Massimiliano Claps
Max Claps (Research Director, IDC Government Insights)

Rail accounts for 8% of global passenger travel and about 9% of freight activity, but only 3% of transport energy use. According to the International Energy Agency, rail consumes 12 times less energy and emits 7 to 11 times less greenhouse gas (GHG) per passenger per kilometre travelled than private vehicles.

Excluding shipping, rail freight is the most energy efficient and least carbon intensive freight transport mode. By some estimates, railways are 15 to 20 times safer than cars.

The environmental sustainability and safety of railways has made them a primary target for government investment around the globe. In Europe, 2021 was the “Year of Rail”. EU Transport Commissioner Adina Vălean said: “There’s no doubt that railway transport means huge benefits in most areas: sustainability, safety, even speed.”

With every major economy committing huge amounts of public and private funding to interurban and urban rail transportation, railway infrastructure companies and service operators can’t just scale the status quo. Building more kilometres of rail track or shifting to high-speed rail is not always affordable.

The future of passenger experience, revenue growth, operational efficiency, and safety and security — the top 3 business priorities for European rail undertakings, according to a 2021 IDC survey — must rely on technology innovation.

What’s Next for Railway Technology Innovation

The railway industry has been hit hard by the pandemic. According to the American Public Transport Association, ridership fell 61% for heavy rail, 54% for light rail and 66% for commuter rail between 2019 and 2020. In Europe, after a steady 10.7% increase in passengers per kilometre between 2015 and 2019, there was a 46.3% drop in 2020.

While the drop in freight transport was less pronounced, the industry suffered a significant reduction in revenues. This has led some railway undertakings to delay or postpone some technology investments. In other cases, lower traffic has been leveraged as an opportunity to test innovative technologies.

Urban and interurban railway undertakings have historically invested in technology to enhance customer experience capabilities such as self-service booking and journey planning. They used enterprise asset management systems and project management capabilities to enable efficient capital investments and infrastructure and fleet operations. They also complemented traditional signalling systems with GSM-based onboard systems to improve safety.

They are now looking at the next generation of technologies, such as intelligent traffic management, 5G, artificial intelligence and machine learning, autonomous and hybrid powered trains, IoT and edge computing, and augmented and virtual reality to achieve four interdependent goals:

  • Increase capacity utilisation of trains, stations, yards and linear assets. This can be achieved with a combination of automatic train controls, smart operations and all the technologies that are converging to make them possible, in addition to redesigning operational and maintenance processes and retraining expert personnel responsible for service delivery.
  • Grow revenues by offering innovative, personalised and convenient customer experiences to ensure that increased capacity is fully utilised. Mobility-as-a-service apps, customer analytics, 5G-enabled onboard infotainment, AR and other technologies augment the ways to innovate customer experiences. They also require a rethink of journey planning, booking, ticketing, payments and reimbursement processes across modes of transportation.
  • Ensure high safety and security standards are maintained or improved, even with higher utilisation rates. This requires a combination of investing in cybersecurity tools and expertise to protect converged ICT and operational systems and the ability to prevent incidents while protecting customer privacy.
  • Ensure the higher volume of rail traffic has a net-zero impact on the environment. Railway operators and infrastructure undertakings will have to share data and expertise to optimise energy management, monitor emissions, extend the life cycle of physical assets and work with other modes of transport to nudge user behaviour towards the lowest-emission door-to-door routes and invest in hybrid and battery powered locomotives when installing overhead catenary or electric ground rails.

A new IDC TechScape (subscription required) analyses railway technology innovation by categorising the technologies in three groups:

  • Transformational: This category includes solutions, such as autonomous trains and automatic traffic control, that leverage the convergence of multiple IT and OT systems reshaping customer experiences, operating models and business models in the urban and interurban railway market.
  • Incremental: This includes solutions such as edge computing and 5G that, when taken individually, help deliver improved business outcomes but don’t transform the industry.
  • Opportunistic: This includes IT and OT solutions, such as quantum computing and hybrid power trains, that are being applied to specific use cases but are not expected to have a wide-reaching impact across the full enterprise.


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