The global automotive sales hit a peak of 75 million vehicles sold in 2019. Although the turmoil of Covid-19 slowed down the sales in 2020, the market is once again inevitably accelerating with sales hitting 67 million units in 2022. This is only expected to grow as the economy recovers post the Russia-Ukraine war and continue to drive the Automotive demand. There are around 1.446 billion cars worldwide. A majority are currently in Asia-Pacific with a significant number in Europe and North America as well. 19% of all vehicles are in the United States which accounted for 289.5 million vehicles on the road in 2022. The Green Mobility Report by the World Bank estimates suggest that there will be an additional 1.2 billion cars on the road by 2030, which will be double of today's total. China has the largest fleet of motor vehicles in the world in 2022, with 307 million motor vehicles and continues to rise at a rapid rate.
Car Parc Rate, 2015-2021 (Number of Vehicles)
Further, the Covid-19 pandemic has also led to further long-term issues related to traffic congestion. While in the short term Covid-19 has slowed down automotive sales, in the long term, Covid-19 is projected to have a positive impact on the Automotive industry. While the initial impact of the COVID-19 crisis resulted in a decline, continued from pre-Covid days, the automotive sales are projected to roar back in the mid-term. Pre-Covid trends that have been long in coming point to significant changes ahead post Covid-19. The changing consumer rhetoric during the Covid-19 period are expected to continue for at least the mid-term far removed from the pandemic. For example, across Europe, more commuters are leaning towards solo transportation, opting for bike- and scooter-sharing services to avoid crowds Beyond that, the anticipated longer-term impact on mass transit systems will hamper a rebound, a business risk that Public Transport Operators cannot bear given their falling net income over the past five years. Looking forward, many technology companies and automotive OEMs are focused on entering the public transportation sector. Regardless of who the new entrants are, they have one characteristic in common: the need and desire to connect directly to end users on a digital platform. This has set the stage for new technologies to solve or alleviate some of these traffic issues not just in the public sector but also the transportation sector as a whole.
The currently available technology is a major influencer in the advancement of the automotive industry. The technology may have an impact on the vehicle design, manufacturing, aftermarket, distribution, services and other innovations of the automobile sector. The changing technology trends that emerge are having a major influence on the future of the automotive industry. This is especially true to modern approach when it comes to vehicle design. For instance, the proliferation of Internet of Things (IoT) will help in the development of connected and autonomous vehicles. One such technology driving massive change is the implementation and need for smart infrastructure and smart transportation solution. This smart infrastructure demand, alongside growing implementation of smart cities is set to transform the Transportation industry.
Rising Traffic and Road Safety Issues
According to World Economic Forum, in the Colombian capital Bogota, commuters are stuck in traffic for an average of 272 hours per year accounting for the highest amount of traffic congestion globally. However, this is not an isolated issue. Similar to Bogota, Rome loses 254 hours and stationary traffic causes and Irish Capital, Dublin also accounts for 264 hours per year. The issues are not just limited to time lost, traffic congestion also causes an upsurge in the carbon footprints of an area as prolonged stationed vehicles, fuel loss, and road fatalities caused by congestion become a bigger issue. With both ecological and economic adverse effects pertaining to traffic, intelligent transport systems (ITS) based on advanced telecommunication and information technology such as GPS and cloud service is gaining traction as an imperative asset for the transportation sector. According to an INRIX study, congestion cost US commuters more than $305 billion in 2019, that represents an increase of $10 billion over the previous year. The United Arab Emirates tops the list of most congested countries, with a total of 553 cars per km of its 4,080km road network followed by Hong Kong, Singapore and Turkey which are all rising at a rapid rate. This increased traffic congestion has led to an ever-increasing amount of road safety issues including fatal crashes.
