How mobile is transforming passenger transportation

Yet, while new technologies offer exciting opportunities, they bring new challenges and regulatory risks.The research is anchored by a global survey by The Economist Intelligence Unit EI

How mobile is transforming

passenger transportation

Clearing the way for more liveable cities

© The Economist Intelligence Unit Limited 2014

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Resolving operational headaches through real-time information delivery 8

Connecting transit modes: car-sharing and pooling services as the next mobility wave 12

Contents

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passengers Yet, while new technologies offer exciting opportunities, they bring new challenges and regulatory risks.

The research is anchored by a global survey by The Economist Intelligence Unit (EIU) of 116 transport executives, including public and private transport operators and government and transport agencies The findings and views in this report do not necessarily represent the views of the sponsor

The author was Sarah Wachter; Carolyn Whelan

edited the report We would like to thank all of the executives who participated on the record and anonymously for their incisive views

Interviewees

Adam Cohen, researcher, Transportation Sustainability Research Center, University of California at Berkeley

Jacqueline Kopp, research expert on transport, Center for Urban Development, Columbia University

Ray LaHood, chair of the MTA (New York’s Metropolitan Transportation Authority) Reinvention Commission and US secretary of transportation from 2009 to 2013

Nathan Marsh, director, performance improvement practice, Ernst & Young

Graham Parkhurst, director, Centre for Transport and Society, University of West of England, BristolMichael Replogle, managing director for policy, Institute for Transportation and Development Policy (ITDP)

Bill Wheeler, director of planning, New York’s Metropolitan Transportation Authority Mike Wilson, managing director, transportation practice North America, Accenture

Survey results are based on 116 responses from transport executives

spanning the globe Most respondents hail from private transportation

operators (61%), public transportation operators (21%) and government

or transportation agencies (18%) Executives are based in Europe and the

Middle East (34%), North America (28%), Latin America (21%) and Africa/CIS

(17%) More than half (53%) are C-level executives or equivalent, 17% are

vice-presidents or equivalent and 9% are senior managers Two thirds work

at organisations with annual revenues of more than $500M Please see the

appendix for full survey demographics

Who took the survey?

© The Economist Intelligence Unit Limited 2014

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Transportation is a sector straining to keep pace with rapid population growth and shifting mobility patterns Its principal pain points are congestion and high costs

These headaches are the fallout of an increasingly urbanised and road-networked world with underutilised mass transit systems Pollution from transport and road accidents can cost a developing country up to 5% of its gross domestic product, and these two factors take a greater toll

on productivity and lives globally than HIV/AIDS, tuberculosis, malaria or diabetes, according to the

2014 World Bank-led Global Road Safety study In tandem, many transit systems are now a complex maze of urban, regional and inter-regional networks, with many gaps and overlaps

Against this backdrop and amid fierce competition for scarce capital, much of the passenger-

transportation sector is now using mobile devices for discrete, practical purposes: to boost system

efficiencies, to better engage with riders, and to lower costs The next set of mobile opportunities lies

in helping to resolve problems that hobble passengers and operators alike, including congestion, uncertainty and interminably long waits.Increasingly, mobile is spurring new service models and generating new revenue streams And

as real-time data become increasingly available and integrated across different modes in the transportation supply chain, they could help cure operational headaches and better meet passenger needs through interactive offerings

“By linking mobile devices to surface transportation, you can create a much smarter transport system that works…from the bottom up, enabling users to get more effective transport where they need it and save money, too,” says Michael Replogle, managing director for policy at the Institute for Transportation and Development Policy

Introduction

Each transportation subsector is tapping mobility for different reasons, but a common thread among operators is efficiency, cost and passenger-satisfaction gains

More than half of private transportation operators surveyed by the EIU say mobile devices will help them improve network or on-time performance (55%) Slightly less say mobility is a priority to reduce costs and to increase passenger satisfaction (both 48%) and to boost revenue (36%) Meanwhile, their peers in the public transport sector believe

greater use of mobile devices and systems will help boost ridership (44%), passenger satisfaction (33%) and public safety (33%)

And government and transport agencies foresee better public safety (60%), greater employment (55%) and curbs in pollution (40%) as the principal benefits These gains will be realised by making commutes easier, by broadening shared-use transport, and by linking transport options, including bike and walking paths, experts interviewed say

Reaping returns from mobility

1

Improve public safety

Improve employment

Reduce pollution

Improve community quality of life

Reduce security threats

Reduce congestion

Attract businesses

Increase tax base

Reduce public expenditures

What goals does your organisation aim to achieve by prioritising mobile technology in its strategy?

