Industry Update: Increased Demand from Mining Sector to Boost the Global Rail Logistics Market

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Marketing Intelligence

"Increased Demand from Mining Sector to Boost the Global Rail Logistics Market"

Technavio - November 11, 2016 12:50 PM Eastern Standard Time

LONDON- Technavio’s latest research study covers the present scenario and growth prospects of the global rail logistics market for 2016-2020. Some of the top global suppliers listed in the report include DHL Freight, DB Schenker, and SNCF Geodis.

Market at glance

In 2015, the revenue generated from the global rail logistics industry was approximately USD 440 billion. The key driver for this industry was the increased demand for transportation services from the mining sector.

According to Angad Singh, a category spend intelligence specialist, “Rail logistics is an important aspect in the cargo handling process as it helps companies manage large volumes of cargo in a short time period. End-user segments depend on rail logistics because of its low costs, high safety, high volume handling, and low environmental impact.”

Rail is commonly used to transport mining goods due to its bulk-carrying capacity and lower cost per shipment for industrial goods. The agricultural sector is the second largest end-user, followed by intermodal goods and the metal industries. Intermodal transport is expected to gain market share of about 23.5% in the next few years as it has access to remote locations and is an energy-efficient means of transport.

Competitive supplier landscape

Union Pacific, BNSF Railways, Norfolk Southern, DB Schenker, and DHL Freight hold approximately 30%–35% of the total global market share. These players often acquire regional players to enter markets they are culturally unaware of. For example, DHL acquired Bluedart to enter the market in India

The supply base for the global rail logistics transportation services market is dominated by a mixture of public and private players. The Union Pacific Railroad Company currently dominates the public sector, closely followed by BNSF Railways in the Americas. Suppliers are increasingly expanding their service portfolios to include intermodal logistics and undertaking high-level strategic supply chain planning activities to help clients procure one-stop services from them.

The rail logistics market does not adopt a specific pricing model as the pricing usually depends upon the volume and weight of the cargo, distance, and shipment values. Suppliers have carefully integrated a differential pricing structure in their offerings to maximize revenue and cater to different buyer categories. The maximum benefit of railroad logistics can be obtained by industrial buyers that transport large volumes of goods.

Thanks!
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Ariene Venida

Marketing Assistant