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Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him.

– Dwight D. Eisenhower

The rail industry stands at a crossroads. Once the backbone of modern transportation, rail travel faces mounting pressures from all directions.

On one hand, more people and goods than ever rely on trains to move them across the country, stretching networks to their limits, which demands expansion and rail infrastructure upgrades. At the same time, vehicle innovations could threaten rail’s long term growth prospects – as digitized and connected cars provide both comfort and privacy, and autonomous fleets offer cost-effective door-to-door freight delivery.

Rail has many advantages. It is a fast and efficient way to transport large numbers of people and goods. It is the greenest form of long distance transport. And it allows passengers space and time to be productive. But if rail is to remain a preferred choice, it must evolve rapidly.

Passengers expect seamless digital booking, reliable connectivity, and onboard services that rival airlines, and more and more their own cars. Freight companies want digital services to track and manage their goods. Trains need efficient modular designs and clean, quiet propulsion systems. Operators need to get more use out of existing (and often quite old) rail networks, all without compromising safety.

But herein lies the challenge: these innovations must come at a time when the costs of rail – material, labor, maintenance – are spiraling. That leads to fares rising, potentially making rail less competitive. Both operators and OEMs are under pressure to reduce costs while keeping networks safe and reliable.

What’s more, the pace of change must accelerate. The rail sector is understandably built around safety rather than speed. But it needs to become faster and more agile in embracing technological advancements – from hydrogen and battery-powered trains to real-time passenger apps – without, of course, compromising the rigorous safety standards upon which its reliability is built.

Rapidly building a future-proof, customer-focused, and eco-friendly railway – all while cutting costs – seems a near-impossible balancing act. But new technologies, combined with new ways of thinking, could yet deliver.

Bringing together the digital and the physical worlds

Modernizing decades-old (sometimes centuries-old) assets and infrastructure will mean bringing together the digital and the physical worlds, in some cases merging 19th and 21st century technology. This, of course, needs to be carefully managed, navigating regulatory barriers, the sheer technical challenge of integration, and the need to keep assets operational as much as possible.

In our recent Engineering and R&D trends report, we surveyed 300 senior decision-makers at global engineering and R&D-intensive companies, including (but not limited to) rail. Through their responses, we identified four overlapping strategic imperatives, each involving a mix of strategy, digital technologies, and modern skills to transform different parts of the physical organization. These range from the end product, to the processes that get it designed and made, to its environmental impact.

We will look at how each applies to rail.

1. Accelerate value through digital technologies

Firstly, new digital technologies will directly transform the entire rail ecosystem, from rolling stock to signaling systems. These can deliver rapid and widespread value, from lowering costs via predictive maintenance and optimized train routes, to boosting customer numbers and generating new revenue streams through the onboard digital services.

This change is underpinned by a raft of enabling technologies, from 5G, to AI, IoT, and software that will need to be deployed into trains and rail infrastructure, as well as the backend IT to join them up.

These enable high value digital products and services, from smart ticketing for multi-modal journeys, to predictive maintenance that learns from data across the whole rail network. They underpin digital twins of complex systems that allow route optimization, virtual training, and low-risk simulations of ideas, from new rail routes to onboard services. And those are just two examples of the many ways digital technologies will transform rail.

In our cross-industry survey, respondents said embracing digital technologies would deliver significant value to their organization, including reduced development and after-sales costs (51%), improved market share and revenue (50%), and improved customer experience and quality of the product (37%).

However, it is unlikely they can do all this alone. Companies will need to access digital talent that they are not used to recruiting and may not be available near their current locations (access to talent was identified as a significant barrier to delivering these benefits in our survey). They will also need to access technology partners who can provide the tools of transformation – cloud, data capture and analysis, silicon chips, and so on.  It is, therefore, unsurprising that 59% said they planned to solve this by partnering with engineering service providers.

2. Reduce core engineering costs without compromising quality or innovation

Second, by modernizing traditional engineering practices, companies can achieve greater efficiency across their organization.

Our survey found that optimizing core engineering to be more cost-effective was considered key to the future of engineering businesses. And, whilst reducing cost is the obvious benefit of core optimization (highlighted by 38%), nearly as many said it was essential to profitability, accelerating time to market, and as a competitive advantage.

This makes sense, given that making and deploying trains and infrastructure is expensive and slow, and rail companies are under pressure to improve both.  A new rolling stock project tailored to specific train design requirements takes roughly five years from the initial design to qualification – the same as a car took twenty years ago. But automotive manufacturers have since compressed that to two years, largely thanks to digital design, development and testing. Rail could do the same.

To deliver these cost and time reductions, rail companies must embrace new optimized design and production approaches for both new and existing product lines, like Design-to-X (design to weight, design to cost, to sustainability, etc.).

