Freight Wagon Market Size, Share & COVID-19 Impact Analysis, By Wagon Type (Closed Wagon, Open Wagon, Hopper Wagon, Flat Wagon, Tank Wagon, Car Wagon, Refrigerated Wagon, and Special Purpose Wagon), By Payload Capacity (Below 60 tons and Above 60 tons), and Regional Forecast, 2023–2030

The global freight wagon market size was valued at USD 13.48 billion in 2022. The market is projected to grow from USD 13.65 billion in 2023 to USD 18.06 billion by 2030, exhibiting a CAGR of 4.08% during the forecast period.

A freight wagon, also known as a goods wagon, is an unpowered railway wagon used for carrying cargo/goods. Various wagons are used for transporting different types of goods such as open wagons designed for transporting coal, tank wagons designed for transporting chemicals, and hopper wagons designed for food, grain, and coal.

Rising congestion levels, both on intercity and urban highway routes, are compelling state & regional transportation planners to switch to an alternative mode of freight transport that can reduce the traffic level. Companies and city planners are considering shifting from road to rail to address roadway traffic. In some situations, railroads can offer a potentially viable alternative to trucking. Switching to rail freight will not only reduce existing traffic congestion levels but also reduce carbon emission levels. As per the Our World in Data organization's 2020 report, aviation accounted for only 11.6% of transport emissions. Rail travel and freight emitted only 1% of transport emissions. Other transport, mainly the movement of materials such as water, oil, and gas via pipelines, contributed around 2.2%.

COVID-19 IMPACT

Major OEMs Witnessed Moderate Profits during Pandemic by Taking Severe Cost Control Measures along with Government Stimulus Packages

The outbreak of the novel coronavirus had impacted the economy and businesses across the globe. The rapid spread of the infection amongst the population forced government bodies to announce nationwide lockdowns from March 2020, followed by partial lockdowns by the states during FY 2021- 22. The pandemic, therefore, resulted in supply chain disruptions and a steep increase in input prices. Market players in the rolling stock market faced adverse economic and market conditions, such as fluctuating costs of raw materials, including steel and aluminum, and delays in the delivery of raw materials. Other challenges included maintaining relationships with suppliers of railcar components, reliance on a small number of customers that represent a large percentage of sales, the risk of customers not accepting new railcar offerings, and other competitive factors.

In the long term, the global market is anticipated to witness significant growth owing to the initiatives taken by government authorities to improve the economic scenario. For instance, in May 2020, the German government announced a package of USD 6 billion for rail operators. Similarly, in May 2020, the U.S. Senate announced a funding of USD 2 trillion for rail and public transport. Due to the government's ambitious plans to enhance the infrastructure and the demand for commercial wagons & containers are expected to remain high. However, a few rail companies were able to mitigate to a large extent through close cooperation with key vendor partners, undertaking cost control measures, and restructuring workforce deployment, which resulted in a moderate profit for the companies. For instance, FreightCar America reported consolidated revenues of USD 203.1 million for the fiscal year 2021, compared to USD 108.4 million for the fiscal year 2020. The company delivered 1,731 railcars in 2021, which included 1,354 new railcars and 377 rebuilt railcars.

LATEST TRENDS

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Increasing Demand for Aluminum Freight Wagons and Incorporation of AI & IoT to Increase Efficiency

The shift from steel bodied to aluminum freight wagons to facilitate carbon savings is another major trend in the wagon industry. Several countries are undertaking initiatives to modernize rail transportation and enable significant carbon savings.

Aluminum wagons have a higher carrying capacity, consume less energy, and are corrosion-resistant. They are 100% recyclable and help in reducing carbon emission levels.

For instance, in October 2022, the Indian government, in partnership with Hindalco, introduced an all-aluminum freight rail to modernize rail freight transportation and enable significant carbon savings for the Indian Railways. The Indian Railways also announced its plans to deploy over 100 thousand aluminum wagons in the coming years, with a potential annual carbon emission reduction of over 2.5 million tons.

