There are also major changes on the horizon in the European manufacturer landscape. Against the backdrop of a notable revival in demand, the insolvency of European market leader International Railway Systems (IRS), Luxembourg, has caused great uncertainty. The remaining suppliers are fighting for market shares and are also striving for a good starting position with regard to the upcoming market entry of CNR Cargo, the new joint venture of PKP, Poland, and CNR, China.
The current global market volume for freight wagons is worth around €8.7bn per year for new business and some €8.3bn per year in the after-sales segment. Following the 2009 downturn, new-wagon business has recovered to two-thirds of what it was during the peak in 2008. In the forecast period up to 2015, the new-wagon market will achieve annual growth of more than 10% and will greatly exceed the 2008 value towards the end of the period.
All market regions were affected by the crisis, but the actual effects on market development vary considerably between individual areas. The after-sales market also shows high annual growth at almost 5% worldwide which is primarily driven by continuous fleet expansions in Asia.
The main growth driver for both freight wagons and diesel locomotives is the former Soviet Union which, following a severe decline at the beginning of 2009, returned to its previous steep growth virtually within the same year and is experiencing a lasting renaissance.
In the years 2006 to 2009 an average of just over €2bn was invested in wagons for the former Soviet Union. This figure is now almost €5bn - with a continuing slightly upward trend. Hamburg-based VTG's decision to actively enter the Russian petroleum wagon business through its acquisition at the end of May of Railcraft Group, which has sites in Finland, Russia and Estonia, demonstrates strategic vision.
Following the dramatic 2009 market slump, North America is still struggling with the consequences of the freight market crisis, although recovery is now gaining momentum. In Asia, China and India continue to report rising market volumes, with the only effect of the crisis being a temporary slowdown in development.
Due to existing orders, the European freight wagon market reacted relatively slowly to the drop in freight demand, which is why the recovery is less pronounced than in other regions. In the medium term, however, demand for freight wagons in Europe will increase significantly, while at present the market is slowly picking up.
A look at the fleets in Europe shows how dominant DB Schenker Rail is in this market. Accordingly, Germany has the largest fleet, followed by Poland and France.
Manufacturers now need to position themselves for the upcoming upswing. The previous European market leader, IRS, had a market share of almost 20% in the period 2006 to 2010, almost twice as high as its main competitor Tatravagonka, Slovakia. In 2010, IRS suffered from economic difficulties because of the crisis in general and the cancellation of key orders, while it already had excess capacity.
In the meantime, Tatravagonka took the opportunity to focus its efforts on growth. Other manufacturers, including Greenbrier which has a 6% market share and DB Waggonbau Niesky which holds 5%, are hoping to take advantage of this upswing, while analysts and manufacturers are also watching with anticipation at how CNR Cargo will position itself.
Given these setbacks and developments, it is possible to speculate that additional players will enter the European freight wagon business in the next few years. However, the extent to which these will be strategic or financial investors remains to be seen.