LONDON--(BUSINESS WIRE)--According to the latest procurement intelligence report from Technavio, the global rail freight services market is expected to grow at a CAGR of 2.3% over the next five years due to the railways becoming an important part of intermodal transportation with approximately 20% end-users.
The research report titled ‘Global Rail Freight Services Market: Procurement Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices, and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning, and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“During the forecast period, the rail freight services will continue to be the popular mode of transportation for heavy and bulky goods such as crude oil and coal,” says lead Technavio procurement specialist Angad Singh for category spend intelligence. “In addition, rail freight has been increasingly used to transport low-cost and high-volume goods in sectors such as mining and agriculture,” adds Angad.
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Cost saving opportunities in the rail logistics market
The adoption of various cost-optimization levers helps buyers of rail freight services realize direct cost savings and enhance category management and value benefits (including reduced procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the rail freight services market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology saving aspects
Technologies such as network sensors, double-stack containerization, and smart rail grid can help improve efficiency and implement cost savings to the extent of 7% of the total category spend.
Businesses need a reliable and cost-effective mode of transportation to ship heavy materials over long distances. Rail freight services help to meet this requirement by linking manufacturing facilities to export hubs.
Optimization of procurement practices saving aspects
Optimization of supply pool segregation is critical in the global rail freight services market. Technavio analysts suggest procurement of the right contract based on volume and distance based on the type of cargo. The development of specialized rail freight wagons has enabled the transport of a wide variety of goods. Industry forecasts of 2012 had suggested that demand for rail freight will grow by 30%–35% over the next decade.
Businesses operating in the heavy material market can negotiate for better prices, as they are consistent users of rail freight services and deal with high volumes of goods.
Bundling of services saving aspects
One of the most opportunistic strategic cost saving levers in the global rail freight services market is the need for consolidation and unification of pre-press activities. Businesses require high-capacity transportation at a lower cost for transporting agricultural products from farmers operating in rural hinterlands to urban units. Rail freight services can employ intermodal freight and group trains for reducing transit time and providing door-to-door services.
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Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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