Post-pandemic traffic jams: What they might mean for tech, media, and telecom
Commuter preferences are shifting as people around the world start returning to work. Due to the ongoing health concerns of COVID-19, the use of private vehicles is rising in preference over public transit, taxis and ride hailing services.. Such a shift will affect not just the automotive industry, but also the tech, media, and telecom sectors due to the car industry’s increasing use of onboard technology to meet owners’ expectations to use route-finding applications, phones, media (audio), and more while driving.
Due to remote work policies, morning rush hour traffic levels in Canada were down between 72 and 86 percent during May. This has lead to an assumption that traffic levels would also be lower. Based on early data, however, this has not been the case. In Chongqing and other Chinese cities, for example, rush hour traffic congestion is now higher than in 2019. The reason for this appears to be the reduced use of shared transportation and an increase in private vehicle use.
In a Chinese survey from Ipsos conducted in February this year, respondents said their use of bus/metro was down 57 percent, taxi and ride-hailing down 30 to 40 percent, and private car travel was up 94 percent. Of those who didn’t own a car, half said they thought public transit was not safe. Two-thirds of non-owners said they wanted to buy a car within the next six months, of whom 77 percent said their reason was to reduce the chance of contracting COVID-19. A global survey from Cars.com from March showed that a fifth of respondents report an increased sense of urgency in buying a new car, and nearly half said they’ve stopped using public transportation.
Deloitte’s State of the Consumer Tracker shows that as of July 11, 62 percent of Canadians are planning to limit their use of transit over the next three months. Fifty-seven percent plan to limit ride-hailing in the same time frame, while 76 percent said that owning a vehicle is important to them. Longer-term shifts in transportation use also look similar pattern. According to an unpublished survey by Deloitte Canada and HEC Montreal conducted in May 2020, Canadians said they expect to use personal cars and bikes more once the stay-at-home measures have been lifted. Conversely, they plan to use buses, the subway, taxis, suburban trains, carpools, and (surprisingly) motorcycles less.
Even though figures in various surveys reflect an increase in intent to buy a car soon, this may not necessarily translate into global new car sales. Canadian new car sales in April were down approximately 75 percent. Layoffs, furloughs, salary reductions, and mass unemployment mean that although many people may want a personal vehicle, affording one may be a challenge. If the intent to buy does transform into actual car sales as people seek to avoid the potential health risks of other modes of transport, the automotive industry may experience better sales than would otherwise be the case during a downturn of this magnitude, and could even see sales grow compared to before the pandemic over time. This could cause ripples throughout the tech, media, and telecom sectors.
The automotive market was 12 percent of all global semiconductor sales or $54 billion in 2018, and is predicted to be among the fastest-growing semi-verticals, with an 18 percent compound annual growth rate to 2024. This is driven by the production of chips used for safety, infotainment, and connected car technologies. Further, the automotive sector is the single largest buyer of industrial robots, at over 30 percent of all units as of 2018. Batteries for electric vehicles were a $13 billion market in 2018. Growing or even less-weak new car sales would benefit all semiconductor, robot, and battery manufacturers.
If traffic congestion gets worse, there are likely to be two further effects on the technology sector. First, more commuters will shift to e-bikes and e-scooters—either shared or owned—for shorter trips (40 percent of all trips in the United States are five kilometres or less), further increasing demand for batteries as well as software apps for route-finding, sharing, and finding lost or stolen vehicles. Second, although level 5 (all roads and all conditions) self-driving cars are not imminent, commuters frustrated by long periods of driving at low speeds on congested highways may opt for cars with level 2 or 3 autonomy, which can assist with either driver-supervised or even unsupervised driving tasks through cameras, sensors, and processing chips.
Media and entertainment
Cars are where we predominately listen to radio, podcasts, and audiobooks. If fewer people are in cars, then the numbers for these kinds of media drop or do relatively less well than video—something we saw during the months of lockdown. On the contrary, if more commuters opt for private cars, (whether new cars or older ones) and spend more time in them we would expect to see a rise in car-friendly audio media. Meanwhile, print media, especially commuter newspapers, will underperform if people avoid transit. Another issue for media will be parking availability. Tens of millions of sports fans, movie and concert-goers typically travel to venues by public transit. It’s unclear when we’ll return to large public events, but when we do—where will everybody park if we’re all driving?
As of 2018, 41 million US vehicles had an embedded 3G/4G base system out of a vehicle fleet of about 275 million, at a rate growing 20 percent year over year. As those vehicles connect to networks and move to 5G, network operators anticipate annual revenues from this market to be in the billions of dollars globally. As connected cars become standard in more models, stronger or growing new car sales would benefit telecom operators. On the other hand, if traffic jams worsen, network operators would need to enhance coverage further along commuter routes as car users consume more media and more data.
One way of handling more cars and more congestion is to make the roads, along with traffic lights and other signalling devices, smarter. Intelligent transportation systems (ITS) were a global $27 billion market in 2019 and were expected to grow six percent annually even before COVID-19. ITS relies on a mix of hardware, software, and telecommunications services to make roads and highways smarter.
A pandemic reset
All of the above assumes that commuters will revert to their previous habits that have been seen in the past, with the default being the private car. However, some are seeing COVID-19 as a chance for a ‘great reset’, where we take the opportunity to rethink everything from how we work to how we travel.
Instead of returning to previous behaviours, we could see a shift in overall mobility patterns. Most major employers, educational institutions, and health care bodies are looking to use this moment in time to rethink the distribution of their work force, physical and virtual, which throws mobility patterns into new territory. Data exchange, digital enablement, hardware, software, 5G, and other telecommunications technologies will all be key to managing this change and avoiding adverse problems like declining productivity, climate impacts due to the increase in emissions from greater private vehicle use, and severe traffic congestion.