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The global railway cyber security market size was stood at USD 9.18 billion in 2020. The market is projected to reach USD 9.77 billion in 2021 to USD 16.72 billion in 2028 at a CAGR of 7.97% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of -8.2% in 2020 as compared to the average year-on-year growth during 2017-2019. The rapid increase in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
Railroad cyber security is a suite of commonly used solutions or services to protect railroad-related networks, systems, and programs from digital attacks. Cyber-attacks generally focus on altering, accessing, or destroying railroad-related information due to unauthorized use. Rail infrastructure and related solutions have been integrated with innovative digital technologies to achieve operational efficiency in recent years. Moreover, the growth of Internet-based systems in the railway industry is impacted by increasing urbanization, smart cities, intelligent transportation, and intelligent rail management. Data protection is a significant concern for the railroad industry as railroad infrastructure, and related systems send data points to run railway operations. Additionally, the number of cyberattacks on railway networks has increased, which is a crucial factor in the market's growth.
Factors such as increased demand for passenger and cargo capacity, an increasing number of railroad projects worldwide, and a growing number of railway cyberattacks are expected to drive the growth of the railroad cyber security market. However, high installation costs hinder market growth. On the contrary, strategic partnerships with rail operators and service providers, and improvements in rail infrastructure in developing countries, provide market participants with favorable growth opportunities.
Declined Production and Sales of Rail Vehicles and Reduced Demand of Freight Trains Amid COVID-19 to Hamper Market Growth
With the outbreak of COVID-19, major railway component manufacturers/solution providers have announced that they will discontinue production/service due to a decline in demand-supply chain bottlenecks. The need for mass transit and rolling stock will diminish, further impacting the delay in deploying cyber security projects on the rail. In addition, R&D budget allocation is expected to be significantly impacted and will hinder the development of innovative railway development. Demand for cyber security solutions for railroads is primarily proportional to government budgets and demand from railroad operators. The ongoing COVID-19 pandemic significantly reduced the production and sales of rolling stock in 2020. This decline greatly affected the railway cyber security market as the prominent demand for freight trains has declined in 2020.
Rail traffic around the world was heavily influenced by COVID-19. According to Deutsche Bahn, the use of long-distance and local trains has been reduced to 15% of average demand during the coronavirus restriction period. Due to freight loss, freight trains used up to about 70% of their standard capacity. The pandemic has also delayed some rail projects, especially in India, where the duration of restriction was very high. Companies such as Alstom and Thales have reported significant revenue losses in the rail business due to the COVID-19 pandemic. Pandemics are expected to have short-term implications. However, the rail industry is expected to recover over the next five years and show strong growth. Development can be accelerated by significant investments in Ultra-High-Speed (UHS) and High-speed (HS) rail infrastructure.
Overall, the cost of railway solutions such as management systems has minimized the impact of COVID-19. Nevertheless, the emergence of the second and third waves of COVID-19 is expected to impact railroad cyber security spending due to the disruption of railroad operators' earnings.
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Increasing Number of Cyber-attacks and Data Leakages Fueling the Market for Railway Cyber Security
Modern railroads are equipped with advanced systems that require an active internet to regulate operations by sending and receiving signals to and from control stations. Therefore, if a hacker discovers a breach, it makes it easier to hack the system and makes the network vulnerable to attack. For instance, in 2016, Network Rail U.K. was attacked by hackers four times a year. This attack caused minor damage to the entire system, but cyber-attacks are becoming more common. Such cyber-attacks created a demand for secure and efficient rail systems with cyber security solutions and guaranteed significant growth over the forecast period.
Furthermore, the market for railway cyber security solutions, products, and services is fueled by a rise in data breaches or data leakages. Automated and sophisticated cyberattacks are becoming more common as technology advances. As cyberattacks get more sophisticated, railway operators worldwide adopt cyber security solutions and services to combat them. For instance, in May 2021, SNCF announced the launch of a prototype for an autonomous train in France in partnership with Alstom, Bosch, SpirOps, Thales, and the Railenium Technology Research Institute. Cyber security is a crucial problem for autonomous trains, and consortium partners have been collaborating with ANSSI (Agence Nationale de la Sécurité des Systèmes d'Information), the French national cyber security body, from the project's inception. In addition, in 2020, Alstom invested USD 7 million in Cylus, an Israeli cyber security firm, to deliver the best-in-class cyber security solutions for the rail industry.
