The global rail market is estimated to be worth $300 billion but just 20% of journeys are booked online. Now that is something to think in this new year
There is a lot going on in rail. Not perhaps in the UK, it is true! Yet Asia, China and India, among others, have just announced rail investment budgets of hundreds billions of dollars a year to put in new hi-speed, hi-tech, electric and Wi-Fi connected railway lines. These are linking up the continent’s cities and boosting local economies.
Yet it is still a bit startling that this month, as part of China’s One-Belt-One-Road expansion strategy, it is launching a new direct connection from Beijing to London. Though, it must be said, this is currently just for freight and its destination is a goods terminal in Barking, Essex. (Even then, it will be interesting to see if it arrives on time. The journey is timetabled to take 18 days.) China is already sending trains into other European cities, including Madrid and Hamburg.
Reflecting Eurasia’s connectivity, facilities for online booking are also creeping out along the tracks. It is still not straightforward for foreigners to buy Chinese rail tickets online from abroad. But, as pointed out on the excellent Seat 61 website run by international rail hobbyist Mark Smith, it is not difficult to use Chinese online sites or buy via an Australian one. Indian rail tickets can also be bought online. All over Asia there is plenty of online rail travel information.
Better for travellers, better for business
Rail is adamant that it is better for passengers (less stress) and the environment (less pollution) so travellers ought to prefer it over air. Yet the latest numbers show that, unlike air, demand for rail travel has been hit globally by the weaker economy. Only in the Americas did passenger rail travel rise in 2015. For the rest of the world the distance travelled fell sharply, particularly, understandably in Russia, according to numbers collected by Statista. Yet Europe, despite its persistent investment, was also affected.
Asia’s numbers are still huge, however - 2.5 billion passengers a year in China, for example. In India and Japan passengers clock up countless rail miles, too. But the French and the Germans, while big travellers, do about a tenth of Asians’ miles and the UK and Italy much less. Meanwhile the US’s love affair with the car means that it does not even feature in the Rail Traveller Top Ten, despite its world-leading freight network.
Rail is aware that it must make booking easier. SilverRail, which aims to create a global B2B digital platform for cross-border rail ticketing (like a global distribution system), has built a new infographic showcasing rail and air travel options side-by-side for key city pairs across Europe.
With the global rail market said to be worth $300bn, according to SilverRail’s Unlocking Rail Travel 2020 report, the aim is to make rail as visible as air across online travel booking sites. Put it this way, today 80% of air travel is booked online yet for rail that is a mere 20%.
SilverRail sees a future where customers of OTAs will be able to book a whole journey in one single transaction. When all modes of transport are incorporated, taxi, bus, metro, train, air, and so on, then travellers can make comparisons and plan properly. To this end, in the autumn of 2016, Expedia UK partnered with SilverRail to become the first OTA to offer rail travel alongside air, hotel, car rental, activities and packages. Interestingly, as Julie Kyse, Expedia VP Transport Partner Services, Americas and EMEA, pointed out at a conference late last year, though the vision is global, rail is the first line of business that Expedia has launched outside the US. “It’s a €30 billion opportunity in Europe but it’s complex,” she said. By adding rail products to Expedia’s ‘secret sauce’ through a partnership with SilverRail, the aim is to reduce complexity while growing the customer base.
As Cameron Jones, Chief Commercial Officer at SilverRail is quoted saying on the site: “With Europe having invested heavily in its high speed rail network over the last few years, rail has gained a competitive edge over air. This is particularly apparent on high-speed routes of four hours or less, where travellers are increasingly choosing the convenience that rail offers over short-haul flights. Firstly, rail is far more productive.”
90% of managers surveyed viewed rail travel as productive time, while only 6% said the same about air travel
SilverRail cites research by Belgium operator Thales stating that “90% of managers surveyed viewed rail travel as productive time, while only 6% said the same about air travel”.
Secondly, the research added, ”rail is often more convenient. It gets business travellers to their destination with less stress, whilst typically offering an end-to-end, city centre to city centre journey – as train stations are typically in, or very close to business centres”.
Rail is striving to offer more services and to use technology to take more advantage of the time stations hold passengers captive. Moving on from designer shops, virtual supermarkets are the latest innovation.
Korea’s Homeplus (once 95% owned by Tesco) is trialling a virtual shop alongside a platform in a Seoul station, displaying 500 of its top-selling brands. Smartphone users scan the products QR code to order for delivery within hours. China’s major online retailer Yihaodian - which has tested ventures with Tesco and Walmart - plans 1,000 virtual station supermarkets. (Would the chance to do the household shop calm the UK’s stranded Southern Rail commuters, one wonders?)
In its report Future of Rail 2050 international design and construction group ARUP suggests a possible ‘next step’ of ‘virtual shopping walls within the carriages themselves’. That, in fact, sounds less futuristic than its assumption that passengers can expect ‘certainty in terms of time’ and ‘reliable and accurate real-time information’ and ‘optimal pricing’. However, 2050 is still a long way away!
Research group Technavio has estimated the global smart railways systems market to grow at a CAGR of above 27% by 2020. And whatever Asia’s plans, it says that Europe has dominated the global smart railways systems market, accounting for a 32% market share in 2015. According to its report, ‘Europe will continue to dominate the industry during the forecast period as it has the best railway traffic management system’.
Across continents, rail companies are standardising their services. Technologies’ input is rising. “The increased adoption of analytics and big data is considered to be one of the major trends that will drive market growth in the next four years,” comments Technavio.
“To gain a better knowledge of their passenger’s requirements, several railway services have started using cloud computing and big data analytics. With the help of the cloud-based system, railways can provide passengers detailed information on seat availability, busiest routes, and train status...”
Sounds great, but as marooned south-of-England commuters would probably add, as long as there IS a train!
Join us at EyeforTravel Europe 2017 (May 3-4) where we’ll be hearing more about the fast-growing rail sector from firms like SilverRail Technologies and Eurail
May 2017, London