Rail companies are leveraging digital technology, including the Internet of Things (IoT), cloud computing, Artificial Intelligence (AI), and 5G to increase the efficiency and safety of freight wagons. European countries are implementing the DigiTwin project to digitally check the condition of freight carrying wagons.

For instance, in May 2021, Germany announced funding a digital twin project for freight wagons.

IT company, RailWatch, received USD 3.86 million in funding from the German government for a digital twin project for freight wagons. Together with the railway company Metrans, they announced the installation of a system to check the condition of wagons digitally. The objective is to develop an innovative measurement system that can create a digital twin of a freight wagon as it drives by. This digital twin will help to enhance train handling and maintenance of such wagons.

DRIVING FACTORS

Growing Shift of Freight Transport from Road to Rail to Drive the Market Growth

Rising level of road congestion is compelling state & regional transportation planners to switch to an alternative mode of freight transport that can reduce the traffic level.

Shippers who convert long-haul freight from road to rail can save up to 40% of their cost. Rail transport uses less fuel than road transport, especially when transporting a large amount of cargo. Congestion and environment-related concerns have made shifting transportation from road to rail a priority for European countries. The Smart-Rail project brought together stakeholders from across Europe to improve freight rail services. Rail transport can be cost-effective, capable of hauling large loads, reliable, efficient, and environment-friendly.

Freight railroads are witnessing significant growth in demand after years of responding to a relatively stagnant market. Freight wagons, once a small market, are now a substantial source of revenue. Rail freight can achieve climate neutrality without the need for any additional infrastructure and, at the same time, consumes less green energy than road, air, and water transport.

As per the American Association of Railroads (AAR) report, if 50% of the truck traffic moving at least 750 miles went by rail instead, greenhouse gas emissions would fall by roughly 26.2 million tons. Therefore, freight rail is the most sustainable mode of transportation as it emits less CO2 than other modes.

Increasing Government Expenditure on Rail Infrastructure along with Private Rail Operates to Boost the Demand

Rising government expenditure to revamp railway infrastructure is anticipated to increase the demand for wagons in the coming years. For instance, in December 2022, the Indian government announced the procurement of 90,000 wagons over the next three years for transporting coal, cement, and food grains at the cost of USD 3,746 million, providing a significant boost to the wagon manufacturing industry.

Similarly, in November 2021, the U.S. government, under the Bipartisan Infrastructure Law, announced a budget of USD 102 billion in total rail funding, including USD 66 billion from advanced appropriations and USD 36 billion in authorized funding. Hence, in the long run, given the private rail freight operators and the government's efforts to improve the economy and its ambitious plans to improve infrastructure, demand for wagons and containers is expected to remain strong.

In January 2023, Renfe Mercancías, a railway company based in Spain, announced an investment of USD 132.65 million to acquire new electric locomotives, wagons, and platforms to decarbonize rail freight transport. The operator will also focus on digitalization and new technologies to increase performance & services. The contracts will be awarded in the first half of 2023 and are expected to be completed by December 31, 2025. The Spanish operator will acquire high traction electric locomotives running on 100% renewable energy and wagons carrying road semi-trailers. The projects also include the installation of onboard ERTMS and noise reduction systems for wagons as well as the introduction of optimization of processes and services in the freight transport centers. These projects aim to use modern rail systems and solutions and improve tracking and identification of the wagons to create a more sustainable, efficient, and competitive transport sector. 30% of the total investment will come from the Support Program for Sustainable and Digital Transport that the Transport Ministry is implementing under the Recovery, Transformation, and Resilience Plan through the NextGenerationEU instrument.

RESTRAINING FACTORS

High Production Cost of Wagons is one of the Major Factors Restraining its Market Growth

High capital outlay is one of the major factors challenging the freight wagon market growth. The cost of construction & maintenance and overhead expenses are high as compared to road or water transport.

