Rail

Overview

L.E.K.’s broad base of experience working with the largest transport groups and public-sector organizations in the rail industry, including more than 600 projects completed using global best practices and insights, has given us an unrivaled capability to advise and bring significant benefits to our clients.

In passenger rail, we have developed deep expertise in franchise and concession bidding. Building on a significant role supporting the British government during rail privatization in the 1990s, we now deliver tending-winning support to clients around the world in commuter, regional, intercity and high-speed markets. This includes advice to bidders for franchises and to government agencies that design the contracting framework, as well as regulatory litigation and expert witness support.

We provide rail freight operators and users with strategy development, and transactional and regulatory support, and assist government agencies with the development and evaluation of policies and investments designed to encourage rail freight growth. Our experience covers bulk, intermodal and general freight, including domestic and import/export movements.

We are also involved with some of the world’s highest-profile high-speed railways, providing expert ridership and revenue forecasting, commercial strategy and business case support, and program management support. We use state-of-the-art customer research techniques and travel data sets to develop guidance on train services, fares, revenue management, ancillary revenue and marketing strategies.

We offer rail operators forensic analysis of revenue trends in order to support claims in the event of force majeure, infrastructure failure, industrial disputes or other disruptions. Applying a combination of transport economics, rail industry frameworks and advanced statistical techniques, we assess losses to the standard necessary to support our clients in legal and contractual dispute processes.

For rail network infrastructure managers, we provide cost and efficiency advisory services, from performance benchmarking to shared-use studies to best practice identification, on major projects such as the development of new high-speed rail infrastructure. We support regulatory processes by providing advice on efficient levels of expenditure, the commercial aspects of asset management policies, charging regimes and performance incentive mechanisms.

In rolling stock, equipment and components, we work with leading manufacturers and original equipment manufacturers on a range of market development, demand forecasting, opportunity screening and rolling stock financing issues. Our detailed understanding of underlying passenger and freight demands puts us in a leading position to help rolling stock manufacturers identify market and demand trends as well as develop equipment and servicing strategies to capitalize on industry developments and international growth.
 

Key questions and challenges

Our rail industry specialists possess a deep understanding of the key business challenges in today’s rail markets, and encourage our clients to explore a few key questions, such as:

  • Which are the most attractive rail markets to operate in?
  • How can we grow rail’s share of the transport market?
  • How should we position ourselves to gain competitive advantage?
  • How should we target our investment capital to generate the strongest returns and manage the associated risks?
  • How do we improve the performance of our business?
  • Should we franchise rail operations, and if so, what model should we follow?
     

Examples of our work

To learn more about L.E.K.’s work in the rail sector, please refer to these case examples:

  • Supported a transport group’s winning tender to operate a high-profile U.K. intercity rail franchise, involving premium payments to the government of £1.4 billion (net present value) over a seven-and-a-half-year term. L.E.K. provided a broad range of services in support of the bid, from prequalification through the main bid phase, including mobilization support at the commencement of the franchise. Activities included market research, revenue and financial modeling, development of bid documentation, and risk analysis supported by ongoing commercial and strategic advice.
  • Conducted a business plan review and commercial due diligence of a multinational rail freight operator. L.E.K. assessed the company’s competitive position and the growth prospects for its key country and commodity markets, validated the business plan revenue and cost forecasts, and uncovered key risks and opportunities that might impact performance. Our work culminated in an acquisition that valued the company at approximately $365 million.
  • Created a cost benchmarking study for a major rail infrastructure manager, developing regional comparisons of a broad range of both input and output efficiency metrics. L.E.K. developed a unique approach to identifying and adjusting for structural differences between regions, which unlocked a number of best practices and ultimately identified between 9% and 13% in annual cost-saving opportunities.
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