Businesses that rely on trade will more likely use more affordable means to transport goods.
New York, NY (PRWEB) June 13, 2014
Due to the economic downturn, the Train, Subway and Transit Car Manufacturing industry is expected to experience a bumpy road over the five years to 2014. However, industry revenue is anticipated to increase over the period as trade flows improve, lifting demand for rail transportation higher, particularly for freight transportation. “As railway operators experience heightened demand, existing locomotives will endure more wear and tear,” according to IBISWorld Industry Analyst Brandon Ruiz. Consequently, railway operators will be more likely to replace existing models, bolstering industry revenue at the manufacturing level. Moreover, rising oil prices will also lift demand for rail transportation. As the world price of oil continues to trend higher, businesses that rely on trade will more likely use more affordable means to transport goods, bolstering demand for energy-efficient fleets. To this end, industry revenue is expected to increase at an annualized rate of 2.2% to $1.3 billion over the five-year period.
Although industry revenue is anticipated to increase over the five years to 2014, this is not indicative of a growing industry. Industry revenue is expected to grow over the five-year period due to starting at a low base from the global economic downturn. “Several domestic service cuts enacted in the latter part of the five-year period are anticipated to result in a decline of passenger services,” says Ruiz. As domestic demand for mass transit falls, industry operators are expected to experience a decline in demand for new railcars. Consequently, IBISWorld expects industry revenue to decrease 7.8% in 2014.
Continuing its historical trend, industry revenue is expected to fall over the five years to 2019 as demand for passenger services continues to decline. Moreover, industry operators are anticipated to increasingly offshore domestic operations to countries with relatively low labour costs. As a result, Mexico is expected to be a primary benefactor of this trend, as the country also benefits from the North American Free Trade Agreement (NAFTA). Although industry revenue is forecast to decline, there are potential bright spots for that will likely support revenue from falling further. For example, improving trade flows are anticipated to lift freight rail transportation.
For more information, visit IBISWorld’s Train, Subway and Transit Car Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry primarily manufactures and rebuilds locomotives and railroad cars of any type or gauge, including frames and parts. This industry includes manufacturing rapid transit cars and special-purpose self-propelled railroad equipment, such as rail layers, ballast distributors, rail-tamping equipment and other railway track maintenance equipment.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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