Steel is a primary raw material to manufacture wagons, but high input costs have prompted a few manufacturers to cut down on their production. Moreover, supply chain constraints due to the COVID-19 pandemic and the Russia-Ukraine war have significantly contributed to high steel prices. Global steel prices have increased by 29.5% in January 2023 amid declining production, resulting in a spike in the cost of construction.

SEGMENTATION

By Wagon Type Analysis

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Hopper Segment to Hold Larger Share Backed by its Higher Adoption Rate for Transporting Various Goods

Based on wagon type, the market is segmented into closed wagon, open wagon, hopper wagon, flat wagon, tank wagon, car wagon, refrigerated wagon, and special purpose wagon.

The hopper wagon segment is expected to hold a significant market share in 2022. Hopper wagons transport loose bulk materials, including coal, ore, steel, and cement. They are also suitable for carrying weather-sensitive goods such as grain, corn, and soya. The demand for covered hoppers is attributed to the expansion of infrastructure sectors and the need to switch to rail transport in urban areas to control emissions and avoid road congestion.

Tank wagon segment is anticipated to grow at a significant rate during the forecast period. A tank wagon is designed to deliver liquid fuels, such as diesel, gasoline, petroleum oil, and hazardous chemicals from fuel terminals to rail stations to reduce the chances of leakage and enhance safety. Growing demand for gases and liquids from the energy sector is anticipated to support the need for tank wagons. For instance, in September 2021, the U.S. Department of Agriculture announced an investment of USD 464 million in renewable energy infrastructure to expand economic development.

The bespoke tank wagons are used for transporting biomass to power homes & business sectors with renewable electricity. Biomass comes into the ports and is brought to the power station by rail, as it is more efficient than road transportation, reducing carbon emissions by 80%.

Flat wagon segment held a market share of 8.42% in 2022 and is anticipated to clock a market share of 8.89% in 2030, growing at a CAGR of 4.80% over the forecast period.

Flat wagons transport goods such as machinery, equipment, lumber, containers, rail ties, and steel coil sheets. Due to their low maintenance costs and long service life, these wagons are suitable for transporting goods in all weather conditions.

By Payload Capacity Analysis

Payload Capacity Above 60 Tons to Witness a Higher Market Share

Based on payload capacity, the market is categorized into below 60 tons and above 60 tons.

The wagons of below 60 tons are used for transporting light to medium-weight goods such as cement, iron ore, medical equipment, and chemicals, among others. Wagons with a payload capacity above 60 tons are used for transporting food grains, commercial wagons, military & defense equipment, coal, iron, and construction equipment, among others.

The new launch of robust freight carrying wagons with higher payload capacity will support the above 60 tons’ segment. In November 2022, Ermewa announced the delivery of 200 newly built wagons to transport grains to Rail Cargo Logistics.

The two hundred newly delivered grain wagons have a loading volume of 95 cubic meters and a loading capacity of 69.7 tons, designed to ensure high safety and durability. They are all equipped with future-proof components. These include the GPS device and the ability to convert to Digital Automatic Coupling (DAC). The design of the wagon makes it ideally suited for transporting various agricultural products throughout Europe.

REGIONAL INSIGHTS

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The North America market dominated the market in 2022 with a market size of USD 5.75 billion in 2022. To mitigate supply chain issues and ensure a cost-effective mode of transportation, the U.S. and Canada are shifting to freight wagons. Additionally, the rapid expansion of the e-commerce sector in the region will support market growth over the forecast period.

Europe held a significant market share in 2022 and is expected to continue its dominance throughout the forecast period. The region's market growth is driven by several manufacturers expanding their manufacturing facilities to increase market share. For instance, in November 2022, Walbo Group, a Czech-based rail equipment manufacturer, launched the production of intermodal wagons and CargoBeamer, an operator in combined transport, that started its freight wagon production in early 2023.