Number of Traffic Accident Fatalities in U.S, 2015-2021
As per the WHO, around 1.3 million road traffic accidents are converted into fatalities each year as of 2021, with some countries spending 3% of their GDP towards road traffic crashes. Of the approximately 1.3 million people that die each year as a result of road traffic crashes, more than half of all road traffic deaths are among vulnerable road users: pedestrians, cyclists, and motorcyclists. Further, an additional 40 to 50 million suffer non-fatal injuries, often resulting in long-term disabilities. More than 90% of all road fatalities occur in low- and middle-income countries, even though these countries have only around 60% of the world’s vehicles. Road crashes may cost countries 2–8% of their gross domestic product. In the U.S alone, more than 46,000 people die every year in crashes on roadways. As of 2021 the U.S. traffic fatality rate is 12.4 deaths per 100,000 inhabitants. Apart from fatalities a further 4.4 million people are seriously injured and require medical attention due to traffic collisions. Traffic collisions are responsible for the highest number of deaths in the U.S. for people aged 1–54. This is further exacerbated by the significant economic and societal impact due to costs incurred for U.S. citizens accounting for roughly $871 billion in 2021. These traffic collisions cost the U.S. more than $380 million in direct medical costs alone. The U.S. has the highest amount for traffic collision deaths of any high-income country. The U.S accounts for around 50% more traffic collision deaths than similar countries in Western Europe as well as Canada, Australia and Japan. To reduce road risk, there is a need for significant commitment and informed decision-making by not just the government but also the automotive industry, non-governmental organizations and international agencies as well. This also requires citizens from many different disciplines, including road engineers, motor vehicle designers, law enforcement officers, health professionals, the media, educators, community groups and inpidual road users to be active participants of change as well. While public awareness campaigns are the forefront of this change, implementation of smart infrastructure, especially smart transportation solutions will massively improve the road safety across the globe.
Shift to Smart Cities and Smart Infrastructure
The rising amount of urbanization has resulted in the need for advanced infrastructure which has led to an increasing amount of investment in smart city projects. Moreover, urbanization has also led to the deployment of improved electrification and transportation infrastructure solutions in these cities. The need to reduce emissions are also boosting the creation of electrified building and improved transportation to meet and exceed emission reduction goals. This deployment will also accelerate the need for cost-effective technologies required for electrification and transportation for improved long-term cost benefits. In addition to this, urbanization will also allow developing countries to accelerate their technological advancement capabilities and thus create new opportunities for major technology providers to invest in these countries. These factors will lead to the deployment of smart transportation infrastructure solutions thus driving the growing use of electric cars for providing smart mobility, as well as the use of advanced connectivity solutions. The growing investments by developing countries such as India, South Africa and so on for deploying smart technology are boosting the smart cities investment as well.
India Urban Population Rate, 2010-2021
Over 68% of humankind is expected to live in cities by 2050. This has led to a complete reshaping of the urban city. Smart cities utilize smart solutions, such as the Internet of Things (IoT) and Next generation communication technology, to strike a healthy balance between human quality of life and the preservation of the natural environment. The investment into the global smart city industry is set to double, from $410.8 billion in 2020 to $820.7 billion by 2025. This exponential growth is driven by the developments in technologies such as IoT, Artificial Intelligence as well as extended 5G access and easing of government regulations on a global level. As of 2021, the top 100 cities that invested in smart innovation made up just under 28% of the spending in the smart city solutions as per IDC. However, while the growth is currently largely focused on developed countries, the investment is rapidly expanding across the developing world as well. Further, 70% of the smart city growth potential lies in cities that invest less than $1 million per year, thus showcasing the massive potential in developing countries. Globally, Singapore is the current top smart city investor, followed by Tokyo, New York and London. The U.S., Western Europe and China alone account for over 70% of the world’s total spend on smart cities. Latin America, India and Japan are experiencing significant spending growth as well. The growing demand for eco-friendly transport solutions and use of vehicles in more conscientious way has enhanced the need for smart mobility and transportation management solutions. In 2021, it was also predicted that the smart mobility market will double by 2025, owing to the developments such as smart fuel, smart vehicles and smart transportation solutions. Further, the rising need to reduce CO2 emission reduction and fuel consumption improvement solutions are driving the smart mobility application, thereby surging the smart transportation demand. Together, smart grids, along with fixed visual surveillance, advanced public transport, intelligent traffic management and connected back-office innovations, represent over 50% of the industry’s investment opportunity. This need for smart infrastructure will drive the investment into intelligent traffic management solutions as well as smart transport technology in the future.
