The railway signalling market in the United Kingdom has too few suppliers, high costs, and Network Rail does not have he procurement practices in place to benefit from its considerable buyer power. That says the Office of Rail and Road (ORR), the UK’s independent railway regulator.
The UK is working on the Digital Rail programme, a cross-industry plan to accelerate the transition to digitally run railways in order to increase rail capacity and improve network performance. Currently, the signalling market in Great Britain is valued at 800-900 million pounds per year. By increasingly adopting digital technology, the signalling market is expected to expand significantly.
Two main players
“Essentially there are only two main players in the GB market for major signalling projects, namely Siemens and Alstom, who account for over 90 per cent of Network Rail’s major signalling spend”, says John Larkinson, Chief Executive of the ORR. This while there are more than 40,000 signals on the mainline network, with 65 per cent of these needing to be renewed within the next 15 years.
The combined share of Siemens and Alstom has increased from 70 per cent in 1999-2004 to a projected 90 per cent in 2019-2024. An analysis of Network Rail’s spend on signalling consistently found that average prices were lower when projects were competitively tendered as opposed to directly awarded to framework holders. Alternative suppliers told the ORR that it is difficult to establish a business case to compete for frameworks or to develop technology without a long term or certain pipeline of work in which to recoup the investment.
