Public Transportation in Megacities Changing the Rules of the Market

Is public transport the solution to achieve and remain absolute mobility? It seems so. As crude oil supplies steadily decline while the demand is going up, the barrel price has significantly increased since 2001. Eventually the oil price rose by 600 percent and is now around an average of $98, making fuel a precious good. An effect that most car owners painfully had to experience.

What could also be observed is the fact that in most major cities parking space has become scarce. As more and more people from rural areas move to cities, the demand has steadily risen and outrun the supply. The often observed consequences are either high parking fees or no parking at all. For these reasons, owning a car has become an expensive situation that many households try to avoid. “Responsible” households furthermore acknowledge that climate change is partly a consequence of exhaust pollution. A sense of guilt that repels many people from buying a fossil-fueled car.

The often chosen alternative is public transport. Studies by environmental scientist Peter Newman suggest that there is a strong inverse relation between urban population density and energy consumption in cities. In particular Newman states that public transport is closely related to increasing the population density, thus could also facilitate the reduction of fuel consumption per capita. An assumption that makes sense considering that cities with a good public transport system attract more people from the countryside. Clearly a win-win situation for both cities and individuals.

Megacities Focus on Mobility

It is not for no reason that the amount of new public transport projects popping up around the world is tremendous. Nowadays, megacities like Tokyo, London or the emerging Sao Paolo, put more and more effort into creating efficient public transport systems. Mostly because stakeholders believe that transport will have the biggest impact on the cities’ competitiveness.

For example, Siemens was hired to build two new rail connections from the London city center to Heathrow airport in the past decade. Furthermore, the company agreed to deliver 1,200 towing train vehicles, as well as to implement a city toll system. After having successfully put these undertakings into practice, reports from the past years show that traffic in the city center has decreased by 20 percent, eventually reducing CO2 emissions by 150,000 tons per year.

But similar strivings can also be observed in emerging megacities like Sao Paolo. The city decided to work on a 24-km Monorail track for the new Expresso Tiradentes line. The main contractor for this current project is Canadian aerospace and transportation company, Bombardier. Not only is the goal to improve the traffic situation in Sao Paolo, but also to find more sustainable alternatives to fossil fuel-intensive systems. Involved Dutch composites manufacturer Parabeam confirms this trend. “During the past years we noticed a rising demand for latest transportation systems. Many of our clients are working for contracting entities, such as cities that want to provide their residents with the latest public transport solutions. Decreasing the weight of trains by applying fiberglass to the interior is just one of many aspects that need to be considered,” says Parabeam CEO Jurgen Koot. So besides simply building new rail tracks, trains or buses, a lot of money is currently invested to promote advances in the public transport industry.

Changing the Rules of the Game

However, the complexity of these kinds of projects require a lot of expertise and experience. Therefore cooperation among the market players is essential. Koot describes it as follows: “When a new customer uses your product, you should adjust his production processes according to it. These adjustments cost money and time. Thus it is fundamental for the economic success of both sides to jointly find a solution that works.” According to many professionals from the public transport sector, being honest about budgets, requirements and limitations is the key to success. As a consequence, decision-makers also have to accept when a project is neither feasible nor profitable.

It is only logical that most contracting entities, therefore, are looking for the most energy-efficient and reliable solutions. According to Bombardier, the two most relevant sources for the latter factor are:

  • Quality design: integration & manufacture
  • Optimized fleet: management & maintenance planning

As already mentioned, this requires a lot of experience that many companies don’t have, especially when it comes to large-scale projects. The level of complexity in this case can’t be overcome by simply putting more effort in it. Instead, only a holistic approach that considers every single aspect of the undertaking will be of success. For this reason, it is essential to gather all the relevant knowledge by openly inquiring other market players. This can be best achieved by following the principle of reciprocity. In particular, the idea is to provide other market players with your expertise for free. Not only does it make you a distinguished authority in the field, but also converts your dialog partner into a prospect as they might feel obliged to consult you on a contractual basis.

In the future companies active in the public transport sector will face a number of new challenges. To be successful within this changing business environment it is important to be willing to cooperate with other companies, even though you might not benefit from it in the short term. Rather, the strong growth of public transportation in megacities suggests that upcoming immense projects will require effective management and engineering.