Understanding the Rail Sector
The Rail Sector in the UK
The rail sector in the UK is a thriving, multi-billion pounds industry.
In the year 2021-22, total rail industry income in the UK was £21.3 billion. Adjusted for inflation, this is a decrease of 0.9% on the previous year.
This total figure is made up of £13.3 billion from government funding, £6.5 billion from passenger operators (£5.8 billion of fares and £0.7 billion from other train operator income), and £1.5 billion from other sources.
Total expenditure in the same period amounted to £22.8 billion. Adjusted for inflation, this is a 3.9% increase on the previous period and was chiefly the result of increased financial costs. This comprised £10.9 billion of franchised train operator expenditure, £10.7 billion of Network Rail expenditure, and £1.2 billion of expenditure elsewhere within the rail industry.
The amount of government funding fell in this period from £17.6 billion to £13.3 billion.
However, for manufacturers in the rail sector, the opportunities are still significant. Investment in new and enhanced rail infrastructure, rolling stock, and equipment increased from £1.8 billion to £7.6 billion. The largest increase came from increased spend and investment on the HS2 project, which accounted for £1.6 billion of the overall £7.6 billion.
In total, £5.1 billion was spent on HS2, while private investment in the sector went up by £0.1 billion from the previous year.
The Rail Supply Industry
The rail supply industry is a very important element of the overall rail sector. It is of fundamental importance to industrial growth, revenue, employment, and innovation.
The rail supply industry includes the manufacture of locomotives, rolling stock, signalling and telecommunication equipment, and parts and components.
It is also a sector which stimulates a lot of activity within UK manufacturing. Multi-nationals, large companies, and SMEs are all active within the UK rail supply industry.
There are a broad range of UK companies who form the rail supply industry, and who distribute components and equipment to the domestic market as well as overseas. These range from small independents to large, international OEMs.
The wider rail supply market is also expanding rapidly. Over the next five years, the global market is forecast to grow by almost 20%, and to achieve an annual volume of around £185 billion.
It is a highly competitive commercial landscape, with many companies vying for the same tenders and supply orders.
Like in most industries, there is an emphasis on product quality and short lead times.
There is also an increasing demand for manufacturers to supply components and parts which are safe, reliable, efficient, and sustainable.