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Strategic Analysis of the Latin American Rail Freight Market 

  • October 2014
  • 116 pages
  • Frost & Sullivan
Report ID: 2432014

Summary

Table of Contents

Increasing Freight Demands are Driving Market Growth

Key Findings

- 2013 and 2020, LATAM will possess approximately $ xbillion in terms of opportunity for rail infrastructure development projects, with up to x% of investment directed toward the construction of new lines, extensions, and the upgrading of existing infrastructure.
- A severe shortage of investment in fleets is causing a bottleneck; consequently, freight volumes have suffered in Chile, Colombia, and Peru.
Approximately xlocomotives are in active service, However, more than x% of all locomotives in the region have seen over x years of active service. As units reach the end of their life, the trend for refurbishment is expected to decrease significantly over the next decade.
- Overall growth in the rail sector is driven by factors such as private funding, rising freight volumes, and political stability.
- Mining-related investments of more than $ x billion are projected to boost rail revenue as rail operations are expected to meet metal and mining transport demands. Traffic from mining accounts for most of the total freight transported by rail in Brazil, Colombia, and Peru.
- LATAM is highly receptive toward foreign investment in the rail market. Changes in regulations are positioned toward promoting foreign investments through public-private partnerships.

- In the 1990s, rail freight recovery in LATAM was slow. It is recovering now, strongly bolstered by the privatization of the railways. Generally, the state is the owner of infrastructure and rolling stock; private companies are responsible for operation, maintenance, and investments.
- As the initial surge associated with new infrastructure translates into increased rail traffic volumes, Brazil is expected to be the fastest-growing rail market in LATAM.

- Brazil holds the longest track network by length; however, electrification is lower than x%.
- Although electrification is not a priority in LATAM, it will be one of the fastest-growing regions of electrified track by 2020 (along with Asia).
- As old tracks are abandoned in LATAM, the percentage of electrification will gradually increase in future.

Key Findings and Future Outlook

Market Outlook (2013)


This is a large market with a lot of potential for expansion. There has been a steady increase in rail freight volumes.
Due to the concessionaires model, competition is fierce among rail operators. The rail supply market is also heavily concentrated between x or 3 primary participants.
There have be no significant advancements in technology over the last x decades. Investments have been driven with the purpose of maintaining operations.
Local manufacturers are the preferred means of procurement.
The existing regulations are biased toward a closed market.

Future Outlook (2020)

Increased investments, the retirement of aged fleets, foreign investments, and ownership of infrastructure and fleets are expected to increase rail traffic volumes.
Aggressive competition among existing market participants and new foreign participants is anticipated.
A strong push for sustainability and profitability is expected to see the rapid uptake of asset monitoring technologies. Signalling systems and rolling stock are expected to be upgraded.
Foreign investments, either direct or through joint ventures and local production, will allow for entry opportunities for global participants.

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