Government Initiatives for Smart Railways and Rise in Demand for Freight & Passenger Capacity are Expected to Propel Market Growth
Smart cities are emerging due to the increased urbanization around the world. Governments worldwide implement many smart city initiatives to improve transportation infrastructure and speed up public transportation operations. For instance, the Indian government planned in March 2020 to build 100 smart cities in the following several years. To accomplish its Smart Nation vision, Singapore's government is adopting digital technologies in transportation. Since transportation is the most crucial foundation of a country's economic development, these smart city efforts are expected to drive market growth.
The deployment of smart railway systems requires collaboration among various stakeholders, including telecommunications companies, infrastructure providers, service providers, manufacturers, government agencies, and user organizations. Governments use Public-Private Partnership (PPP) models, which allow private sector enterprises to join in government-led smart railroads deployment and funding programs. These government initiatives will promote market growth over the forecast period.
Furthermore, the railway sector has seen substantial growth in passenger ridership compared to other forms of public transportation owing to its fare frequency, overall commuting length, and expanding integration of high-end technology to obtain increased safety and comfort. Passenger rail travel has increased steadily over the last decade in terms of million passenger-kilometers. Also, China, India, and Japan are gaining traction in terms of million passenger-kilometers.
High Installation Cost of Cyber Security Services Inhibiting Market Growth
The high deployment cost is one of the main constraints in the rail cyber security market. In Brazil, South Africa, and India, inadequate infrastructure makes deploying various solutions and services challenging. Land acquisition for railway transportation projects is expensive, requires government approval, and is subject to PPP (public-private partnership) agreements. Similarly, every industry is adopting IoT, including rail systems that require massive networks. As a result, delays in infrastructure construction limit the deployment of modern technology and solutions, posing a barrier to the implementation of railway cyber security.
The initial cost of deploying a cyber security solution is high. Deploying advanced technologies such as field-level equipment setup, old infrastructure replacement, predictive maintenance, artificial intelligence, big data, cloud computing for light rail vehicles, end-user transmission network setup, new and existing Management requires a significant initial investment. Rail authorities are also very concerned about the high operational and maintenance costs after deployment. In addition, the limited budget of railroads is hampering the use of advanced railroad technologies and solutions by government and private stakeholders. Therefore, the high initial cost of providing a cyber security solution is expected to slow the railway cyber security market growth over the next few years.
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Infrastructural Type Segment Holds the Largest Market Share
Based on type, the market is segmented into infrastructure and on-board.
The infrastructural segment dominated the market with a revenue share of more than 55% in 2020. Massive connected infrastructure, such as railway flagging, passenger data frameworks, platform management frameworks, ticketing frameworks, and various other frameworks are all included in the infrastructure segment. Most platforms for previous railroad frameworks are equipped with the above features, which raises the demand for cyber security in the infrastructural segment.
The on-board segment is expected to emerge as the fastest-growing market segment during the forecast period due to increasing demand for cloud-based services, analytics, and mobile internet technologies in developing countries. With the rapid growth of big data applications, increasing complexity is also expected. The growing data pools, new technologies, and the constant need to optimize costs will drive the on-board segment market during the forecast period. The on-board segment accounted for 43.60% market share in 2020.
Network Security Segment Holds the Largest Market Share Due to High Efficiency
The market is divided into network, application, data protection, endpoint protection, and system administration based on security type.
The network security segment occupies the largest market share in the market. The network security segment accounted for 33.33%. Railway network security regulates and automates all traffic by utilizing real-time data and high-speed communication links among rail networks, trains, and other rail facilities, allowing for centralized rail network supervision. This system has several functions, including traffic planning, maintenance assistance, and operation management. Moreover, the network security system also works on disaster management and cyber-attacks. Hence, all these features are propelling the growth of the railway network security segment over the forecast period.
