Article | 2016 Infrastructure Outlook

Article | 2016 Infrastructure Outlook
4th December 2015 Atheneum Team

What crucial trends are driving the industry?

Rapid urban growth is becoming an unbearable problem for many cities, especially in Asia, Latin America and Africa.
It affects the function of the cities related to their social and environmental conditions and it hampers the economic development that is necessary to step out of the vicious circle of donor-dependency.

Big percentages of the countries GDP are actually lost in the traffic congestion of their capital cities.
While growth rates in many parts of the world are slowly decreasing, in Africa, and some parts of Asia, the accelerated growth will continue beyond 2030. Cities that already have 15 million or more inhabitants today, will double their size in about ten to fifteen years.

In 2030, we will see cities with 30 or even 40 million inhabitants in one urban agglomeration and all of them need access to opportunities. It is difficult, if not impossible, to gauge the kind of planning effort required, especially regarding transportation.

Europe, the U.S. or any part of the northern industrialized world have never experienced a growth scenario like this, and above all they had about 100 years to set up an infrastructure to base their urban future upon.

The focal points of urban growth today do not have that much time. Brushing up the existing infrastructure for motorized traffic in order to be able to serve a population of 40 million people by 2035 is not a viable option.

Public transport is the only solution to manage this extremely accelerated urban growth. How to quickly implement a working public transport system with the huge required capacities is the biggest challenge at hand.

What market segments will experience the most growth and why?

The geographic coverage of the urban area or simply put, the level of geographic access to public transport is a central issue to solve.

This issue is getting increasingly difficult to address because many of the affected cities are not only facing the fastest urban growth on earth, but also the fastest sprawl, which makes the coverage of the spatially growing urban area almost impossible.

Now in order to generate economically successful public transport, urban planning will need to supply the critical mass of users in order to achieve it. This can be done by implementing new Paradigms of urban development.
The magic word in this respect is Transport Oriented Development (TOD) which generates high density residential development along the main transit lines. This is highly attractive for private investors, who usually are even willing to pay parts of the transport infrastructure themselves.

Currently the most famous example for this kind of urban development is The Hong Kong Metro System, which is generating a win-win situation for investors and transport operators respectively.
Where this is not possible or affordable, the transit network needs to be very fine grain, using a perfectly adapted mode for every condition.

The integration of these different modes needs management and reaches deep into the digital economy with umbrella-services integrating different public and non public modes in order to be more cost effective and efficient and easy to use. In many cities these smart mobility options can already be used but there are still few places where these services have reached their full potential.

What are the key challenges?

The biggest challenge is always money. Cities in developing countries need a functional, high capacity transport system in order to survive as such, but operators will normally not get any public subsidies for the system, since the affected states or cities are not able to or not willing to pay.

In these countries, donor agencies might help with the initial investments, but the operation will need to be economically viable and, at the same time, affordable for a big part of the population.
The challenge is to find ways of operating transport systems in an economically viable way. The Know-How on this can not typically come from the northern hemisphere, because there, subsidies for transport are something that is widely unquestioned and accepted.

The direction of influence will rather be reverse. It is very probable that the north will be able to learn from the south in these issues like it already is the case with innovative transport modes at the moment.
Latin America for example has developed very viable transport options like Bus Rapid Transit (BRT) or Urban Ropeways, that are slowly making their way into the established European and North-American Transit- Systems.
Operational structures and strategies for economically viable public transport will probably be the next big export story of the market.

Another key challenge is the work on the demand side.
The use of transport is subject to millions of personal decisions and these are influenced heavily by price, functionality and convenience.

The car has become so successful because it is so convenient to travel in a private space that can almost be seen as an extension of home. For this convenience people are willing to take longer or to pay more.
So for public transport to be successful amongst those who could afford to drive, it needs to beat the car especially in that point. It needs to be faster, more affordable and more convenient.