During 2010, many nations will increase their roll out of high-speed rail (HSR) initiatives to make them a more integral part of their overall transportation infrastructure and improve their transportation infrastructure for commuters and freight. Several countries in Europe that lack an HSR system have expressed their commitment to begin construction by the end of the year. Many Asian nations, too, have already begun HSR development projects that will be completed by 2015 or 2020. China and Japan, for instance, are rolling out thousands of miles of new routes that will expand their established HSR network and create new HSR capacity through the next decade. Manufacturers of a multitude of HSR components required to construct this complex transportation system stand waiting in the wings to capitalize on the potential need for their supply of goods and services.
Nations with little or no HSR infrastructure, such as the United States, are closely weighing the benefits of HSR adoption and the initial and long-term financial commitments. Much of the debate is centered around the types of HSR infrastructure to implement. Traditionalists of HSR manufacturing advocate a wheels-on-rail system while futurists prefer the more costly magnetic levitation (maglev) system.
This SBI Energy report analyzes the market opportunities that global HSR manufacturers are eager to embrace through the next decade. We examine the critical trends driving HSR growth by region and forecast the value of this growth by each of the manufactured HSR components. Finally, we look at the socioeconomic and consumer-based trends affecting the HSR industry, such as the development of next-generation HSR products, safety issues, and long-term effects of HSR on a transportation economy.
Market Insights: A Selection From The Report
Japan Keeps Pace with HSR Development
The HSR manufacturing market in Japan is growing fast. The current population of the Japanese Bullet Train market is more than double that of the California market as projected for 2030. The counties and metropolitan areas that will have stations in the California system are projected to have less than 44 million people in 2030. By comparison, the prefectures of Japan served by the Bullet Trains already have a population of more than 97 million. In the Tokyo and Osaka-Kobe-Kyoto urban areas, 63 and 56% respectively of urban travel is by transit. In the third largest urban area, Nagoya, transit’s share is approximately 25%. Approximately 80% of that transit travel is by rapid transit modes in each area, which tend to be competitive in travel time with cars (subways and commuter rail). Finally, in each of these large urban areas, commercial revenues (including fares) account for more than 95% of operating and capital costs.
The existence of Japan’s comprehensive rapid transit systems, which were built as the urban areas spread out, makes near “seamless” travel possible throughout the Japanese urban areas. Analysts say Asian companies are already very active in bidding for projects on other continents, including the Middle East and Latin America. They are also targeting projects in Australia and the U.S. and have already made significant inroads in their own region, with contracts in Thailand and Hong Kong.
The main HSR manufacturing constraint on exports is capacity, as Chinese producers try to keep up with orders at home in what is now the largest market in the world. Some big HSR manufacturers are tripling their output in 2010. Central Japan Railway Co. is considering opening a section of its proposed Tokyo-Osaka maglev train system earlier than scheduled, Chairman Yoshiyuki Kasai said at an event for local businesspeople recently. The railway company, also known as JR Tokai, is targeting the 2025 launch of the first leg linking Tokyo and Nagoya. JR Tokai is scheduled to complete construction in fiscal 2013 to extend an existing 18.4km maglev test route in Yamanashi to 42.8km. The railway firm hopes to extend this line both east and west and eventually transition it to operational use.
In the News
High Speed Rail: Manufacturers Race to Secure Contracts from $8 Billion U.S. Government Pie
New York, June 30, 2010 - Since the Obama administration awarded $8 billion to states for 13 high-speed rail (HSR) projects, the race has been on for companies and manufacturers to get a slice of the pie. Competition is fierce between Amtrak, the nation’s only operator of high-speed trains, and foreign HSR manufacturers eager to win bids in the United States.
The successful installation of a fast moving transportation system is beneficial on two levels. First, it would decrease the nation’s reliance on depleting fossil fuels and secondly, HSR will stimulate local economies and drive growth across the U.S. According to SBI Energy’s new industry study High Speed Rail Infrastructure Component Manufacturing, the accumulated market value of global HSR manufacturing sectors was $244 billion from 2005 to 2009 and will grow to reach $907 billion between 2010 and 2015.
