Rail Freight Services
There is a significant increase in the global demand for rail freight services from the manufacturing, retail, and e-commerce industries, and automotive, especially in APAC, and Europe. The demand is expected to increase slowly in the coming months, due to increase in demand for intermodal shipments amidst increasing road freight costs, and port congestion.
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Rail Freight Services market report transcript
Rail Freight Services Global Market Outlook
The global rail freight market value is estimated to be at ~$217 Billion in 2022*, it is expected and forecasted to grow at a CAGR of 4 to 8 percent in the next three years
Owing to liberalization and technology adoption, regions such as Western Europe, and North America have a high shipper and supplier maturity
Global Rail Freight Industry Trends
Shippers are increasingly looking for end-to-end supply chain solutions from suppliers
Suppliers are enhancing themselves to meet the demands of the shippers by providing value-added services in addition to rail transportation services
Global Rail Freight Drivers and Constraints
Retail sales are expected to increase by a CAGR of 5–6 percent, which might increase the demand for rail freight services marginally in the forthcoming years
E-commerce is expected to grow by about 20 percent, increasing demand for rail freight services, particularly in Asia Pacific and North America
- Countries are working towards improving their rail infrastructure to pave way for efficient and sustainable transport of freight, by envisioning modal shift from road freight
Global Trade Activity:
- During the last decade, increased production of high-value and light-weight goods and expanded trade among the member countries results in increased road freight transportation
- Because growth in GDP implies increased economic activity, there is a positive correlation between the development of freight transport and GDP, where any increase in GDP is directly related to the increase in road freight services in that region
Fuel prices account for nearly 12-15 percent of rail freight rates, thus having a sizable impact on pricing. Fuel prices, which have been increasing in the recent past are expected to stabilize in the next few months
Personnel & Equipment costs:
The Driver wages account for nearly 30–35 percent of rail freight operating costs. Increasing consumer inflation and driver shortage within the road freight communities are putting upward pressure on rail freight costs. Additionally, the surge in freight volumes is driving equipment costs upward
Rail Freight Services Cost Structure – North America
The purchased services, compensation and fuel prices are the most influencing components in the overall freight rates and are driven by the market forces. Hence, service providers will have less control over these costs and are likely to pass them on to the shippers. For 2022, operators are likely to incur relatively higher employee and fuel expenses
The share of fuel expense decreased in 2020 primarily due to lower average fuel prices, lower gross ton-miles, and improved fuel efficiency. Locomotive fuel price per gallon decreased by 30 percent for the full year 2020 Y-o-Y to USD 1.44
However, in 2022, fuel costs have increased significantly. In order to reduce the impact of fuel, service providers employ a fuel cost adjustment factor which is based on mileage and surcharge to mitigate the fluctuations
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