They also need to cut costs and time by utilizing the latest efficiency-enhancing digital tools. These range from those that automate physical manufacturing processes, to virtual trial environments for evaluating systems without physical setups, to 3D simulations that provide location-agnostic employee training on new equipment, to exploring how Gen AI use cases can deliver future value.

Such big technological transformations can be hard in existing factories with legacy systems and cultures. So, many companies are embracing a new type of innovative outsourcing, where designs of physical products are outsourced – not to a carbon copy of their factory in a low cost location – but to cutting-edge factories that can apply whole new approaches to making products more efficiently. These are designed around the latest technologies, located to embrace global workforces with the right skillsets, and built within collaborative ecosystems that ensure constant cross-fertilization of ideas between similar industries. In an era of rail transformation, this exposure to ideas from other digitalizing industries (and access to ecosystems of partners that can deliver such ideas to rail) will be critical to delivering rapid innovation.

Again, our survey showed that industrial companies can’t do this alone and are exploring a mix of strategies to improve their core engineering, from in-house modernization programs (65%) to partnerships with engineering service providers (67%), hyperscalers (32%) and platform providers (51%).

3. Reconcile business growth with improving the planet

Third, while trains are the most sustainable mode of long distance transportation, companies are constantly seeking ways to become greener. This includes developing more eco-friendly product designs, alongside conversion to alternative power sources, like battery or hydrogen. In our survey, 54% said sustainability was key to maintaining market share, and 100% of respondents believed the sustainability imperative would transform their industry within a decade.

These new approaches often require new capabilities outside of rail’s core skillset. Many are looking to partners to explore eco-design principles during bid and development phases, conducting life-cycle assessments to evaluate the environmental impact of rail components, and undertaking digital simulations and the design-to-X approach to optimize weight, carbon footprint, and energy consumption.

This is an area where ÎÚÑ»´«Ã½ itself is investing. We aim to deliver a 90% reduction in carbon emissions by 2040, and learn hands-on lessons from this that we can deliver for clients. For example, our Energy Command Center leverages digital technologies to manage energy consumption across all our offices in India, and has provided valuable lessons in delivering emissions reductions at scale across diverse and distributed assets.

4. Build an agile organization fit for a fast-changing world

Last but not least, the rail industry’s reliance on physical assets (like rolling stock, signaling systems and infrastructure) makes it hard to quickly adapt to change. Nonetheless, rail must learn to thrive in a faster-paced world, where it will have to make more frequent upgrades to trains and infrastructure, from upgrading to clean propulsion systems, to adding new onboard services as new technologies appear. Many trains will need to operate across borders, networks, and company boundaries – to provide users with seamless journeys, even as trains move between different physical and digital infrastructure.

Newer trains will become more modular, and with more standardized parts, to speed time to market. At the same time, they must be designed to make future upgrades easier, for example, through digitization of components so that trains can evolve through software updates to meet new needs.

Doing this may need a change in thinking. Rail companies will have to embrace concepts, like rapid digital prototyping of new designs, and agile and automated approaches to rapidly trialing non-safety critical products, such as bookable onboard ‘workpods’ where commuters can join business calls in private. Some of this work might need to tap global talent pools to bring in new skillsets and ways of working.

Companies with agile operations and access to flexible global talent pools will be better able to seize opportunities and adapt to change. Industry leaders in our survey recognized the need for more agile engineering practices, including improved responsiveness to market changes, and better access to global talent pools. Many of these ways of working may be new to rail and numerous respondents said they were using partners to improve agility, from outsourcing low value costs to free up resources (84%) to working with technology service providers to ramp up skills as needed (62%).

A rail industry fit for the future

Rail is a mode of transport that is efficient and sustainable, removing congestion from roads, reducing transport emissions, and giving drivers back the gift of time. Despite this, it must become more attractive to users – with more efficient, connected, greener, and more comfortable designs that fit around customer needs. And it must do all this whilst cutting costs.

That will require new digital technologies to be applied across trains and rail networks, engineering teams and manufacturing and maintenance facilities, and backend IT. But it will also require organizations to think differently, bringing modern agile working practices into conservative and often siloed organizations.

Our cross-industry Engineering Trends survey shows few established companies expect to do this alone – 71% told us that they intend to increase their use of outsourcing partners for engineering.

The rail industry of the future will be run by those who successfully combine the digital and the physical. Rail companies hoping to play their part in that future will need to build an ecosystem of strong partners, who understand how to combine the physical and digital worlds, in order to safely deliver that transformational change. The sector’s success depends upon it.

ÎÚÑ»´«Ã½ Engineering brings deep experience and access to ecosystems of partners, in both physical and digital domains, combined with long standing engineering expertise in rail engineering, rail digitalization, and other safety-critical industries. Contact us to discover how we can support your digital and physical rail transformation.