The application security segment will have high growth in 2020. The application security segment accounted for a 20.81 % market share in 2020. The segment will show positive change during the forecast period due to the high usage of application platforms in railway sectors for ticket booking and other use. Hence this segment will offer lucrative growth opportunities in the coming years.
The data protection security segment is projected to register a significant CAGR of 8.8% during the forecast period. Demand for data protection security in railway is expected to rise as the railway sector worldwide is taking important initiatives to protect the privacy of passenger data. The railway sector focuses on encrypted technologies to protect passenger data from cyber-attacks.
Asia Pacific Railway Cyber Security Market Size, 2020 (USD Billion)
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The Asia Pacific market accounted for USD 3.57 billion in 2020 and is projected to reach USD 6.70 billion by 2028, at a CAGR of 8.36% over the forecast period. APAC will lead the market with a revenue share of over 35% in 2020. Rapid urbanization and population growth are important factors driving the expansion of rail networks and, as a result, the building of urban rail and mainline infrastructure in the Asia Pacific. Hitachi Ltd., Huawei, Toshiba, and Tech Mahindra Ltd. are significant participants in the Asia Pacific. Further, increasing sophisticated technology penetration, rising country GDPs sustained growth, and developing economies are the major influencing factor for the region. China, Japan, India, and the Rest of Asia Pacific are potential markets covered by Asia Pacific. China is estimated to dominate the market in terms of share and growth rate among all countries during the forecast period, followed by India, Japan, and the Rest of Asia Pacific. The expansion of this infrastructure will drive this market in the region. Railway management systems, which may get hacked for data breaches, are critical to cyber security. China and Japan have the region's most advanced rail infrastructure.
Europe is projected to register a CAGR of 7.2% from 2021 to 2028. The European government and other private companies invest heavily in developing and upgrading railway infrastructures and modernization of railway systems. Furthermore, trade treaties have encouraged freight movement and cross-border trade between European nations, increasing the cyber security sector.
North America is anticipated to see a considerable increase in the railway cyber security demand over the projection period. The number and complexity of cyberattacks increase, increasing cyber railway security across the region. Furthermore, The Transportation Security Administration (TSA) will impose new cyber security mandates at the railroad and airline industries, together with reporting necessities as a part of a branch attempt to pressure compliance inside the wake of high-profile cyberattacks on crucial sectors. Hence, adopting advanced railway and government regulation technologies will help the market grow in this region.
The Rest of the World contributes 15.80 % due to low technology adoption and fewer rail networks. However, it is expected to grow in the future at a CAGR of 7.8%. Additionally, the Middle East & Africa will show lucrative opportunities to develop the railway cyber security market.
Improvements in Existing Product Lines, Strategic Partnerships with Railways from Major Key Players, and a Strong Focus on R&D Activities are all Expected to Boost Market Growth
Key market players such as Thales Group (France), Siemens AG (Germany), Alstom (France), Wabtec (USA), and Nokia Networks (Finland) are focusing on research and development to explore long-term growth opportunities. These companies offer a wide range of products for the rail cyber security industry, have a strong distribution network, and invest heavily in research and development to develop new products.
An Infographic Representation of Railway Cyber Security Services Market
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The global railway cyber security market report provides a detailed analysis and focuses on crucial aspects such as leading companies, product types, leading product applications, company profiles, and competitive landscape. Besides this, the report offers insights into the market trends and highlights vital industry developments. In addition to the factors above, the report encompasses several factors contributing to the market's growth in recent years.
Value (USD Billion)
By Security Type
Fortune Business Insights says that the global market size was at USD 9.18 billion in 2020, and it is expected to reach USD 16.72 billion by 2028.
In 2020, Asia Pacific stood at USD 3.57 billion.
The market is projected to grow at a CAGR of 7.97% and exhibit steady growth during the forecast period (2021-2028).
The infrastructural segment is the leading segment in this market.
Government initiatives for smart railways' growing demand for freight and passenger capacity will be the driving factors for market growth
Thales Group, Siemens AG, and Alstom are the major players in the market.
Asia Pacific dominated the market share in 2020.
Government initiatives for smart railways, growing demand for freight and passenger capacity, and adoption of advanced technologies will be the driving factors for market growth
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