Global transport heading in new directions

Trans­port is cur­rent­ly under­go­ing sig­nif­i­cant dis­rup­tion, not only from trans­for­ma­tive changes in exist­ing modes of trav­el, but also because of inno­va­tions shak­ing up the sec­tor.

As Bhoopathi Rapolu, Cyient’s head of ana­lyt­ics for Europe, the Mid­dle East and Africa, says: “New tech­nolo­gies, such as drones, auto-pilot cars and remote­ly pilot­ed air­craft sys­tems, are fun­da­men­tal­ly chang­ing the dynam­ics of the mar­ket by enabling vision­ary com­pa­nies to devel­op cheap­er, sus­tain­able trans­port solu­tions.”

It’s not just con­sumer trans­port fac­ing dis­rup­tion. Increas­ing envi­ron­men­tal con­cern and chang­ing reg­u­la­tions are hav­ing a dra­mat­ic impact on the sup­ply and logis­tics mar­ket. With e‑commerce now con­sti­tut­ing a large part of the econ­o­my, ship­pers need to rework busi­ness mod­els to man­age last-mile deliv­ery.

Dig­i­tal tech­nolo­gies and the need for omnichan­nel ful­fil­ment are see­ing syn­chro­ni­sa­tion between pro­cure­ment, trans­porta­tion, ware­hous­ing, order man­age­ment and ful­fil­ment. This con­flu­ence is also dri­ving con­ver­gence across dif­fer­ent trans­port sec­tors.

On a sec­tor-by-sec­tor basis, there are dif­fer­ent stress fac­tors. The Inter­na­tion­al Civ­il Avi­a­tion Orga­ni­za­tion has pre­dict­ed world sched­uled air pas­sen­ger traf­fic will grow by dou­ble glob­al GDP growth in 2015.

Improving efficiencies

The King Abdul­lah Port is the first major deep-water port south of the Suez Canal

E‑ticketing and oth­er stream­lin­ing oppor­tu­ni­ties are improv­ing effi­cien­cies, includ­ing the imple­men­ta­tion of e‑freight. This intends to build a paper­less, end-to-end trans­porta­tion process for air car­go across the entire air car­go sup­ply chain.

The Inter­na­tion­al Air Trans­port Asso­ci­a­tion says it wants to see the indus­try move towards 100 per cent e‑freight, start­ing with adop­tion of its e‑Air Way­bill. Yet pro­grammes devel­oped to increase effi­cien­cy and cut emis­sions, from a green taxi­ing sys­tem to the Sin­gle Euro­pean Sky pro­gramme, have been delayed through a com­bi­na­tion of fund­ing prob­lems, pol­i­tics and chal­lenges from the trade unions.

In freight terms, sea has its advan­tages and is up to ten times cheap­er than air, per unit weight, accord­ing to Boe­ing. Indeed, there has been a refo­cus on the role of ship­ping with­in the sup­ply chain.

While rel­a­tive­ly small, at three mil­lion TEUs (twen­ty-foot equiv­a­lent unit con­tain­ers), the King Abdul­lah Port, the first major deep-water port south of the Suez Canal, lies direct­ly on the main Asia-Europe trunk line and can reduce East-West trans-ship­ment times by five to sev­en days. It is part of the $100-bil­lion King Abdul­la Eco­nom­ic City (KAEC) project that is also sup­port­ed by a new high-speed rail­way net­work to con­nect Mec­ca, Jed­dah, KAEC and Med­i­na, which is expect­ed to start oper­at­ing in ear­ly-2016.

There is not an ele­ment of the glob­al trans­porta­tion net­work that isn’t being affect­ed by changes in tech­nol­o­gy and demand

In the UK, Peel Ports is invest­ing £300 mil­lion in Liverpool2 to cre­ate the country’s most cen­tral­ly locat­ed deep-water con­tain­er ter­mi­nal. Cur­rent­ly Liv­er­pool can only han­dle 5 per cent of the con­tain­er ships that sail, while Liverpool2 will be able to han­dle 95 per cent, dou­bling the port’s through­put from 750,000 con­tain­ers a year to 1.5 mil­lion TEUs.

But when China’s Yang­shan Deep­wa­ter Port in Shang­hai is com­plet­ed in 2020, with 50 berths and an annu­al han­dling capac­i­ty of 20 mil­lion TEUs, it will sur­pass Singapore’s exist­ing sta­tus as the world’s largest port.

Upgrading infrastructure

Bet­ter con­nect­ed and more effi­cient trans­port net­works are the goal of most coun­tries, but in the devel­op­ing world this can still mean build­ing roads. How­ev­er, in the devel­oped world the aim is to get peo­ple off roads and on to mass-tran­sit sys­tems. Infra­struc­ture improve­ments, such as elec­tri­fi­ca­tion and mod­erni­sa­tion of rail tracks to accom­mo­date faster trains, are pri­or­i­ties in the UK, Ger­many, France, Japan, Korea and else­where.

An exam­ple is Mel­bourne, which is devel­op­ing the AUS$1.5‑billion Metro Rail Project. This will involve the con­struc­tion of two nine-kilo­me­tre under­ground rail tun­nels. Evan Tat­ter­sall, chief exec­u­tive of Mel­bourne Metro Rail, says: “Mel­bourne Metro’s five new under­ground sta­tions will direct­ly sup­port the growth of inner res­i­den­tial, com­mer­cial, health and edu­ca­tion precincts, and make cen­tral Mel­bourne an attrac­tive option for new busi­ness, gen­er­at­ing sig­nif­i­cant invest­ment oppor­tu­ni­ties and fur­ther posi­tion­ing Mel­bourne as one of the world’s most live­able cities.”

There is not an ele­ment of the glob­al trans­porta­tion net­work that isn’t being affect­ed by changes in tech­nol­o­gy and demand

The chal­lenge is trans­port invest­ment often suf­fers at the hand of polit­i­cal expe­di­en­cy. In the UK, this can be exem­pli­fied by the his­to­ry of London’s Cross­rail projects. Despite the fact that pas­sen­ger num­bers on the Tube have increased by 40 per cent in the past 15 years and the equiv­a­lent of the pop­u­la­tion of Man­ches­ter now rides under­ground in the cap­i­tal every day, the £27-bil­lion Sur­rey to Hert­ford­shire Cross­rail 2 project has yet to be approved. The delay has been put down to polit­i­cal dis­agree­ment on the exact route, agree­ing a fund­ing deal and final­is­ing the con­struc­tion timetable.

Tak­ing an overview, there is not an ele­ment of the glob­al trans­porta­tion net­work that isn’t being affect­ed by changes in tech­nol­o­gy and demand. While invest­ment in ship­ping, avi­a­tion and rail con­tin­ues unabat­ed, with new projects attempt­ing to include the lat­est tech­no­log­i­cal break­throughs, it is per­haps road trans­port that looks to be most affect­ed by chang­ing par­a­digms.

The impact of tele­coms and the inter­net on road vehi­cles can­not be under­es­ti­mat­ed. In a world that is increas­ing­ly con­nect­ed through big data and the inter­net of things, tra­di­tion­al trans­port mod­els must con­tin­ue to adapt and evolve.