Nations around the globe are increasing their roll out of high-speed rail initiatives during 2010, making them an integral part of the overall transportation infrastructure. Several countries in Europe, for example, currently lacking an HSR system have made commitments to begin construction by the end of the year. In Asia, a multitude of HSR development projects are underway with anticipated completion dates between 2015 and 2020 and of the 17,000 miles of planned HSR track implementations worldwide, nearly 10,000 is allocated for Asia, SBI Energy reports.
The move for high-speed rail in the U.S. will create or save tens of thousands of jobs in areas like track-laying, manufacturing, planning and engineering, and rail maintenance and operations. Over 30 rail manufacturers, both domestic and foreign, have agreed to establish or expand their base of operations in the U.S. if they are hired to build the country’s next generation HSR lines - a commitment the Obama Administration secured to help ensure new jobs are created in the U.S.
“We expect North America to grow the fastest in the TGV technology sector through 2014, although its total sales pale in comparison to Europe,” observes SBI Energy publisher Shelley Carr. “Revenues will increase at a 39% CAGR to reach $3 billion for the four-year cycle. The lion’s share of accumulated market value in technology will come from Europe, which will grow at a 4% CAGR to reach $10 billion by 2014.”
As global expansion of HSR initiatives accelerate through the next decade, manufacturers of HSR components remain cautiously optimistic about their long-term profitability along with concern that increased use of HSRs will likely result in greater incidence of fatal accidents. On the bright side, new developments in HSR and intercity passenger rail could bring a resurgence in railroad engineering and manufacturing that could help to bolster the globe’s industrial base.
High Speed Rail Infrastructure Component Manufacturing covers shipments, imports and exports, as well as the economic and market trends driving the HSR manufacturing industry. It identifies key market trends and dynamics, and profiles major market players, outlining their strategies to maximize growth and profitability. The research methodology for this report involved aggregating, synthesizing, and analyzing data from several sources, including the U.S. government and several third-party market research syndicated data suppliers.
About SBI Energy SBI Energy, a division of MarketResearch.com, publishes research reports in the industrial, energy, building/construction, and automotive/transportation markets. SBI Energy also offers a full range of custom research services.
High-Speed Rail Development Accelerates Despite Hefty Initial Costs - Blog Entry
The case for high-speed rail (HSR) development is often a decision of cost versus benefit. Regions that have analyzed HSR systems have weighed the expense of investing in pricey next-generation Maglev systems against its potential impact on alleviating transportation demands and improving the quality of life for citizens.
Increased investment in HSR is directly related to commuter demand for more efficient transportation over longer distances. As trips grow shorter, users of public transport spend an ever-higher portion of the total travel time in getting to and from stations, as opposed to the line-haul journey itself. The shorter the trip, the less HSR can influence the passenger’s total travel time.
At the other end of the distance spectrum, at the 400-500 mile plateau, air travel begins to catch up with HSR on a door-to-door travel time basis, as the superior cruising speed of air overcomes its disadvantages with respect to terminal locations and time consumed. Over long distances, the main competitor for HSR is air, and the recent development of low cost airlines presents a serious challenge to rail operators, many of whom have historically faced little pressure to contain their costs.
United States Progresses to HSR Future
The U.S. is embracing Maglev as the HSR system for its future. The Maglev Deployment Program encourages the development and construction of an operating transportation system employing magnetic levitation, capable of safe use by the public at a speed in excess of 240 mph. The projected costs per mile of the Maglev systems are comparable to conventional electric light-rail systems when looked at in aggregate. The proposed Pennsylvania Maglev system, for example, is expected to cost more than $2.7 billion or $51.4 million per mile. The light-rail system proposed for Austin, Texas, in contrast, will also cost about $51 million per mile.
Of the two corridors in which Maglev shows favorable cost ratios, California is proposing to develop new HSR because of its ability to make flexible use of existing rail rights-of-way in densely-settled areas. The Northeast U.S. corridor has formidable environmental obstacles to the introduction of Maglev along much of its length, as well as other investment needs centering on the high-volume commuter and intercity rail passenger services that depend on the established and aging infrastructure.
HSR Construction Costs Per Mile for Several Global HSR Projects
(in $ millions)