Emergence of Smart Transportation Technology
According to a report from the United States Environment Protection Agency in 2019, the transportation sector generates the largest share of greenhouse emissions accounting 26% of total emissions globally. The deployment of smart transportation solutions, such as smart fuels and connected vehicles help in reducing the total vehicle carbon emissions and enhancing the environmental safety. The rise in population living in cities, changing government regulations as well as rising smart city investment are driving the need for developing connected vehicle technologies such as Vehicle-to-Vehicle (V2V) and Vehicle-to-Grid infrastructure (V2I). For instance, Indian government provided funding of $7.6 billion for the development of smart infrastructure and management services under the smart city initiative program over a five-year period from 2016 to 2021. Such investments and initiatives are expected to continue through the long term thus driving smart transportation implementation. Continuously rising urban population, growing road services demand, rising number of road incidents and rapid vehicle modernization are some of the key factors that drive the development of smart transportation solutions. Rising implementation of road safety technologies over the past decade are driving the smart transportation deployment forward. In addition, the Governments are taking road safety measures taking into account for the "cost-of-loss" arising from loss of life and damage to infrastructure, thus resulting in more investment into smart transportation technology.
IoT Spending in Transportation and Logistics Sector, 2015-2021
The implementation of smart transportation is not just limited to the roadways either. Smart railway is a technologically advanced approach to managing railway operations more efficiently through the sharing of rail data across rail infrastructure components such as passengers, control centers, ticketing departments, and freight. Smart railways are the integration of cutting-edge technologies such as the Internet of Things (IoT), big data, cloud, analytics, artificial intelligence (AI), global positioning system (GPS), and machine learning (ML) to improve efficiency and accuracy of rail operations. The penetration of digital infrastructure and the need for automated and autonomous rail operations are driving the demand for smart railway solutions. The majority of railways are run by government agencies, and the procurement and installation of such smart technologies are done through contracts and agreements. It carries billions of tons of freight and passengers each year, which results in the development of efficient smart rail infrastructure and technologies. According to the International Union of Railways, Asia-Pacific accounted for nearly a quarter of the total railway network (in terms of length of lines). China and India account for the largest share, with 100,000 km and 65,000 km rail networks, respectively. Regional governments in this region have made concerted efforts to "upgrade" and "revamp" existing lines in order to improve the overall efficiency of their operations. The emergence of megacities is expected to be highest in Asia-Pacific emerging markets with four of the world's existing 24 megacities are in China. Chinese planners are expected to merge nine cities in the Pearl River Delta, from Guangzhou to Shenzhen, to create a 26,000-square-kilometer urban area. This is expected to be 26 times the size of Greater London. The governments of various countries are also focusing on initiatives and implementation of regulations for the development of the smart railway solutions. In China, the government has invested $28 billion in various PPP projects for implementing smart railways. This rising investment is growing across the transportation sector.
New Era of Transportation and Traffic Management
Transportation management system is a part of enterprise resource planning which is a subset of supply chain management through which enterprises are able to plan effectively for in- shipment of route planning documentation and others. Transportation management allows users to track freight that’s on the road and even receive alerts to any transit exceptions or unforeseen delays from one location. The adoption of digital solutions from connected warehouses through to new mileage delivery services ultimately results in increased deployment of transportation management systems. This is resulting in the transformation of the old industry into an exciting place to drive change in community development. The rise in traffic across the world has led to a need for transportation management solutions to be deployed. Increase in demand for consumer goods leads to a greater requirement of trade and transportation. Increase in volume of trade goods will have a direct implication on the number of transportation management solutions & services. Advancement in adoption of cloud and IoT applications in planning and execution for instance according to the World Economic Forum, digitalization in the logistics industry could unlock a USD 1.5 trillion opportunity by 2025 and the Internet of Things (IoT), big data, and Artificial Intelligence (AI) and their predictive capabilities allow smarter and more efficient transportation operations.