Asia Pacific is expected to register a significant growth rate. Increasing government expenditure on rail infrastructure is expected to support the market growth in Asia Pacific. For instance, the Indian Railways announced an investment of over USD 12 billion to develop and procure assets. Additionally, the government announced the procurement of 90,000 wagons over the next three years. Government authorities in the region are developing dedicated freight corridors to improve the movement of industrial raw materials & finished goods. These corridors are also helping to improve freight traffic across the industrial areas.

Increasing investment opportunities in the transport sector in Latin America and the Middle East countries, including Saudi Arabia, South Africa, and Brazil will support the growth of the wagon market. For instance, in April 2022, the African government implemented the Free Trade Area, leading to an increase in intra-African freight demand of around 28% by 2030. This free trade agreement, in turn, will support the adoption of freight cars or wagons.

KEY INDUSTRY PLAYERS

Companies are Focusing on Mergers & Acquisitions and Securing Wagons Orders to Gain Competitive Edge

Companies are securing strategic partnerships with the government, investment management firms, freight companies, and cargo operators to strengthen their market share. Moreover, these companies are investing in energy-efficient commercial freight trains to cater to the increasing demand for aggregates and infrastructure sectors in emerging countries. For instance, in October 2022, United Wagon Company signed a contract with JSC Tikhoretsky Bakery Plant, a leading milling company in Russia, to supply a batch of new-generation box cars. The box car, Model 11-6874, with a high payload capacity of 73 tons, is an efficient transportation solution for bulky, lightweight or small-sized heavy loads. Similarly, in May 2022, Titagarh Wagons Ltd. received an order of USD 955.09 million from the Indian Railways to manufacture and supply 24,177 wagons. The order will boost the company's revenue and strengthen the company's position in the global market.

List of Key Companies Profiled:

• Titagarh Wagons Ltd. (India)


• FreightCar America (U.S.)


• United Wagon Company (Russia)


• Jupiter Wagons Limited (India)


• Texmaco Rail & Engineering Ltd. (India)


• Jindal Rail Infrastructure Limited (India)


• ELH Waggonbau Niesky GmbH (Germany)


• NYMWAG CS a.s. (Czech Republic)


• GWI UK Holding Limited (U.K.)


• WH Davis Group of Companies (U.K.)


• AmstedMaxion (Brazil)

KEY INDUSTRY DEVELOPMENTS:

• January 2023 - Škoda Group received orders for nine sleeping coaches and eight freight wagons from, VR Group, a Finnish state railway company, for a total of USD 54.4 million and the freight trains will be produced at the Finnish production site of Škoda Group in Otanmäki and will be available by the end of 2025. The contract also includes an option to purchase an additional 30 freight wagons for cars and 30 sleeping coaches.


• January 2023 - Motilal Nehru National Institute of Technology launched lightweight and rustproof freight wagons for the Indian Railways to transport salt. The rustproof wagon would be made of glass fiber reinforced polymer, a lightweight material lighter than the presently used material. The wagons would be used for transporting salt, which is used in industries & households.


• November 2022- WH Davis Group of Companies received a contract to build 30 new biomass wagons from Drax, one of the U.K.'s biggest renewable electricity generators. The upgraded high-capacity wagons manufactured by WH Davis will help further to reduce Drax's carbon emissions by 25%, thereby making its biomass supply chain more efficient and resilient.


• November 2021 –Freightliner, a subsidiary of GWI UK Holding, delivered the first 40 of 230 new Freightliner FFA-G wagons in the U.K. from Poland, representing the next generation of energy-efficient, 40ft intermodal wagons. The new FFA-G wagon is manufactured by partners Greenbrier Europe and Wabtec Axiom Rail. The FFA-G wagon is designed to carry two tons lighter per platform, driving significantly less weight per train. The modern low-track force bogies ensure significantly reduced noise levels and minimize track damage.


• August 2020 - CRRC Shandong received an order for 842 new wagons from the UAE-based Etihad Rail. The wagons will transport containerized and bulk freight such as petrochemicals, aggregates, construction-related materials, and industrial and perishable goods.

REPORT COVERAGE

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The report provides the freight wagon market analysis and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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