Cracking the global transportation challenge for future generations



With more than $14 trillion expected to be invested in global transport infrastructure projects by 2025, a new report from Strategy& – the global strategy consulting team at PwC – lays bare the need for a collaborative and tech-savvy approach to developing sustainable and inclusive transport systems. It also outlines the inherent risks for developing and developed nations alike if they fail to do so.

According to the report, “Building sustainable and inclusive transportation systems,” significant improvements in mobility, multi-modal connectivity, sustainability and safety can only be achieved with rapid evolution in transportation planning and policy techniques.

The report cites various cities that experience transportation challenges. One example is Manila, which has been facing tremendous challenges in terms of transportation infrastructure and sustainability. Manila’s streets are perpetually clogged with private cars, taxis and motorcycles. On top of this, the public transport system that is expected to help ease the transportation woes of the riding public has also been saddled with its own share of problems.

The Strategy& report explains that creating sustainable and inclusive transport systems demands a very different planning model from those that have been devised in developed countries and are currently used around the world. The model for the future will need to be far more flexible, adaptable, and well regulated. Three new concepts need to be incorporated: distributed and diversified transport systems; sharing of real time data; and pragmatic, balanced multi-modal regulatory schemes, which balance the needs of users and the economy with those of the incumbent operators.

In most cities, such as Manila, growth in vehicle ownership outpaces that of road development. Road congestion and underdeveloped road networks cause logistical inefficiencies and create obstacles to productivity. As a result, various proposals have been made to help ease congestion in major thoroughfares, the most recent of which was the proposal to ban driver-only cars along EDSA.

In terms of air transport, the Ninoy Aquino International Airport has virtually no new landing slots, and has, therefore, become a major constraint on air travel growth across the entire country.

Overcoming these challenges will require that planners take the best of the approaches and techniques they have used in the past and then rapidly develop them to better assess the wide-ranging and interrelated impacts of infrastructure on the economy and on society.

The Strategy& report outlines a “Total Appraisal” method that will help policymakers and transportation planners understand the complex welfare, fiscal and economic impacts and trade-offs that come into play and evaluate the options. And, crucially, this could help deliver the best outcomes for all stakeholders.

Daniel Hanson, director at PwC’s Strategy& in the UK, explains:

“Transportation needs are increasing all over the world and while the focus of developed and developing nations may differ, it’s clear that if these growing demands are to be met in a sustainable and connected way, a new future-focused and integrated approach is needed.

“Using a Total Appraisal approach that captures all of the various direct and indirect impacts of a project and views a project clearly and consistently through the complementary lenses of both welfare (or Benefit Cost Ratios (BCR)) and GDP impacts can reflect the true value and impact of projects, ultimately improving decision-making and outcomes for all.”

The report shows how the use of Total Appraisal, rather than a traditional BCR or financial feasibility approach, could make the difference when selecting and planning major projects, which are forecast to have substantial impact throughout the economy, on GDP and jobs, and that could pay for themselves through future higher tax revenues. Taking advantage of big data techniques, this process allows for more rigorous approaches to demand and cost forecasting.

Consequences of growth

Transport investments need to be appraised in a way that takes account of various economic, social and environmental impacts, as well as reflecting how cities will manage these issues as they grow and how they continue to interact and connect to other urban and rural areas.

This includes diseconomies of scale – consolidation of container volumes into fewer large vessels means that ship size has become one of the most challenging issues for maritime transport, while large airports, in developed and developing nations, face huge expansion costs, resulting in shortages of slots as capacity expansion becomes unaffordable. This, in turn, means that regional airports lose connections to major hubs, disconnecting poorer regions from economic growth but can also provide an opportunity for Indonesia to compete on a more even playing field with Singapore, traditionally seen as the transport hub for Southeast Asia.

Challenges in transport planning

As transportation planners in both developing and developed nations grapple with the consequences of growth and new technologies, they must take into account a wide range of new and emerging issues.

In response, the Strategy& report encourages greater collaboration between public and private sectors across areas such as risk sharing to accelerate innovation and development, operation and maintenance funding throughout the life cycle of a project. New techniques such as machine learning and use of “big data” must be unleashed to radically enhance the quality of route, network and infrastructure planning, and also provide advice and services to users as they travel.

The report also highlights the need for robust data infrastructures, as connectivity and data-sharing increase, so that users, freight consignments and vehicles are adequately protected against the rising risk of cyber-attacks.

Edward Clayton, SE Asia transport sector leader with PwC’s Strategy&, based in Kuala Lumpur, concludes:
“Over the next few years, we’ll see a technological revolution in transportation that will not only affect individual and commercial users, but will inevitably drive new approaches by regulators, funders and policymakers.

“Decisions made now will lock in the future shape of transport so it is vital that cities and nations get it right. Closer collaboration between governments, academics, systems developers, investors and users, will go a long way toward this goal.

“Ultimately, however, the most important ingredient will be a clear vision of what a user-centered transport system will look like, what’s needed to build and maintain it, and how to appraise it in a way that takes into account the total impact of the investments and policies under consideration.”

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Catherine H. Santos is an Assurance partner, and Assurance Transformation partner, of Isla Lipana & Co., a member firm of the PwC network. For more information, please email This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.


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