Please select up to three

(% respondents)

Source: Economist Intelligence Unit survey, 2014

Government or transportation agency Public transportation operator Private transportation operator

Improve public safety Increase public revenues Improve workforce safety and productivity Reduce congestion

Ensure regulatory compliance

44 33 33 28 28 28 22 17 11 6 6

Improve network or on-time performance Increase passenger satisfaction and loyalty Reduce costs

Increase revenues Improve passenger safety Reduce environmental impact Improve workforce safety and productivity Ensure regulatory compliance

55 48 48 36 26 22 16 10

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Looking ahead, the sector aims in five years to increase its use of mobile technology and data to address its biggest and costliest headaches—

relaying information about delays and emergencies

The payoffs of a better communications infrastructure include cost savings and cutting

pollution by applying real-time data to operational decisions—ensuring, for instance, sufficient subway cars at peak or slack times In the future, the growth of this two-way dialogue will further open the door to providing new products and services to passengers

In this first wave of wireless data delivery, mobile technology is helping transportation organisations better connect with passengers in a more cost-effective way.

According to the EIU survey, providing information on fares, tickets and services; route viewing/planning features; and ticket, pass and trip purchasing are the primary ways operators currently serve passengers through mobile technology

As they add new features and functions, transport organisations are increasingly offering

mobile-payment options for tickets Easy mobile purchases are now available to commuters through the national rail network in Spain, across southern Ontario, Canada, through the Presto e-payment scheme, and via the Massachusetts Bay

Transportation Authority (MBTA) in Boston.This shift to mobile is helping reduce costs Mike Wilson, managing director of Accenture’s North American Transportation Practice, reckons the cost

of managing fares accounts for roughly 15% of a ticket’s price due to time-consuming paper and customer phone-line transactions This cost drops

Static information and online purchases today

2

“The two great trends in the next century are demographic shifts and climate change,” says Ray LaHood, chair of the Reinvention Commission for New York’s Metropolitan Transportation Authority (MTA) and US transportation secretary from 2009

to 2013

Millennials, those born in the 1980s and 1990s, represent 22% of the population in the greater New York region Many eschew car ownership for car-sharing services and the subway, even at odd hours

Because many millennials work on flexible or non-traditional schedules and live in

neighbourhoods with limited peak subway service, they are dramatically changing commuter

patterns in greater New York Peak times are becoming flatter, while the greatest ridership growth is now between 7 pm and 11 pm on weeknights, followed by weekends

To accommodate the city’s most-connected generation, the MTA has rolled out real-time information on its bus network, installed countdown clocks on major subway platforms and published a map detailing weekend shutdowns in real-time It is also building a fully wireless system in all stations and tunnels This involves installing a communications backbone so that all

460 subway stations can take payments when a rider waves a smartphone at a turnstile or across a reader panel

case study How New York’s MTA is adapting to an influx of millennials

❛❛

The two great

trends in the next

Chair of the Reinvention

Commission at New York’s

Metropolitan Transportation

Authority

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to 9% when transactions migrate to smartcards and mobile devices, he adds Transport organisations are also using mobile technology to manage fleets,

to exchange information internally, to maintain, inspect and repair vehicles, and to equip attendants

to serve passengers on station platforms

Globally, transport operators are locking in these wins despite the lack of ubiquitous wireless connections In developed countries, many riders have sophisticated mobile devices; operators are upgrading networks and launching new services to keep pace with passenger expectations for quick updates and easy mobile payments In a poll managed by Coleman Parkes Research on behalf of Accenture in 2012 and 2013 that covered nine

major world cities, 90% of riders said they expect travel updates on social media, while one in three expect mobile-payment capabilities

As these offerings expand, new transport service models are emerging to pair riders with real-time data to plug gaps in the transportation system, particularly over the last mile home Ride-sharing schemes such as Uber, Lyft and Sidecar are proliferating in many countries Uber is now in dozens of cities, guaranteeing door-to-door service

in five minutes And Park-o-Pedia in San Francisco helps drivers find nearby parking spaces, says Adam Cohen, a researcher at the Transportation Sustainability Research Center at the University of California at Berkeley

The next mobility wave in transportation, however, will help resolve a pain point that preoccupies the industry and passengers: congestion, by relaying more real-time information on emergencies and delays Congestion was ranked as a top obstacle for both easy and reasonably priced journeys by survey respondents More mobile devices in more hands and more ubiquitous wireless coverage in transportation hubs will drive this change

In five years, passengers will use their mobile devices most frequently to receive alerts and instructions related to emergencies, delays and rerouting, and to buy tickets and receive information

on fares and routes, according to the EIU survey

Experts say that the move is already underway

“A lot of agencies are already publishing statistical and geographical information in case of

emergencies,” and encouraging third-party developers to build information services around them, says Accenture’s Mr Wilson The city of Ottawa’s smart bus initiative, for example, helps passengers access bus arrival information from

mobile devices Meanwhile, many US drivers receive real-time traffic data and routing assistance through satellite navigation systems in their vehicles and through global positioning systems in their smartphones

