BMI Research has found that there is a shift in developing transit in a number of growing and emerging markets. BMI examined mass transit, freight transport and other areas — which include projects such as high-speed rail. One of the main driving factors behind the boom in infrastructure investments is urban areas aiming to make their cities more sustainable and reduce congestion.
Mass Transit
Mass transit accounts for 27 percent in global growth in rail. Michelle Karavias, BMI head of global infrastructure, explained that BMI’s research has found that more people are moving to urban areas, putting a strain on not only the urban infrastructure, but also causes an increase in congestion.
“This has led to governments investing in infrastructure,” said Karavias. “In order to reduce carbon emissions we’ve also seen people switching from cars to public transport.”
Karavias explained that BMI has seen a decline in age groups that have licenses, which in turn requires mass transit systems to expand services.
Karavias said that they’re seeing more investment in technology like fare collection methods. “We’re also seeing an investment intelligent transport, much of this is really around data gathering which is really crucial in allowing transit systems to run more efficiently.”
China has 43 percent of the investments in mass transit. “One of the reasons it is so important for China is a reduction in emissions,” explained Karavias. India has also been experience a boom through the installation of around $77 billion dollars in rail.
Throughout North America and Australia, Karavias said that there has been an investment to make mass transit systems greener.
“Mass transit still remains one of the most difficult areas in developing revenue from projects. It’s been a key area and a flagship in emerging markets — in India for example, they have been funded through public-private partnerships.”
Technology has become more involved in the mass transit market. In emerging markets, BMI found that the main challenges are introducing green projects into emerging markets, as well as integrating mass transit projects with technology.
High-Speed Rail
High-speed rail (HSR) is a developing form of transit, but the support and availability of financing varies between the different markets across the globe.
Jesse Wheeler BMI infrastructure industry analyst explained, “We expect HSR to be the largest growth in our global rail. We expect a wide range of variety of high-speed markets, the strongest growth is in Asia as part of their infrastructure projects”
While HSR is experiencing a boom, Wheeler also stated that due to the high cost of the project and support given to them from governments, some of the projects may not go forward. According to BMI, HSR projects are the largest and most ambitious projects globally. China is projected to increase its HSR lines from 19,000 kilometers to 28,000 kilometers by 2025.
“China is by far the largest project pipeline with projects reaching $160 billion,” said Wheeler, “funded by both governments and private investments.”
BMI feels that private funding brings in limited funding. Wheeler said that companies are limited in providing financing and are not given real options of a contract. Also giving a hit to private funding is poorly projected revenue from HSR.
In the United States the recent election of Trump has a cloudy projection for the future of HSR.
“Trump on whether or not he’ll support HSR is an interesting question. Previously he’s spoken on the developed HSR networks other countries have and spoke on how the U.S. should have a system like that. We believe his kind of broad campaign rhetoric is more in line with the republican views on mass transit and renewable energy,” said Wheeler. “While trump has also spoken on debt financing in the past he has said that his plan will rely on tax credits.” HSR still hasn’t been designated as being eligible for the tax credit funding, and with a lack of government support, it is unknown if it will be.
The U.S.’s current infrastructure is heavily “car-centric.” This past March the FRA had issued request of proposal for the HRS, however legislation showed that there were no funds to be provided without explicit congressional approval. California’s current HSR project is underfunded.
“At this time we do not believe that funds will be made available,” said Wheeler.
