The rail sector’s changing maintenance game

The rail sector’s changing maintenance game

By Elke Eisenschmidt, Stefan Reimig, Lisa Schirmers, and Sebastian Stern

How can rail operators and OEMs benefit from the disruption brought on by digitization?

The rail sector is no exception when it comes to disruptive changes through digitization. In a sector where fleet reliability is a key lever for increasing efficiency and reducing the total cost of ownership (TCO), big data and advanced-analytics solutions, such as condition-based maintenance and predictive maintenance, represent a great opportunity to yield the next big efficiency leap in maintenance—reducing the number of failures, the amount of unplanned maintenance, and, eventually, the required level of reserve asset capacity for operators.

From a traditional perspective, this seems to be good news—above all, for rail operators. It might be positive for rolling-stock OEMs as well, which increasingly experience pressure from new entrants and heavy consolidation in the new-fleets business. Offering innovative (turnkey) maintenance solutions based on condition-based and predictive maintenance can help rolling-stock OEMs address the issue of rising competitive pressure.

Against this backdrop, and based on the findings from extensive research, we developed a new report, The rail sector’s changing maintenance game. We discuss the following in its three chapters:

  • why the sector’s maintenance game is changing or can be expected to change
  • what digitization of the maintenance regime in rail is all about and how it will affect the sector’s maintenance ecosystem and overall landscape
  • how individual companies can prepare effectively for capturing value from the new opportunities in the emerging maintenance ecosystem

In doing so, we mainly focus on the perspective of European rail operators but also include examples from around the world—and incorporate the perspective of rolling-stock OEMs where relevant.

Some of our key findings:

  • Advanced analytics are going to make condition-based maintenance an attractive lever to increase maintenance efficiency. With 10 to 15 percent efficiency gains expected, it is estimated that the global maintenance market can save up to around €7.5 billion per year by moving toward condition-based maintenance.
  • Jumping from a condition-based scheme to a predictive-maintenance one, however, requires further investments. The additional savings is not significant enough yet (currently estimated at a maximum of 10 percent) to be pursued aggressively.
  • Roles in the new maintenance ecosystem will change, as a significant share of maintenance-related activities will be automatable.
  • To compensate for a flat value pool in the new-fleets business and to address consolidation, rolling-stock OEMs will find it increasingly attractive to enter the service business, in particular, through offering fleets and guaranteeing their availability simultaneously.
  • An overhaul of their maintenance system through condition-based maintenance is a must for regional or urban rail operators and cargo operators, as increased competition will be felt most prominently in these rail segments. An efficient maintenance system is key to remaining competitive.

To prepare for these changes, a few pragmatic recommendations could help operators:

  • Defining the desired strategic target state and deriving a partnering strategy up front is key to success with respect to (condition-based) maintenance. An assessment along key parameters, such as market position, fleet characteristics, and operating contexts, can help to assess the fitness for condition-based maintenance.
  • Success in the new maintenance scheme is all about which party owns what kind of data and what they can do with it. Thus, operators and rolling-stock OEMs need to negotiate data access with one another and build the analytical capacities that enable success within their chosen operating models.
  • Operators and rolling-stock OEMs need to find a way to effectively couple and colocate rail-engineering expert knowledge and analytics power to develop powerful analytical models.
  • The entire value chain in maintenance needs to be addressed to realize impact; equipping locomotives and cars with sensor technology and building analytical capabilities is only the first step.
  • Only for business-case-positive components should a component-by-component rollout of condition-based or predictive maintenance be pursued.

Download The rail sector’s changing maintenance game, the full report on which this article is based (PDF1.21MB).

About the author(s)

Elke Eisenschmidt and Lisa Schirmers are consultants in McKinsey’s Munich office, Stefan Reimig is a consultant in the Cologne office, and Sebastian Stern is a senior partner in the Hamburg office.

The authors wish to thank Andreas Behrendt and Isabel Schwerdt for their contributions to this article.
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