Sam Sherwood-Hale spoke to Ralf Baron, Partner and Global Practice Manager Travel and Transportation (T&T) at Arthur D. Little, based in Frankfurt
Ralf has more than 25 years of experience in management consulting, and has worked in the mobility sector for more than 15 years. He has advised leading players in the mobility industry and ecosystem on strategic orientation and performance improvement, as well as organizational change and transformation.
As global head of Arthur D. Little’s T&T practice, Ralf has worked on mobility issues around the world and addressed key transportation-related topics in various cultural contexts. Our discussion focussed on the intersection of different transport modes and how each one is necessary for a ‘smart city’. We also discussed different types of regulation and Mobility as a Service (MaaS).
If transport planning is future orientated, where can infrastructure owners and operators look to help them anticipate future trends?
Look at studies that seriously address the future – for example, Arthur D. Little’s Future of Mobility Study 3.0 and its predecessors. Explore the future thinking of UITP – the leading global association of public transport managers. Look at study-selected, progressive spots in the world that are famous for innovation – places like Singapore and Dubai.
Look for the hotspots in the start-up world – e.g., Silicon Valley, London, Berlin and Vienna. Check out the cities which are famous for providing the best quality of life. Discuss the topic with futurists who specialize in innovation in transportation, for example, Professor Andreas Knie of INNOZ.
Consider these four points:
4. Transportation ecosystem
First up is regulation – transportation is very regulatory driven. Minor changes of regulation (e.g., ownership rights, ecological regulation) throughout the mobility system can affect the roles of not just operators and infrastructure providers. In fact, the entire value chain of transportation can be disrupted, and players need to prepare for this. Keep track of political discussions and try to detect tendencies, including between comparable countries.
Technological developments and their degrees of maturity affect their eligibility for being used within the field of transportation. Take autonomous operations, for example: it appears conceivable that the experience of riding in an autonomous car could be similar to that of taking a train. Additionally, last-mile aviation will add another player to the game. Try to understand each technological development and question its influencing power on the current state. Digitalization will pose big challenges for infrastructure providers, especially in the field of cyber-security.
Look at users – new generations and changing routines bring about significant shifts in mobility behavior. In a world with competing mobility offers, operators and infrastructure owners need to deeply understand the challenges to their existing positions and adjust to remain sustainable.
Finally, the transportation ecosystem. Transportation concerns a lot more than just operators, infrastructure providers and users. In fact, a high number of stakeholders (besides people) are affected by transportation, and this, in turn, will affect transportation needs in the future. Therefore, future transportation planning must take the wider context of affected parties into account. For instance, urban transportation planning must reflect ‘traffic generating’ entities such as schools, event locations and stores. Knowing how these will develop, and combining that knowledge with all previously mentioned future indicators, will make a clear picture of what transportation needs to cope with and – connected to this – how to build infrastructure and operate.
What is your view on autonomous vehicles? How can they be incorporated into the current transport infrastructure?
From the beginning it was the strategy of all players to enable autonomous vehicles to self-drive on the existing infrastructure. Nevertheless, infrastructure enhancements such as ‘vehicle-to-x’ communication (e.g., with other vehicles or traffic lights) will support better performance and improved safety due to redundancy.
High-definition maps play a vital role in any case, and intelligent traffic steering would have a positive effect on traffic flow. Our traffic micro-simulations show that radical platooning of self-driving cars would lead to enormous capacity effects (multiples of five or more).
Combined transport could be answered in new ways, with feeders e.g., (suburban) trains as backbones and vehicles as feeder.
How do you personally define a ‘smart city’?
A smart city is a city that constantly seeks to improve the lives of its citizens and visitors, as well as the prerequisites for successful economic activity. It becomes more efficient, more technologically advanced, greener, and more socially inclusive.
You also define prioritizing common initiatives as an important step in establishing an innovative and effective urban mobility system – what are the best examples of different transport modes working towards common goals?
We put emphasis on strong integration between different transport modes to ensure a seamless journey for the customer. Hence, it is imperative to define an integrated network as a system that brings together mass transit (bus, rail) and first and last-mile solutions (bike sharing, e-scooters, etc.). Customers will have the option to compare and chose: Do I take the bike? The taxi? Or the scooter? The integrated network is generally consolidated by a Mobility-as-a-Service offering under an integrated mobility platform, which allows access to mobility solutions in the most efficient manner.
Tell me about integrated mobility platforms.
The development of smart mobility front-end solutions is mainly driven by shifts in traffic-usage patterns, combined with the rise of digital solutions and the increasing number of transport players available to customers around the globe.
In the age of digitization, consumers become more and more used to receiving customized product and service offerings, which allows for the highest level of convenience. In mobility, and even more so in public transport, this means users care less about single transport modes and operators. They are, rather, interested in simple, integrated, highly customized, end-to-end solutions (search, plan, pay, etc.) that incorporate their individual travel preferences, such as speed, price, convenience and environmental impact.
An integrated mobility platform (IMP) is a key solution to accommodate these customer preferences under a unified digital roof. By integrating different modes of transport, IMPs drastically simplify route planning, making traveling more efficient while providing a customized offer based on selected preferences. As IMPs also feed data back into smart-mobility back-end applications, thereby supporting future infrastructure development, these platforms will increasingly become the nucleus of modern mobility ecosystems.
As a result, IMPs are being established all over the world, with different kinds of integration levels and value propositions (i.e., Citymapper, GoEuro, Google Maps, Moovel, Moovit, Qixxit, Rome2rio). Yet, no one player has yet emerged as a prevailing provider with a superior offering. Consequently, we must ask what the key success factors of integrated mobility are, and what the future of integrated mobility will look like.
