MENA rail market on track for five-year growth period

Projections at Middle East Rail reveal 3% annual growth until 2021 as $39bn of projects underway in GCC region

The railway supply market in the Middle East and North Africa region is expected to grow at over 3% annually for the next four years on the back of several big-ticket projects in countries throughout the region, believe industry players.

Participants at the sixth edition of the Middle East Rail exhibition at the Dubai World Trade Centre were particularly upbeat with the projections revealed for the region by one of the most important global rail sector surveys, the World Rail Market Report, produced by Roland Berger and UNIFE, a professional association for the railway supply industry. The report forecasts that the growth in the rail equipment market in the MENA region in the period through to 2021 will almost match the growth pace of Western Europe.

The report quoted Helmut Scholze, partner at Roland Berger, a global strategy consulting firm, as saying: “Despite some setbacks and the economic complexities seen in the past year, the rail market is picking up speed in the Middle East and North Africa. We predict further investments in rail systems and this will lead to significant, long-term growth in the rail equipment market. The UAE and Iran will be the key growth markets, while Saudi Arabia will stay moderately flat at its current high volume.”

Agreeing with the report, Munir Patel, CEO, XRail Group, said: “The region is still a very prosperous place as governments continue to realise the social, environmental and economic benefits of incorporating railway and metro systems into the transport infrastructure. The key is to stay connected to stay ahead. We have now established offices in Dubai, Doha and Riyadh, so we can be close to our clients to support them in their upcoming projects as we see stable growth in the market.”

Last year, XRail was awarded a key contract to undertake the installation and testing of a remote conditioning monitoring system for Dubai Metro.

Rolling stock provider Greenbrier Companies (GBX) is one of the suppliers of railcars in the Saudi market. The company recently expanded with the acquisition of Astra Rail, and Thomas P. Jackson, GBX’s vice president of marketing, said: “With the Greenbrier-Astra Rail formation we are keenly focused to support long-term growth opportunities in the GCC region. Our entry into Saudi Arabia’s railcar market is a great honour and a great responsibility as we participate with the Kingdom in one of its premier economic development and engineering projects at Wa’ad Al Shamal City.”

Last year, GBX delivered its first set of 1,200 railroad tank cars to the Saudi Railway Company under a contract received in 2015, Jackson said, adding that the company has set up a new corporate sales office in Riyadh. The three types of tank cars supplied by the company will support industrial mining operations, led by the national mining company, Ma’aden, at Wa’ad Al Shamal Industrial City in the Sirhan-Turaif region of northern Saudi Arabia. The tank cars will facilitate rail transportation of molten sulphur and phosphoric acid products that are used in a range of industrial activities, Jackson added.

According to industry players, $69bn worth of projects are currently under construction in the GCC region. The 15km extension of the Dubai Metro to the Expo 2020 site and the Saudi Land Bridge linking Riyadh to Jeddah are both in progress. In Egypt, the modernisation of a metro line and a large order for new metro vehicles is expected in Cairo. For the GCC Railway Project, individual member states are currently assessing the details of continuation of the project as well as domestic alternatives. Oman Rail is now weighing up plans for the development of a domestic heavy-haul line that will transport minerals from Thumrait to Duqm Port.

Experts from Roland Berger joined James Cowan, CEO Greenbrier International, in a discussion on the topic of ‘Competing on Freight Efficiency’ in which Cowan showed how GBX is executing on its current orders. In another discussion, Roland Berger’s Scholze presented the firm’s latest insights on “Key levers to increase non-fare box revenues for railway operators”.

Andreas Schwilling, partner and global head of Rail & Mobility at Roland Berger, said: “The private sector’s response to suggested PPPs in the region has been cautious and moderate. A clear demonstration on whether transportation projects can be built and operated in a way that generates the returns required by equity investors will define the future of PPPs in the infrastructure sector in the Middle East.”

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