But in virtually all countries, insufficient technology investment in the public-transportation sector is slowing the expansion of the integrated platforms needed to deliver real-time transit information region-wide The public-transportation sector spends just one penny of every $10 of total investment on information technology, an Accenture study shows

Still, some experts, including Mr Cohen, are skeptical that emergency data is the next big trend for car drivers in the US, because many passengers with access to real-time traffic data are not changing their travel habits, either because real alternative routes don’t exist or it would be too expensive to create them in clogged city centers

“The real problem is a lack of alternative routes,”

he says

Resolving operational headaches through real-time information delivery

3

© The Economist Intelligence Unit Limited 2014

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The shift from static to real-time data is being slowed by business case issues Justifying heady investments in mobile services is difficult without a critical mass of passengers equipped with, or open

to, accessing real-time data delivery through smartphones or tablets

Indeed, roughly one-third (32%) of survey respondents say passengers’ resistance is what most gets in the way of quick and easy access to travel information A similar percentage (29%) cites the lack of a desktop computer

Today, of the eight channels that passengers use

around the world to plan and manage their journeys, the personal computer (PC) is the most heavily used, followed by customer-service phone lines, according to the survey Less experience with mobile may be the cause “It’s more about

education and outreach, [the need] to teach providers and consumers how to fully leverage and use these technologies,” Mr Cohen says “Reliance

on customer-service lines in these areas may be due to the comfort level… vs using text messaging

as buses converge on city centers

In Nairobi, for example, 40% of

vehicles on the road are matatus,

privately owned minibuses that serve as the city’s de-facto bus network Until recently, no map of the network existed, and passengers had to rely on their

limited knowledge of lines and unofficial stops

Now Nairobi’s mobile-savvy population can access a map on mobile phones that was developed by equipping the mobile phones of volunteer mappers with global positioning system (GPS) capabilities

Thanks to the digital map, the National Transport and Safety Authority

of Kenya is implementing a cashless fare

system for matatus that also calculates

standardised fares after commuters enter departure and destination information into their mobile devices

case study Using mobile to untangle Nairobi’s matatu maze

❛❛

The Digital Matatu project

illustrates the power of

technology to support critical

data collection on transport from

below It is also a challenge… to

start making data available to

the public to support

entrepreneurship, accountability

and better research and policy.

❜❜

Jackie Klopp,

researcher at the Center for Sustainable Urban

Development at Columbia University

respondents expect smartphones to be the second most popular channel, almost on par with PCs

Perhaps that is why executives surveyed see their top opportunities for 2014 as linked to providing

passengers with real-time information, better network availability inside vehicles, and the ability

to make purchases

Which mobile services do your passengers use today, and which services do you expect to support in the future?

Mobile feature

Select all that apply in each column (Number respondents)

Access information on fares, tickets and services View and plan routes View and plan mixed mode routes and trips

Purchase tickets, passes, or packaged trips

Receive alerts on delays and rerouting

Receive assistance with alternative travel and

services in the event of delay or interruptions

Receive alerts about emergencies

Receive instructions in the event of emergencies Receive personalised offers

or recommendations Access information about local entertainment, retailers and public services

Access information on tickets and services such as taxis or car services

Reserve, request and pay for taxis or car services

Source: Economist Intelligence Unit survey, 2014

77 51

46 53 50 45 37

52 41

51 39

47 43 61 48

46 42 46 45 61 54 34

38 42 47 46 38

36 37 35 29 38 38 26

38 35

Now Two years from now Five years from now

© The Economist Intelligence Unit Limited 2014

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To better connect with passengers via mobile, executives say they face two thorny issues: poor data quality and a lack of data integration

Respondents rank a lack of quality transit information across all channels as the top obstacle

to faster journeys This may be due to difficulties integrating data and systems across many organisations, which executives rate as the top obstacle to delivering data to mobile devices within five years vs insufficient network coverage or bandwidth today

Common data integration hiccups range from smartcards that do not work across all transport providers to services that cannot be accessed in a nearby transit zone or a neighbouring country

But addressing data-integration problems will be

neither simple nor fast and will require greater IT investment, says Accenture’s Mr Wilson: “Agencies need to think about a single customer account and more holistic, integrated platforms and invest in vertically integrated solutions To access data in real-time, you need the right IT platforms,” he adds

Other data problems concern the need for better data to more fully engage all segments of the population, from the visually impaired to those suffering from dyslexia “The problem is producing technology that is easy to understand by

everybody—[people] of all ages and at all levels of education—and hardware that promotes good user interaction,” says Graham Parkhurst, director of the Centre for Transport and Society

Solving data-quality and technical problems