The business climate amongst the leading companies of the global railway industry has significantly improved. This is shown in the most recent SCI Rail Business Index – a periodical survey among the global railway industry’s top managers by the consultancy firm SCI Verkehr. At the end of the second quarter in 2017, the current business situation has been assessed distinctively more optimistic than in the previous quarters. In line with this more positive assessment, the evaluation of the demand for products and services has jumped in balance from -6 percent to a value of 14 percent. In addition, in saldo, 27 percent of the polled managers anticipate a more favorable development in the upcoming six months. Despite this optimistic outlook, the global railway industry has to cope with a number of key challenges, giving new impulses on the one hand, and changing established structures on the other hand.
At the end of the first two quarters in 2017, the development of the current business situation has been assessed to be considerably more positive than in the previous quarters. The more cautious assessment at the beginning of the year has made way for a distinctly optimistic perspective. In balance, 31 percent of the surveyed top managers evaluate the current business situation as “good”. The number of companies assessing the current situation as “good” jumped from 19 percent in the last quarter to around 35 percent in the current quarter. At the same time, the share of companies dissatisfied with the current situation decreased from 14 percent to 4 percent.
As an important indicator for industry development, the demand for products and services seem to have vanquished the short-term downward move of the last two quarters. With new momentum, the railway top-managers’ assessment of the demand situation jumped in balance to a value of 14 percent, with 31 percent of the managers declaring a rise in demand.
In line with the more positive assessment of the demand for products and services, the evaluation of the current order backlog has improved. In balance, a total of 32 percent assess the current order backlog to be “relatively large” – with only 9 percent of the companies assessing their current order balance as “too small”.
With regard to the expected business development in the coming six months, heterogeneity in the polled top-managers assessment of the last months has turned into a more distinct positive rating. The slight caution of the past quarter is followed by predominantly optimistic expectations regarding the business development. While the vast majority expects a consistent business development, in balance, 27 percent of the polled managers anticipate a more favorable development. In contrast, only a small share of 4 percent of the polled companies expect a less favorable development.
In the last years, SCI Verkehr has been asking companies about the railway industry’s key challenges, whereat results of the different years strongly reflect structural changes in the railway business. While the situation regarding certification and homologations as well as life-cycle management issues seem to have been improved, other aspects have significantly gained in importance. In this context, aspects related to the ongoing process of consolidation in the global railway industry are reflected with increased challenges related to activities in the field of mergers and acquisitions.
In addition, with the aspect of process optimization digitization has further increased in importance, currently accounting for the industry’s biggest challenge. “In particular with regard to the optimization of process structures, digitization has gotten serious more recently”, said Maria Leenen, CEO of SCI Verkehr. “Moreover, new digital technologies force their way into the railway industry, giving not only new impulses, but changing established structures.”
