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 kilometres 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 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 (including Alstom, Bombardier, Hitachi Rail STS, Siemens, and Thales) 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 signalling 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 signalling 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 centres, 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 centres. 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 signalling systems, 1940s level crossings, or 1960s interlocking systems.

Europe’s slow pace of digitization threatens its preeminent position

Luxembourg and Switzerland have migrated their train-control and traffic-management systems to ERTMS levels 1 and 2. Spain has introduced ERTMS level 2 on many lines yet the pace of overall progress across Europe has been slow. The process of migrating the Danish and Swiss rail systems has been fraught with setbacks, including multiyear delays as a result of underestimations of the project’s complexity, and, so far, progress in rolling out ERTMS in large markets such as France, Germany, and Italy has been very limited.

The deployment and telecontrol of digital interlocking and the rollout of digital user interfaces have also been slow. Some central rail-network operations, such as France’s Commande Centralisée de Réseau and Germany’s Digitaler Bedienplatz, do have a plan to update a portion of their interlocking, but the time horizons are long: they expect to be finished in 2033 and 2035, respectively.

This slow migration puts a speed limit on the R&D efforts of European OEMs and leaves room for other players to enter the market with a more aggressive strategy backed up by huge investments. China’s government, for example, has pushed hard to export railway technology, and the Chinese rolling-stock industry dominates many segments more than 50 percent of global high-speed trains, for example, are now produced in China. The export share of China’s CRRC has doubled in recent years, including via contracts in mature markets such as Germany, and it is now by far the largest rolling-stock manufacturer in the world. Exports of signalling technology have lagged behind, but China is investing significantly and is likely to compete in Europe too before long.

Decisive action is needed

The European railway industry can indeed continue to push innovative technology forward. Digitization is fundamental to the ability of rail to grow into an economically viable and environmentally friendly mode of transportation, and we believe Europe is in a good starting position to achieve this growth and attain a successful digital transformation. The challenge is significant, the window of opportunity is narrow, and the entire industry, regardless of roles, must be willing to collaborate and change. The potential gains in cost efficiency and capacity, as well as the benefits of reduced CO2 emissions, are large both within and outside Europe. To be successful, operators, governments, and OEMs need to act now.

McKinsey