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Isler India Decodes the Russia-Ukraine War’s Grip on Railway Wheels: A Supply Chain Conundrum

The global railway wheel market, initially projected to grow from $3,772.3 million in 2020 to $4,869.1 million in 2025 at a CAGR of 5.2%, faces unprecedented challenges as the Russia-Ukraine conflict significantly impacts a crucial component—forged wheel discs. Historically, Ukraine has played a pivotal role as a major exporter of these discs, essential for railway wheels.

The ongoing conflict has disrupted production and export, leading to shortages that reverberate across railway manufacturers worldwide. This turmoil is particularly pronounced in the EU market, where approximately 50% of the railway wheel market relies on imports, with the freight railcar segment, in particular, experiencing a higher degree of import dependency, historically accounting for up to 70% of this market share.

The absence of supply from market leader Interpipe in the freight railcars sector has created a substantial imbalance in the market, amplifying the challenges within the highly concentrated railway wheel production landscape, consisting of around 20 factories worldwide.

Both Russia and Ukraine, vital transit hubs for railway goods, including wheels, have witnessed disruptions in transportation routes due to the conflict, rendering the movement of wheels from production sites to customers challenging and costly.

The worldwide railway wheel market, already contending with growth projections, encounters further challenges with sanctions on Russia and export restrictions from Ukraine. These measures limit the availability of railway wheels, complicating the quest for alternative suppliers. Additionally, the global railway wheel market experiences heightened pressure from surging demand in India, posing challenges for the industry. To address shortages intensified by substantial orders for 90,000 wagons and 400 Vande Bharat EMUs, India Railways (IR) seeks international wheel and axle suppliers

Source: erail.in

This heightened demand for railway wheels globally, stemming from the need to diversify supply chains and reduce reliance on Russia and Ukraine, has exacerbated the strain on already limited supplies. The repercussions are palpable, with key impacts on railway wheel production evident:

• In India, key railway production units missed targets for coaches and locomotives due to a shortage of imported wheels from Ukraine & Russia.
• European railway operators have been compelled to seek alternative sources, turning to China, India and other Asian countries.
• The global price of railway wheels has seen a significant increase due to the limited supply.

Looking forward, the long-term consequences of the conflict on the railway wheel supply chain are uncertain, prompting potential outcomes such as:

• Increased reliance on alternative suppliers, notably from countries like China and India.
• Countries may choose to invest in domestic production, aiming to reduce dependence on imports.
• The war may accelerate the development of new technologies for producing and repairing railway wheels, including additive manufacturing.

In conclusion, amidst the undeniable impact of the Russia-Ukraine war on the global railway wheel supply chain, Isler India is a reliable source for essential railway components, encompassing pivot parts, lock plates, axles, and wheels. The company leverages its robust global manufacturing ecosystem to provide international quality products within shorter lead times, all while ensuring end-to-end transparency in its operations. Despite ongoing disruptions, the industry holds the potential for positive transformations, including increased investments in domestic production and the adoption of innovative technologies.