The smart railways market is set to grow from $28.9bn in 2022 to $43.0bn by 2027 at a CAGR of 8.3%, according to a report from Markets & Markets.

The railway business is not immune to the transition as the globe becomes increasingly digitised. The railway industry, seen as a relatively conservative sector in adopting technology, has also recognised the advantages of becoming digitised.

Connectivity, the cloud and artificial intelligence (AI) have emerged as three crucial areas that will form the foundation of the railway industry’s transformation as it adopts digital technology. Major factors influencing this growth include the adoption of IoT and automation technologies to improve the optimisation of smart railways, an increase in government initiatives and public-private partnerships (PPPs), and technological advancements aimed at improving the passenger experience.

Key players include Alstom (France), Cisco (USA), Wabtec (USA), ABB (Switzerland), IBM (USA), Hitachi (Japan), Huawei (China) and Indra Sistemas (Spain).

The demand for smart railways services is driven by a growing number of passengers each year. Software, hardware and other technologies that make up smart railway systems redefine how train assets and rail network connectivity are employed. ICT integration with intelligent transportation systems enables this.

Rail companies depend on streamlined and reliable asset operations, maintenance, and continuously growing infrastructure to meet rapidly multiplying requirements. The increased requirement for an efficient ecosystem with a reduction of expenses is driving the segment.

The rail communication and networking segment accounted for the largest market share in 2022, says the report.

The use of intelligent communications in railway management applications aids in improving rapid decision-making for problems, including asset deployment, usage and maintenance. For stations, control and dispatch centres, and rolling stock to communicate accurately and on time to maintain security, safety and uninterrupted service, railroad operations must be efficient. Therefore, signalling, phone, video and data traffic must be reliably sent over railway lines and across backbone transmission networks using railway communication systems.

Europe is the largest market for railway digital transformation. It is the second-largest economy in the world in nominal terms, after the USA, and the third in purchasing power parity terms, after China and the USA. The GDP of Europe was $17.1tn in 2020. By 2025, the EU aims to have uninterrupted 5G coverage on major transport paths across Europe.

In November 2021, the UK government announced a $126bn investment in rail infrastructure for faster and better journeys for more people across the country. This represents a significant opportunity for companies working towards the development of advanced connected rail technology.

The railway market in terms of revenue in Germany rose from 2016 to 2017 by approximately 2.5%. Long-distance passenger kilometres improved from 40 billion in 2015 to 41 billion in 2016.

France has a strong economy, with a GDP of $2.7tn in 2018. In October 2021, the French government announced an investment worth $1bn to strengthen the competitiveness of rail freight operators.

The report can be downloaded from www.marketsandmarkets.com/pdfdownloadNew.asp?id=960.