Missed part one? Read it here.
Transport underpins everything we do. Transport is also undergoing one of the most radical upheavals of any sector, and the stresses and strains of this upheaval manifest themselves in a plethora of issues and controversies, ranging from industrial disputes to radical technology development, from restructuring huge manufacturing systems to conserving scarce resources, and from integrated transport systems to individuals’ bicycles and roller skates. To manage this complexity, insightful and clear strategy and communication are key.
Madano has identified ten key issues impacting the transport sector: Decarbonisation; Air quality; Electrification; Infrastructure; Congestion, Efficiency and productivity; Disruptive technology; New entrants; Safety and services; Trade and jobs; Transparency, ethics and trust. All or some of these impact every economic sector, all organisations, and all people in one way or another. All need to be managed, in whatever sector an organisation operates.
In this article we look at the first five of these issues: decarbonisation, air quality, electrification, infrastructure and congestion, efficiency and productivity. These are five very tangible ‘hard engineering’ challenges shaping whole economic sectors today.
Reducing greenhouse gas emissions from transport has been a policy priority for nearly a decade, since the passage of the UK Climate Act and arguably before. Yet despite the reduction in UK new car CO2 emissions from 181g/km in 2000 to 120g/km in 2016 (SMMT data) recent government data showed UK transport emissions are rising, driven largely by commercial vehicle traffic volumes, much of it associated with the delivery of online products and services. The decarbonisation target remains, and as the deadline looms the action on greenhouse gas emissions will increase. Paris has banned petrol and diesel cars from 2030. London will cease buying purely internal combustion engine public transport vehicles. San Francisco’s city attorney is calling on the oil industry to be held liable for climate change. Decarbonisation will continue to be one of the major forces restructuring transport for the next twenty years, with profound consequences consumers, retailers, manufacturers, policy-makers as well as transport operators. The focus to date has been on road transport, but as the regulators wrestle with delivering reductions the big guns will swing to cover aviation and shipping; two modes of transport relatively un-touched so far.
2. Air Quality
Diesel vehicles are reported to kill 38,000 people prematurely each year due to the failure to meet official limits in real driving conditions. Chinese-made goods bought in western Europe and the US are reported to have killed more than 100,000 people in China in one year alone as a result of the air pollution associated with their manufacture. Policy instruments – like London’s new Toxicity Charge for road vehicles – are emerging to address the problem, partly in response to legal challenges. Such policies – a £10 charge for driving a dirty vehicle, for example – are blunt instruments, designed to tweak the consciousness of buyers, users and the ultimate beneficiaries (consumers, employers) of transport and force change upon them. Simply relying on charge, without mandatory vehicle change, risks delaying vehicle upgrades to new and better technology, and risks penalising drivers of older cars who are the least able to pay. Ultimately bringing air quality emissions within recommended limits will depend on significant changes to both the vehicles we drive and the way we use and drive them. Electrification, automation, and improved utilisation will all be accelerated by this pressure. This will be so particularly if attempts to pinpoint liability are successful. The London toxicity charge is payable by the driver, so is the driver liable for the pollution, and the resultant health impact? If San Francisco can hold oil companies liable for climate change, can local authorities hold you liable for air pollution in areas where your car or fleet operates?
Electrification of transport is not only a strategy for the tackling climate change and cleaning the air; it is also a strategy for motor manufacturers to sell a whole new generation of vehicles, a strategy for new entrant manufacturers to overtake existing suppliers and establish leadership positions in a global industry, and a strategy for electricity suppliers to supplant oil companies. The stakes could hardly be higher. Electric vehicle global market share has been projected by some analysts to reach 80% by 2025. However in the UK, which is relatively advanced in the adoption of electric vehicles, the market share for pure electric vehicles remains below 1%, with a market share of circa 2% for electric and hybrid vehicles combined. Many hurdles remain, which will receive intense political and commercial focus in coming years. The key ones are the provision of recharging infrastructure to enable recharging where and when it’s needed, and the development of batteries able to store sufficient energy and charge rapidly without adding weight. Depending on the success of each, it remains to be seen how much additional electric generating capacity is required to charge the vehicles despite electric vehicles being inherently more energy efficient, and how this capacity will developed.
Most infrastructure projects are also transport projects, and most infrastructural shortcomings relate to transport infrastructure provision. Better roads, railways and train lines are aspired to nearly everywhere, but the resultant environmental impacts are not. In the next 20 years in the UK, Heathrow’s third runway, Gatwick’s second runway, HS2, Crossrail, Crossrail 2, Hinkley C, Birmingham City Centre, and electric car charging points will continue to fill the news, generate controversy, suck-up resources, inform house purchasing decisions and vehicle ownership patterns, and help facilitate the transport transformation. There will be significant winners and losers. Which are you?
5. Congestion, Efficiency and Productivity
It’s well known that stagnant productivity is one of the UK’s greatest strategic challenges. When average traffic speeds in the capital city grinds to a stupefying 9 miles per hour it hardly helps. Neither does a succession of tube and train strikes. Traffic jams alone are estimated to cost the UK economy £9 billion per annum. While our airports reach record passenger throughput levels, trains reach record passenger utilisation and roads reach record traffic levels, efficiency declines and productivity falls. Time, energy and human motivation are unproductively expended, and shortcomings in mobile technology provision (think 5G and wi-fi on the move) don’t help. As our population steadily rises, the requirement to address congestion, efficiency and productivity increases, with potentially huge rewards for organisations delivering solutions.
These five issues affect all organisations, not just those directly engaged in transport. They have the potential to render your car, your fleet, your business model, and even your industry, obsolete. They are each therefore worth making a plan for. Yet many organisations treat transport as an activity outside their operation, not fully realising that their own activities require transport, their own business models are dependent upon actively managing transport, and their own risk-reward profile (and therefore shareholder value) is inextricably linked to transport. Every organisation involved in transport needs a strategy to mitigate the risks and capture the opportunities, and a stakeholder engagement plan to ensure this is achieved.
In the third article in this three-part series we will look at the next five issues: disruptive technology; new entrants; safety and Services; trade and jobs; transparency, ethics and trust. These are five ‘softer’ issues that are only just beginning to re-shape the global economy.
Madano helps clients define strategy and deliver their objectives through insight, creativity and communication in complex highly-regulated sectors including transport, energy, building and infrastructure, and healthcare.