In 2050, transport in Australia will be a very different industry – at least according to Brendan Richards, head of Ferrier Hodgson’s logistics practice and nationally regarded industry expert. “By 2050, Australia’s population will have nearly doubled, aged considerably, and still be largely urban-based,” he says. “The traditional modes of transport – road, rail, air and sea – will not be able to cope with that change. They are neither environmentally friendly enough to support large urban populations, nor terribly practical due to their massive reliance on infrastructure investment.”
As such, he says traditional modes of transport will likely become supplanted by new ones over the coming three decades – some of which are in early development now, and some of which we haven’t even thought of yet. To find out just how impactful that modal shift will be and how today’s transport industry is placed to respond to it, Brendan and his team collated a vast amount of data and background information over the course of 2016 and distilled it down to a compact 40-page future outlook, titled Look Out! Here Comes the Future.
“We’re trying to paint a picture of what the future of transport could look like, based on what we know today,” he explains. “We’re often caught up in the here and now and don’t really focus on what’s happening around us. Look Out! Here Comes the Future is an attempt to do just that – create awareness for what’s happening in the world at the moment and how it will affect Australia’s transport community down the track in a realistic, fact-based format.”
Brendan says reflecting on the future of transport has a long and proud tradition in both pop culture and academia, especially since the global oil crisis in the 1970s prompted widespread research into a future beyond fossil fuels, but has recently lost momentum. “All popular visions of the future of transport had one thing in common – a world where we moved beyond oil. But the reality we’re now living in couldn’t be more different,” he says. “Following the oil crisis, we’ve lost our imagination. It turned out hydrocarbons were more abundant and diverse than we thought, so we began focusing on improving the same old technology instead of following more bold future visions.
“Oil became a self-fulfilling prophecy. The higher the market price rose, the more rapidly we saw technological breakthroughs, and the more accessible resources became. Traditional combustion engines became ever more efficient and the idea of transportation running on alternatives to oil – conventional wisdom a mere five years ago – is now far from guaranteed.”
Brendan says even with global transport demand expected to grow by 50 per cent, he and his team were surprised to learn just how little interest in future technologies there was in Australian road transport. “What everyone thought would drive the future of the Australian transport industry has turned out to be a red herring that has simply guaranteed business as usual.
“As an industry, we’ve missed the boat. Rather than using the oil crisis as a prompt to kick-start some sort of evolution of the traditional modes away from the dependency on oil, we’ve waited so long that we are now facing a much more powerful technological revolution that will, in some cases, completely replace those traditional modes.”
According to Brendan, the transport industry will be forced to change dramatically to respond to megatrends like globalisation, urbanisation and digitation, but the names that dominated the business while it was still done “the old way” may not be able to keep up. “The players at the forefront of the industry today are unlikely to be the leaders of the future – many of them won’t even exist unless they can adapt to a fundamentally different business model,” he says. “Instead, the major players in the industry will be companies that, while you may have heard of them, are not currently directly involved in transport.”
As such, Look Out! Here Comes the Future is more of a wake-up-call than a scientific document, he says, with the goal of creating awareness for the threats incumbent businesses will be facing in the future. Especially for road transport, he says the status quo is dire. “Even though road transport currently dominates the Australian market for non-bulk freight due to its advantages in price, speed, convenience and reliability, it is under severe pressure to evolve. Industry analysts are predicting 75 per cent growth over the next 20 years, with profitability under pressure due to skill shortages and reductions in fuel rebate,” he warns. “Low barriers to entry are also putting pressure on rates and margins, so there is a serious need for change in that segment.”
“This is largely due to the country being positioned well geographically, as the Asia-Pacific region is likely to make up almost half the world’s economic output by 2050. However, annual growth in income will be less than what Australians are accustomed to, and pared-back funding of large infrastructure projects is likely. More pressure will be placed on private enterprise to innovate in order to remain competitive.”
The key influence on the future of the transport industry, he explains, will thus be technology. “Technology has the potential to transform the industry, offering new modes of transport and eliminating the need for drivers as autonomous vehicles become the norm. Electric drivetrains – especially for short-range vehicles – will decrease costs. Vehicle connectivity will make transport safer and do much to decrease congestion, and new lightweight designs will improve economies and profitability.”
He warns, “However, with this influx of technology will come an influx of new competitors. The transport industry will need to compete with companies that previously were customers. As the Internet of Things becomes more prevalent and catering to individual demands becomes more achievable, there is a very real possibility that the technology that drives the transport industry will be less about engines and capacity and more about telematics and connectedness. In that environment, the transport companies of the future may well be the likes of Microsoft and Apple, rather than Linfox and Toll.”
According to Brendan, global venture investors put $5.7 billion into transportation businesses in 2014 – more than twice the level of investment in the previous two years combined. Uber was the highest profile investment, raising some $3 billion, but other new businesses such as GrabTaxi ($334 million), Lyft ($250 million), BlaBlaCar ($100 million) and INRIX ($65 million) also raised significant funds. “Again, it is an indication that technology is rapidly moving ahead and will have a significant impact on the transport industry. It’s a process that could’ve already been underway, but will now arrive more like a tsunami wave than a cold shower.”
In line with that, Brendan says ignoring autonomous driving as a viable future option could be disastrous for the industry. “Semi-autonomous vehicles powered by technology such as Tesla’s Autopilot and GM’s Super Cruise system are currently in production. Experts believe that fully autonomous vehicles are not far behind and momentum is building quickly – so make no mistake, they will change the world.”
Brendan says automated driving will make the elderly more mobile, reduce traffic congestion and improve fuel efficiency. “On- demand service and delivery will become the norm, and vehicles will become increasingly digital. It’s already happening.”
As much as he says Look Out! Here Comes the Future is meant to stir up the industry and act as a warning bell, though, Brendan says there is still time to react. “We’re at a crossroads. A new generation is pushing into the workforce, 3D printing, blockchain technology and the Internet of Things are becoming ever more prevalent, and material science is progressing by the day. It’s an exciting time to be part of the industry, but only if you’re willing to open up and realise what’s happening around you.”