Transforma Insights recently published a report ‘Rail Transport: Generating USD886 million in annual IoT revenue by 2032’ , which discussed in detail how railways are incorporating IoT connectivity to ensure timely and sustainable transportation of passengers and freight.
In this blog, we discuss how IoT has been implemented in rail transport, what limits the adoption of technology, and what the future holds for such devices in the industry.
The railway is one of the most efficient and sustainable modes of transport; it consumes only 2% of the total energy used for transportation but carries 8% of the world’s passengers and 7% of global freight. Investment in railway infrastructure is consistently increasing as countries set out to meet their global emission targets. For instance, the EU is investing EUR5.4 billion (USD5.9 billion) in 135 infrastructure projects targeting the development of the TEN-T (Trans-European Transport Network) and movement between all states with a major focus on railway projects. The government of India will invest approximately USD16.9 billion by 2025 in the procurement and development of railway infrastructure, while the US government has also announced plans to invest more than USD368 million in grants to improve the railway infrastructure of the country.
The environmental benefits of rail for inland freight transport will continue to drive investment in new rail infrastructure and vehicles in an effort to reduce CO2 emissions.
IoT solutions are being implemented in the railway industry to keep a check on vehicle and track conditions and monitor movement in real-time. Remote monitoring of a variety of metrics can ensure the efficiency and safety of vehicles and allow predictive maintenance which will reduce downtime, improve the quality of service, and save money . One such example is Trenitalia’s EUR50 million (USD53.28 million) partnership with SAP that saves Trenitalia EUR100 million (USD106.55 million) in maintenance costs annually. Trenitalia is an Italian state-owned railway company that operates over 240 high-speed and 6,300 regional trains per day. Partnering with SAP, the company expects to save 8% in the current maintenance cost of EUR1.3 billion (USD1.39 billion), increase availability by 5-8%, and reduce the cost of failures that can range from EUR10 million (USD10.66) up to EUR20 million (USD21.31 million).
With developed countries not typically expanding their rail networks, implementing IoT and the use of smarter systems and automation would allow for more trains to be used on the same routes, thus increasing the number of connections.
Most connections work on satellite and cellular connectivity technologies due to their expanded coverage as rails are frequently operating in remote areas where network coverage of other technologies might not be adequate. Railway-specific cellular technologies are often used due to the confined mobility inherent in trains.
While there are definitely positive results from using IoT on railways, there are also factors limiting adoption. Investing in rail infrastructure is expensive and rail authorities often lack financial resources to implement these IoT solutions, particularly in developing countries. Even in developed countries, upgrades require a lot of public funds which are often difficult to secure since the industry is fragmented and a large number of stakeholders are often involved. Agreement between operators is often difficult to reach, including negotiations on budget and the introduction of new standards and timetables for the implementation of rail automation schemes.
Additionally, the rising adoption of alternative modes of transport including ride-sharing services like Uber, vehicle-sharing services like Zipcar, and bike and scooter-sharing schemes for shorter distances will limit the demand for urban rail systems, which in turn may reduce the growth in connections. The growing adoption of autonomous driving might also eventually compel passengers to make use of private vehicles for transportation.
Market development will vary drastically depending on the existing rail infrastructure, the ability to invest in improving infrastructure, and how suitable a country’s geography is for expanding its existing rail usage. As such, absolute growth will be limited in many developing markets, especially in Latin America and Africa. However, the railway network is rapidly expanding in China and India, which is expected to drive significant demand for railway IoT solutions in future.
The growing public support towards investment in railway infrastructure will also influence the adoption of IoT solutions in the industry. To cite an instance, as per a survey conducted by the Rail Passengers Association in 2022, 78% of Americans want increased investment in the passenger rail network of the US. This investment in railways will ultimately lead to lower use of private vehicles as the availability and usability of rail networks improve. This will further reduce emissions from the road and lead towards a more sustainable future, making it likely that public investment in rail networks will increase as global emission targets of various countries near their deadlines.
According to Transforma Insights’ report , the total number of IoT connected devices in the railway industry is expected to reach 3.7 million by the end of 2032 – growing at a CAGR of 5% between 2022 and 2032. We expect most of the connections to use 5G by 2032, compared to presently used 4G.