Integration of the latest technologies such as blockchain and artificial intelligence, to improve transportation management system capabilities is one of the most recent and popular trends. The increasing preference for cloud-based, anti-theft GPS and IoT-enabled solutions to provide transparency and security is pushing the use of sophisticated transportation management systems. The introduction of AI-enabled, self-driving trucks, as well as the continuous development of 5G networks, are expected to change the transportation industry and create new potential for market growth. The desire for more agility in transportation and logistics operations that help businesses create improved customer experiences is being driven primarily by digital transformation in the industry. As part of the digital transformation trend, the majority of companies are adopting a new set of digital technologies, generating unprecedented prospects for operational efficiencies, sustainability, new business models, and richer consumer experiences. Growing technological integration in the transportation sector has generated unprecedented prospects for operational savings, sustainability, new business models, and enhanced customer experiences. For example, according to the World Economic Forum, digitalization in the logistics industry can create a $1.5 trillion opportunity by 2025.
Digitalization Investment in Transportation and Logistics Sector, 2015-2021 ($Bn)
The Internet of Things (IoT), big data, and artificial intelligence (AI), as well as its predictive capabilities, have resulted in smarter and more effective transportation operations and this will help to boost the deployment. AI-powered predictive analytics can assist transportation service providers in optimizing route planning and delivery timetables. Furthermore, the technology-based strategy provides increased asset performance through timely maintenance, resulting in fewer failures. Thus, digital innovation has expanded the relevance and presence of the Transportation Management System, transforming an age-old industry into an exciting location to create change for the betterment of society. The continuing digital transformation in the transportation industry is likely to drive the demand for Transportation Management System, with the promise of enhancing productivity performance by enabling innovation and lowering the prices of a variety of business operations. The rising usage of vehicles will result in increase in parking issues worldwide. This can be dealt with the introduction of advanced parking management system (APMS) and other transportation management solutions. APMS helps drivers find parking spots quickly and easily, thus enhancing the visitor experience. In a similar vein, Smart transportation systems also allow city and transportation managers to have the ability to improve the traffic control capability and provide improved routing for emergency and law enforcement personnel responding to incidents, as well as commercial vehicles which are delivering goods. This will result in increased need for Transportation management solutions globally.
The rising globalization, hyper population growth and the need for improved travel convenience have all contributed to the need for an efficient transportation system. The rising use of advanced smart transportation solutions are assisting in the resolution of various transportation infrastructure problems. The applications and changes to the system derived from these technologies are greatly enhancing user experience and more technological innovations are expected in the coming years. Smart transportation systems will be influenced by ongoing trends towards integrated logistics, globalization, and a focus on information and communication technology. Increased focus on the safety and security features of intelligent transport system (ITS) is driving the demand for Transportation Management and Smart Transportation Systems. Smart vehicles and applications that use road sensing are widely used across roadways, railways, seaways, airways, and intermodal transportation to enhance safety and commuter experience. The incorporation of intelligent technologies enable extensive opportunities through the unrestricted and smooth mobility capabilities as well as improvements offered to driving efficiency, which may increase need for transportation management solutions. Disruptive technologies such as advanced traveler systems, advanced vehicle control systems, and analytics are also expected to drive the usage of transportation management systems and smart transportation solutions across railways, roadways, and other verticals. The transportation systems industry is experiencing a surge in demand as a result of the introduction of electronic access, mobility management, traffic sensors, and displays to efficiently monitor the system. The proliferation of smart vehicles on smart roads primarily contributes to improved communication, increased safety, and advanced infrastructure that automates the overall management of control systems. Growing awareness among commuters of how to effectively manage, monitor, and streamline their travel, as well as declining congestion and traffic management, may have a positive impact on transportation systems growth in the coming years.
In 2021, more than half of the world's urban population lives in Asia, where some countries, such as India and China, already have over a billion people living in cities. North America, Europe, and the Middle East are the other regions with relatively high urban populations. Increasing urbanization is a sign of the growing complexities in cities around the world, with transportation needs being one of them. One of the major challenges that the transportation markets in these regions face is resolving these complexities. Technological advancements have resulted in a significant shift in operational efficiency. Today, the Internet of Things has made developing connected networks feasible in nearly all major operating sectors. Most transportation-related complexities have been resolved as a result of the integration of this transportation system. The increasing growth rate of megacities around the world, as well as numerous technological innovations, are expected to create a slew of new opportunities and expected to boost the need for improved transportation infrastructure which will be alleviated through the integration of smart transportation and transportation management solutions
Mr. Venkat Reddy
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