Digitizing Europe`s railways: A call to action

The train is a symbol of industrial development and national pride for many European countries, and the importance of railways shows no sign of waning. Passenger kilometers have grown by more than 10 percent in the past five years, and rail has been winning passengers from air travel on major intercity routes. Around 7 percent of passenger traffic in Europe runs on the railways, compared with less than 1 percent in the Americas. The European Green Deal, along with national regulations, pushes railway travel even further. In addition, the French government’s cancellation of short-haul flights on Air France as a prerequisite to funding the airline during the COVID-19 crisis will likely result in additional passengers turning to the railways.

Despite the strength of European rail, the industry is partly built on antiquated legacy systems that are becoming more difficult in some cases, nearly impossible to maintain. Some large European railways have multiple different interlocking types, some more than a century old, and tons of obsolete trackside technology that they can no longer maintain due to a lack of the requisite knowledge or spare parts.

Automated interlocking, train dispatching, and incident handling offer the significant benefits of capacity, efficiency, safety, and sustainability to rail passengers, operators, regulators, and manufacturers.

The landmark European Rail Traffic Management System (ERTMS) legislation passed in 2000 has led to some improvements in technology, but progress to date has been slow and fraught with setbacks. Part of the reason is that effective digitization requires a “big push” transformation rather than a step-by-step approach. Also, a regulatory environment that is ill equipped for the logic of digital platforms hampers migration to new digital systems.

To overcome these difficulties, and to modernize European train control and traffic management, industry leaders need to acknowledge that digital technologies completely change the rules. We have identified five major shifts that are necessary to accelerate rail digitization, starting with a fundamental shift in the way the industry operates, including new modes of collaboration among network operators, regulatory authorities, and original-equipment manufacturers (OEMs). The challenge is significant, but success is vital to securing the future of the industry and the European rail network more broadly for decades to come.

The future of train traffic is digital

The importance of the railway industry to Europe is clear. Many world-class train-control and traffic-management OEMs is either European or have the largest share of their global footprint in Europe. Overall, about 60 percent of the world’s train-control and traffic management market is European. These OEMs lead the world in signaling innovations such as moving block technology, which allows trains to run in the sequence of brake distance, increasing capacity by more than 20 percent on many lines, and in fully autonomous operations, which further increase capacity and safety. Together with the railroads, European OEMs have already developed and put these systems into commercial operation, though on a small scale.

Replacing legacy technology with an advanced train-control and signaling system such as ERTMS level 2 and above, which uses wireless communications to supervise train movement is a core element of the digitization of train control and traffic management. Whereas today’s systems might have 100 to more than 1,000 mechanical and electrical signal boxes, those will be replaced with new, digital interlocking and control centers, only a few of which are required to control even the largest rail systems. Within the next ten years, these digital advancements will also allow operators to withdraw most of their trackside equipment, and autonomous train operations will be based on a digital rail infrastructure.

Studies have shown that large scale digitization of this sort would provide the following substantial gains for passengers, operators, regulators, and OEMs:

• Additional capacity.Increases in railway demand have pushed many systems to their capacity limits; digitization could increase capacity by more than 20 percent on many network lines without additional tracks being built.
• Less-expensive, more efficient services.Network operators will benefit from much more efficient operations and maintenance. They will also benefit from lower equipment costs because, potentially, more than 90 percent of signal boxes can be replaced by a few control centers. In addition, the lower costs may result in reduced track access charges, from which the train operators will profit. As soon as digital train control and traffic management are introduced, the rail system’s availability, reliability, and punctuality will increase.
• Enhanced technological leadership.Automation and the harmonization of standards required by digitization offer European OEMs and the rail industry more generally an opportunity for substantial product innovation and the chance to conquer new markets.
• Increased environmental sustainability.Digitization enables smoother operations, which will be a key to the rail industry’s contributions toward meeting overall transportation CO₂ emission targets by 2030 and beyond.
• The chance to future proofs the industry.Only a digitally transformed railway system will be able to compete in the transport industry of the future; operators cannot hope to beat smart mobility platforms with 1920s signaling systems, 1940s level crossings, or 1960s interlocking systems.

McKinsey