Tell me about Mobility-as-a-Service.
Mobility-as-a-Service (MaaS) is about providing consumers with flexible, efficient and user-oriented mobility services. MaaS implies integration of ALL mobility solutions: both public and private, including private ‘new mobility’ solutions that are critical for the first and last miles.
Most MaaS platforms are not yet financially viable today – financial viability will be driven by a shift from personal ownership of cars towards usage of mobility-as-a-service (against a fee). MaaS operators and public transport (PT) authorities (theoretically) have a common objective to increase the share of sustainable transport modes in modal split (including PT).
Additional (non-mobility) services will further improve the customer experience, but associated revenues are not expected to be significant in the short to medium term. Marketing (for user recruitment) is among the most significant cost for MaaS operators, which presents a competitive advantage for incumbent operators.
There are data monetization opportunities for back-end platform owners. There are several candidates to become leading MaaS operators, including ‘over the top’ players, such as MaaS Global (WHIM), a young and fast-growing company based in Helsinki, Finland. Copenhagen also has a great MaaS offering.
Can the low-cost carrier model be replicated in rail?
Long-haul (high-speed) rail has been gaining popularity in recent years. Due to the growing acceptance and branching out of incumbent operators, it is likely that we will see diversification of business models in the near future.
The low-cost movement, which transformed the airline industry in the late 1990s, and recently the coach industry, could now touch rail. In France, Belgium and Germany, first operators have entered the segment and are playing with the low-cost carrier (LCC) model. On the buy side, operators are limiting operational costs and investments. On the sell side, they maximize the usage time of rolling stock as well as the load factor, and try to attract new customer segments. Profitability has not been made public, but the number of routes serviced by these operators is increasing.
Can we expect a major disruption in the market? For now, it seems questionable whether the 25–50 percent cost advantage made by LCC airlines can be adapted to rail. That is, unless the underlying investment and asset-heavy cost structure of the industry can be changed. The LCC business model, however, can still be of interest – for incumbents and new entrants.
In 2017 Arthur D. Little benchmarked one hundred cities globally to identify good practices in urban mobility; how did you come up with that list?
Arthur D. Little’s Urban Mobility Index 3.0 is much more comprehensive than prior versions. Using 27 criteria, Arthur D. Little assessed the mobility maturity, innovativeness and performances of one hundred cities worldwide. The highest score went to Singapore, followed by Stockholm, Amsterdam, Copenhagen and Hong Kong.
Tell us about Stockholm, Europe’s highest-ranked city.
Stockholm ranks second out of one hundred worldwide, but is first out of 29 in Europe. The Swedish capital kept the second place it achieved in the previous Mobility Systems ranking, and distinguished itself by coming top in the Performance ranking, second in the Maturity ranking and sixth in the Innovativeness ranking.
Out of all one hundred cities surveyed, Stockholm has the safest mobility system – i.e., the lowest share of transport-related fatalities per million citizens. It also has a well-balanced modal split, with 34 per cent of trips attributed to motorized individual transport, 33 per cent to public transport, and the remaining 34 perc ent to walking and cycling.
The air quality in Stockholm is good too, with regard to NO2, PM10 and PM2.5 levels. And the concentration of fine particles with diameters of 2.5 µm or less (PM2.5), a highly dangerous pollutant, is the lowest among all one hundred cities surveyed.
Stockholm’s strategy is to be considered good practice in urban mobility and urban freight. It involves setting ambitious goals relating to capacity, accessibility, attractiveness and sustainability. As a part of its ‘Smart and Connected City’ plan, Stockholm is also implementing a broad range of smart mobility initiatives, from smart traffic management and traffic-light priority for buses to a congestion-pricing system and smart lighting for bicycle paths.
Mobility platforms used by locals and visitors alike include global platforms such as Citymapper, Moovit and TripGo, plus successful local services such as SL Journey planner, TravelSmart and SLife. Well-known start-ups such as UbiGo have also chosen Stockholm to be their pilot city.
It is also worth mentioning a self-driving shuttle that began test runs under real-world conditions in mixed traffic early in 2018.
In order to win the next global urban mobility ranking, Stockholm will need to further improve its innovativeness level. Car-sharing services require more promotion, as do digital mobility services, such as MaaS platforms and peer-to-peer and ride-sharing platforms. It should also work on its smart mobility initiatives, including autonomous driving. This will allow Stockholm to unleash the potential hidden in its transport infrastructure capacities, as well as reduce investments in new road and rail lines.
Do you still believe that a majority of cities are badly equipped to cope with the challenges ahead?
The overall results find that most cities still need to work intensively on improvements to their mobility systems if they are to cope with the challenges ahead. The global average score of the one hundred cities surveyed is 42.3 out of a possible one hundred points. This means that, worldwide, the average city has unleashed less than half of the potential of its urban mobility system, a state of affairs that could be remedied by applying best practices across all its operations.
What is holding back change?
Mobility visions and policies do not cover requirements. A lot of mature cities do not yet have clear visions of what their mobility systems should look like in the future, or coherent strategies for getting there. Moreover, there is a lack of integration between transport modes and across different urban policies (environment, land planning, energy, social policy) and regions, which is leading to a suboptimal outcome in terms of performance.
The management of urban mobility still often operates in environments that are too fragmented and hostile to innovation. Mobility systems often still do not respond sufficiently to evolving customer needs, which would involve combining single steps of the mobility value chain into integrated systems.
And, despite evolution over recent years, mobility systems still often do not sufficiently bring together key players to work jointly to foster lateral learning and develop innovative mobility solutions.