The Transport Revolution: When Sci-fi Becomes Business Reality

by María Mendiluce, Managing Director, Natural Capital Area, World Business Council for Sustainable Development
Sep 8, 2017 10:05 AM ET

Originally published on GreenBiz

The world is changing. Technological developments and the advance of the digital age fundamentally have shifted the way we experience day-to-day life. These new developments offer innovative ways to build sustainability into the world around us.

Take the issues of transport and cities: The world is booming towards a population of over 9 billion in 2050 — with 70 percent of people residing in cities by then, driving 80 percent of total energy demand and 70 percent of global GHG emissions. According to the World Health Organization (WHO), 3 million people died prematurely every year due to ambient air pollution as of 2016.

Mobility is the lifeblood of cities and is essential for urban life. Everyone needs to move around to get to work, go to school and live their lives.  As a result, emissions growth from transport is expected to be the highest in any sector. Without intervention, air pollution is poised to get worse.

We will not reach the Paris Agreement or the SDGs without near-decarbonization of transport before the end of the century. But, believe it or not, there’s reason to be hopeful.

Digitalization offers us the opportunity to decouple transport from emissions, making the transportation revolution more sustainable.

Digitalization: a promising way forward

The World Business Council for Sustainable Development’s (WBCSD) Vision 2050 predicts that the 2020s will be a decade of transformation. We are already experiencing unprecedented transformations in energy, food, materials and transport systems, and it’s not even 2020 yet.

For example, the renewable energy revolution has exceeded all expectations. Today, one out of every five units of energy delivered to customers comes from renewable sources (PDF)Unsubsidized levelized renewable prices are at all-time lows, costing on average $0.01 per kWh, 21 percent below gas and 51 percent below coal generation in 2016.

Companies are increasingly looking at power purchase agreements to secure low prices for clean energy. Even energy intensive companies such as Akzo Nobel have fallen in love with renewables, committing to 100 percent renewable power purchases joining the RE100 group.

Lower energy prices, distributed generation and access to renewable energy are revolutionizing power markets and opening new opportunities through electrification.

Because of these developments, many would think that electrification of transport would be the next logical step, but that’s only part of the story.

The hidden driver transforming the transport sector is the Internet of Things (IoT) and the connection between electrification, autonomy, artificial intelligence and the shared economy. Taken together, the future of transport seems to resemble science fiction — but in truth, it’s becoming our new reality.

The combination of IoT and big data is changing transport services at an unprecedented pace.

Today, the IoT can match cars to networks through sensors, connectivity and rapid computing. New sources of aggregated data are opening cutting-edge mobility services and creating an ecosystem where connected public transport and private cars can operate seamlessly.

Today two-thirds of the world’s population has a mobile phone, one-third can communicate on the internet and 50 billion devices (PDF) are expected to be connected by 2020.

Because of this, the IoT has the capacity to provide full access to transport without vehicle ownership. Some studies state that shared mobility enabled by IoT and big data (car sharing or ride hailing) removes 9-13 cars for every shared vehicle on the road (PDF).

Further estimates stipulate that if policy makers and businesses successfully can collaborate, linking the physical and digital worlds through IoT could generate up to $11.1 trillion per annum in economic value by 2025.

Whether it’s sharing your ride, being able to easily swap between modes of transport, accessing nearby drivers wherever you are or getting into an autonomous vehicle, the IoT is enabling a revolution in transport — both systemically and for individuals.

Owning a car is the second largest investment a typical household makes, but car sharing has the potential to save 46 percent of costs for the average car owner. The most liberal analysis (PDF) predicts a 90 percent decrease in finance costs, 80 percent decrease in maintenance costs, a 90 percent decrease in insurance costs and a 70 percent decrease in fuel costs.

In the long run, the autonomous vehicles could have a much greater impact on new-car sales than car sharing. Companies are investing large amounts into R&D to bring AV cars to the road by 2020. 

The combination of new transport services and electrification of transport could lead to emissions reductions of 60 percent in certain urban areas by 2030, and a 90 percent reduction in CO2 emissions from light duty vehicles by 2030 if combined with autonomy.

Turning these predictions to practice will not be straightforward. But these estimates illustrate the potential associated with the transport revolution, bringing new opportunities and societal benefits. Business will benefit, too.

Optimizing freight transport

According to the International Transportation Forum, if transport trends hold, we’ll see a tripling of freight transport, increasing transport emissions 60 percent by 2050.

Digitalization and connectivity can help companies reduce their freight costs, optimize operations, reduce their emissions and increase their competitiveness.

A recent Road Freight analysis from the World Business Council for Sustainable Development (WBCSD), concluded that optimization, delivery time windows and asset sharing could reduce 52 percent of GHG emissions while saving 20 percent in costs from companies logistics.

These gains represent untapped and unmapped opportunities for companies who are ready to get on board.

The IoT already has brought value to the freight arena with innovative ways for companies to track routes, drivers packages and traffic. For example, Daimler has been exploring autonomous trucking and the benefits that come with it such as platooning. There’s also been a boom in e-commerce autonomous vehicles including the fact that drones are predicted to deliver 80 percent of all items in their "last mile."

Additionally, aviation is using the power of IoT to solve lost luggage problems and alternative fuels to reduce their emissions. Shipping has started to use low carbon fuels and Yara is developing the first autonomous ship.

Some will say that the business case for reducing emissions never has been clearer: save costs and boost performance. Others will argue that the emission reductions are just a consequence of the transport transformation without being a direct goal.

How do we get there?

Reduced environmental degradation is not a given when it comes to transport and the IoT. Companies and governments need to collaborate and build new transport models that reinforce the SDGs, prioritize lifestyle, environment and circular supply chains.

Infrastructure will need to change, cyber security risks need to be addressed and companies and policy makers need to work together to remove the technical, organizational and regulatory hurdles associated with the new transport model.

The challenge we really face is not embracing the transformation but rather how to influence the transformation so that the new transport system is more sustainable and resilient than the current one.

Everyone agrees that the transport transformation is happening. The only question is how fast.