Transport investment under uncertainty

Guest Blog by Gerard Whelan from KPMG.

We are at the beginning of a new industrial revolution which will bring challenges and opportunities to our communities. This revolution will disrupt economic, social and transport needs, creating increased levels of uncertainty for those involved in making transport policy and investment decisions.

Charting a course through these choppy waters to safeguard and develop an effective and efficient future transport network will require local authorities, LEPs and transport providers to make more informed investment decisions, to stay agile to mitigate risks, and above all to confront and embrace change.

There are a number of well-rehearsed trends and potential market disruptors which could have a material impact on the size and structure of local economies. In turn these will have a bearing on the strategic narratives to support transport policy and investment decisions. These trends include:

• Technological development: The impact of technological advances on the economy, society and the environment are likely to be substantial. Key developments include: automation and digitalisation, additive manufacturing, virtualisation, artificial intelligence and blockchain technologies. Some of these changes could lead to substantial increases in productivity but some may lead to substantial reductions in employment. The way the economy responds to these changes, specifically output levels, locations of production and labour force movements, could all have important implications for the use and development of transport networks.
• Social change: Walking side-by-side with technological changes are new business models and changes in social attitudes to ownership and consumption of goods. Increased acceptance of ‘sharing’ which when coupled with automation could dramatically reduce the cost of transport and travel by improving overall asset utilisation, already car/ride sharing technologies are becoming widespread in many urban centres.
• Demographic change: Many regions are experiencing a growing population with migration shifting productive capability within and between regions. In addition, the general aging population will place increasing demands on the nation’s economic and social infrastructure and resources.
• Environmental focus: Tighter regulations on resource consumption and emissions will influence development and take-up of new propulsion technologies, potentially driving greater use of renewable energy and the way in which users pay for access to transport networks.
• New business models: The market is likely to respond to demographic, technological, social and environmental changes, creating new opportunities and ways to undertake economic activity. Potential jobs lost to automation could lead to more fragmented and diverse labour markets. The increased flexibility arising from this diversification could result in less peaked and less tidal traffic flows.
• Political landscape: The way markets respond to competing and conflicting demands for ever greater globalisation against the rise of protectionism will have important implications for economic activities and for access to international gateways including ports and airports.

No one can say for sure what will happen in the future but change is happening now and even more change is on its way. The time is right for collaboration and knowledge sharing, for testing and piloting innovations, and for being creative and agile in transport policy and investment decisions.

As transport planners, we have the knowledge, skills and experience to meet the challenges ahead by investing in and managing transport networks; aligning the decisions that we make with broader economic, social and environmental priorities.

Keep calm and be agile!