Transport Equipment
Demand threatened by weak macro environment, but high backlog levels will ensure income in the short-term
Last update – December 2022
Sector rating

SENSITIVE RISK FOR ENTERPRISES
Fragmentation
Internationalization
Capital Intensity
Profitability
Strengths & weaknesses

- Pricing power since there are few manufacturers with the know-how, capable of engineering and building tailor-made transportation equipment, especially in the aircraft sub-industry
- Significant growth potential overall, but especially for the rail equipment market as governments seek to encourage green mobility
- In some cases, contracts made with governments (state-owned transportation companies), making payment more reliable
- Construction contracts are usually for several years, which allows companies to anticipate their production levels and forecast their income

- Capital-intensive sector as it is necessary to invest both in R&D and in capex and infrastructure for construction and assembling
- Highly leveraged market, with companies requiring a lot of cash during the construction period as they are only paid fully on delivery in most cases
- Vulnerable to price volatility of essential commodities such as steel and aluminum as sales agreed on a fixed-price contract basis
- The market expects precision and high quality for the finished product as any failure of a structural component, manufacturing defects or accident can have negative consequences for both the operator and the manufacturer
- Cyclical sector, with sales accelerating during periods of prosperity as transportation companies enlarge capex and vice versa
Sector overview
Subsectors
Contact
Contact Allianz Trade
Economic Research Team
Economic Research Team
Maria Latorre
Allianz Trade
Allianz Trade