Rail infrastructure: turning plans into reality

Global transport infrastructure is under increasing pressure from ageing assets and growing demand. McKinsey estimates that an investment of just over 91 trillion euros (106 trillion US dollars) will be required by 2040 to meet global demand for new and modernised infrastructure. Transport and logistics will account for the largest share, at almost 31 trillion euros (36 trillion US dollars).

Stakeholders along the entire value chain of the rail sector can focus on five key actions to realise plans for rail infrastructure:

Redesign, build and deliver rail services

Technology, especially AI, can fundamentally change rail operations and value creation. From energy efficiency to predictive maintenance, there is huge potential if AI is utilised more widely in the railway sector.

Strengthening cross-border rail connections

Rail corridors can provide economic impetus; reduce transport costs and shorten journey times. The Ethiopia- Djibouti railway, for example, has reduced the journey time from three days by road to less than twelve hours by rail and achieved a reduction in logistics costs of around 30 per cent. Rail corridors usually also have social benefits, such as jobs, easier trade and greater regional equality of opportunities.

Utilising high-speed rail technology (HSR)

Around 81,000 kilometres of HSR are in operation; under construction or planned worldwide. HSR saves time and supports decarbonisation (CO2 emissions are only six percent of an aircraft’s and eleven percent of an automobile’s under comparable conditions). Investments in HSR also promote tourism, employment and property values.

Promoting project and investment management (capex excellence)

Realisation of railway projects takes on average 47 per cent more time than initially planned and exceeds the budgeted investment by 36 per cent. High capex quality is crucial in all project phases. Careful project planning can cut costs by around ten per cent and reduce time overruns by up to seven per cent compared to poorly planned projects.

Making good use of public private partnerships (PPPs)

PPPs can support the expansion of publicly funded infrastructure by providing private management skills and private capital. Successful investment in rail infrastructure requires strong partnerships; joint efforts and close coordination between stakeholders in terms of policy, funding and implementation models - to enable sustainable growth.