SURVEYING the world railway industry in mid-2005, on the occasion of our Centenary, it is clear that steel wheels on steel rails still have formidable potential for further development.

In the following pages we have indulged in the luxury of looking back, with our 170-year history mapped out on p372 and the first page of our July 21 1905 issue reproduced on p375. Although the basic concept of rail transport was well established in the 19th century, the last 100 years have seen some spectacular progress, and we have highlighted some of the more significant events on pp376-77.

Record achievements abound, but it is day-to-day operations that count as rail strives to hold its place in the increasingly competitive transport market of the 21st century. As we report news and developments from month to month, our focus is inevitably on the present, but we also seek to look ahead to discern trends and explore the key technical, commercial and political issues that influence the railway business.

A decade ago, we expanded our portfolio of publications with the launch of Rail Privatisation News, now Rail Business Intelligence - our fortnightly newsletter dealing with the turbulent railway landscape in the UK. Our world railway reference book Railway Directory, is now in its 110th year of publication, and our urban supplement Metro Report, launched as Developing Metros 20 years ago, continues to prosper. We also have exciting plans for our two websites, and Taken together, we believe this portfolio offers a first class authoritative information service for the world's railway industry.

A resurgent industry

Railways have been through tough times, and not long ago there was a school of thought that sought to dismiss steel wheels as old-fashioned and unlikely to survive. How wrong that has proved, as railways revive in Brazil, expand in China and attract increasing interest in the Middle East, to give but a few examples.

In an increasingly urbanised society, commuter, metro and light rail routes play an important role in the economic and social wellbeing of cities. Not for nothing do property developers choose locations with easy access to rail routes. Regional railways too have witnessed a revival in many countries, although funding remains a contentious issue.

At the other end of the spectrum, heavy haul railways play a vital role in the world economy, hauling millions of tonnes of coal, iron ore and other raw materials to ports, power stations and processing plants. And since the launch of the Shinkansen in 1964, high speed railways have helped to revitalise the inter-city business.

Yet rail has no divine right to exist. Both freight customers and passengers expect standards of service that match their experience in other areas of life, and a production-led industry cannot compete with businesses whose sole focus is the customer. Too often have we heard lip service from railway managers that the customer is king, only to find that in practice service and operating standards are sloppy and undemanding.

The need to keep up with, and conquer, competition from rival modes is all-embracing. Competition starts with attracting the best staff, and railways must recognise that they are losing engineering and managerial brain to what are perceived as more attractive industries. There is evidence of a serious loss of expertise in front-line operating skills, and the need for training is greater than ever.

We are encouraged by recent initiatives such as Errac's plan for a European Railway University, due to be launched within the next two years. Similarly, there seems a brighter future for railway engineering in the UK, with the relaunch this year of the MSc course in Railway Systems Engineering & Integration, which is moving to the University of Birmingham. And we are hopeful of progress with the developing EURNex network of 66 European institutions dedicated to railway research, co-ordinated by the Technical University of Berlin.

This renewed impetus in research may perhaps be the key to what Errac Vice-Chairman Manuel Pereira describes as 'a step-change in technology' which he believes is needed if Europe's railways are to bring about the EU's vision of a 40% increase in the number of passengers and a 70% increase in freight volumes by 2020 - which would give railways market shares of 12% and 15% respectively.

But the long timescales envisaged for these research initiatives are indicative of another real threat to our industry - railways still take far too long to react to market opportunities. While high speed trains have brought about a dramatic shift in rail's position in the European inter-city market, the threat from low-cost airlines is real, immediate and difficult to counter, not least in eastern Europe where Ryanair and easyJet are expanding aggressively. Purchase of long-distance international rail tickets compares poorly with the ease of internet booking offered by low-cost airlines. The RailTeam alliance of high speed operators proposed earlier this year by SNCF Executive Vice-President Guillaume Pepy cannot come too soon.

Europe will continue to be a continent of change. The EU policy of using competition to drive up service standards may ultimately lead to the disappearance of today's national operators as we know them, but the process of managing technical change is being made more difficult by the proliferation of organisations. The nascent European Rail Agency will have to grow into a leading role, while the UIC will need to adapt and work with its new partner.

Investment challenge

Apart from the ever-present need to raise staff productivity, perhaps the most critical issue is to reduce the capital intensity of the industry. Bob Blank, Director, Research & Tests, at Norfolk Southern, told the Eighth International Heavy Haul Conference in Rio de Janeiro last month that 'railways are the most capital-intensive of the major industries'. While research in North America is geared towards this objective (p433), the urgency is less appreciated elsewhere.

With 360 km/h commercial services already planned by East Japan Railway, perhaps 400 km/h is not that far off, but justifying higher speeds in business terms must await further developments. And maglev? The Transrapid installation in Shanghai may seduce transport politicians, but this expensive technology is unlikely to replace steel-wheel technology on any significant scale.

Driverless metros are now widely accepted, and it can only be a matter of time before the technology is adapted for main line use. Apart from anything else, human error can be eliminated at the operating level. To quote Blank again, 'the world's railways have a stellar safety record', and we have every confidence that the future will see the number of significant train accidents per million train-km continue to fall.

And will railways be part of the sustainable world? Will they be able to wave the environmentally-friendly flag in decades to come? Only if they work hard at cutting power consumption through lightweight trains and energy storage systems, reducing exhaust emissions, and lowering noise levels.

We are proud that Railway Gazette has served this industry for 100 years, and acknowledge the generous messages of support and encouragement from our readers across the world (pp379-83). We are also greatly indebted to our authors and correspondents, whose input is vital to our existence. Thank you all.