The global rolling stock market shows a promising uptrend until the terminus of 2019. The rolling stock market meets its all-time high during 2018-2019, as shown in figure 1. The worldwide growth was expected to grow exponentially, as seen in figure 2.
Figure 1 Global Rolling Stock Performance
Figure 2 Global Rolling Stock Market Forecast
The market share distribution among manufacturers and region in the global market in terms of volume is shown in figures 3 and 4, respectively:
Figure 3 Rolling Stock Manufacture Share Distribution in Volume
Figure 4 Rolling Stock Region Distribution in Volume
But as pandemic hits, the downturn in the worldwide production and transport demand has taken hold of the industry, and the market projections may come otherwise. The effect of the COVID-19 on rolling stock market performance can be as demonstrated using a market performance comparison in the first-half year over the last few years, as shown as follows:
Figure 5 First half rolling stock market performance
Looking at how severe the rolling stock performance in the first half of 2020, the projections of the rolling stock market performance in each first half in the upcoming years seems bleak.
The market response due to this pandemic might depend on the virus spread & public health response and knock-on effects & economic policy response. Based on the effectiveness of interventions on these segments, nine scenarios have been generated by McKinsey. (https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business, 2020)
Figure 6 Scenarios for the economic impact of the COVID-19 Crisis
Following the best scenarios that the virus will get contained and strong growth rebound will happen, the v shape growth in the first half-year rolling stock market performance will be seen as follows:
Figure 7A4 scenario in rolling stock market
But this will only happen if and only if strong policy responses prevent structural damage, recovery to pre-crisis fundamentals, and momentum. And also, if a robust public health response succeeds in controlling spread in each country within 2-3 months. This is called the A4 scenario as per the Mckinsey report.
If not, and the widespread failure of public health interventions happens, a delayed recovery will mostly occur in the rolling stock market as well. This is called the B5 scenario as per the McKinsey report, as shown as follows:
Figure 8B5 scenario in rolling stock market
Due to the sensitivity of the global economic impact on public health and economic policies, the effect on the rolling stock market will differ from one market segmentation to another.
The rolling stock market can be segmented on customer preference, region, and type of product. Thus to analyze the impact of COVID for each segmentation, though possible, will be lengthy. Therefore, this article will only cover how the effect of COVID-19 differs from one country to another.
Asia Market Performance
Figure 9 Asia Rolling Stock Performance H1 comparison
Asia rolling stock market being fluctuates as it is; the effect of COVID-19 on the market is not as apparent as in any other region. The first-half performance in 2020 shows a decline if compared with 2019, but still better than what has happened in 2018—forecasting a market with no visible pattern like will be rendered impossible, if not misleading.
But with all trends that seem to decline for all types of rolling stock in the Asia market, freight wagon shows a slightly up-going trend, which shows an increase to 600 freight wagon ordered in 2019, slightly increasing from 100 compared to 2018.
Figure 10 Asia top 15 types of rolling stock ordered
Freight wagon has been the majority of the type of rolling stock ever ordered in Asia in the last few years. The freight wagon price has been under pressure since 2014 and predicted to be as low in the next years.
Figure 11 Freight wagon price decline in Asia
And this strategy seems to work well in Asia, as shown in this chart, the lower the price, the order of such product increases.
Figure 12 Number of car ordered vs Price Fluctuation
North America & CIS Market Performance
Figure 13 North America Rolling Stock Performance H1 comparison
In North America, interim procurement peaks have recently passed, and the market is gradually cooling down since 2018 – 2019. The same with what happened in the CIS region, which has passed its peak in 2018.
European Market Performance
Figure 14 Europe Rolling Stock Performance H1 comparison
In Europe, where the rolling stock market is estimated to grow, market calming commences at the terminus of 2019. The ephemerally very high demand for various types of rolling stock was met in 2019.
Article Author:
Mr. Bedy Kharisma,
Manager, PT Industri Kereta Api (Persero)
