Global and national transportation trends 2023

At the end of 2022, Deloitte released Global Transportation Trends presenting the results of a global survey offering insights into the trends in the transportation industry with a forecast for the coming years.

In these Infrastructure Talks, Dmytro Pavlenko, Partner at Deloitte Ukraine, leader of Infrastructure industry group, dives into five trends from Deloitte's global report and provids examples of their implementation in different countries of the world. Dmytro and his colleagues from the Center for Transport Strategies talk with leading businessmen and experts in the transport industry of Ukraine to obtain their views on the global trends and learn more about their own observations within the local context.

Future-ready transportation

At first, we had our doubts about whether these global trends are worth discussing now, because the war has upended the agenda for Ukraine, leaving it out of global progress. However, it didn't take us long to realize that today is just the proper time,” says Dmytro Pavlenko. “Firstly, we will have to catch up with the progress and, perhaps, even spearhead advances in certain areas, using all the latest innovative technologies in facilitating the economic recovery of Ukraine. Secondly, it appears obvious that these global challenges in the field of transportation may greatly contribute to this very reconstruction of the country.

The global problems of transportation funding, the efficiency and fairness of fuel taxes, the need to seek transparent and sustainable financial alternatives (Trend 1) come against the backdrop of the fuel crisis, which we have survived and must be prepared to survive again.

The growing share of electric vehicles (EVs) — exponential in some countries — and the development of the charging infrastructure (Trend 2) should be a possible response to the fuel crisis; however, these are difficult to implement during the current electricity crisis. This rapidly evolving industry faces a talent crunch, which, nonetheless, may open up an opportunity for Ukraine where unemployment is expected to remain high after the war.

Ukraine's post-war public transport system is to become inclusive and equitable (Trend 3) with due consideration given to affected peoples’ needs in transportation and war-stricken regions' needs in reintegration.

In addition to ensuring resilience to cyber threats and climate change (Trend 4), we need to demonstrate resilience to an inadequate aggressor. In all cases, technology should be coupled with a more data-driven approach to prioritizing investment decisions.

Digital transformation, smart infrastructure, connected and autonomous vehicle technologies and innovative mobility-on-demand solutions (Trend 5), all of which we need not only after the war, but also for our victory.

Creation of the future ready transport will require from government transportation leaders bold action and political will to reimagine traditional rules and funding models. They are already competing in experiments and innovations. Ukraine should swing into action.

Trend 1. Creating sustainable funding mechanisms for transportation

Today, many traditional funding models still are based largely on taxes levied per gallon or liter on fossil fuels. However, they’re being undermined steadily by the increasing number of hybrids and EVs, since fuel consumption ceases to be a criterion for drivers' activity. Road user charging (RUC) and vehicle miles traveled (VMT) taxes are being piloted and implemented around the globe, in particular in the USA and Australia. Tolls will be paid through a telematics-enabled systems and geofencing to assess vehicle movements, thus eliminating the need for tolling plazas and allowing for smoother traffic flows. In addition, this will incentivize drivers to make sustainable travel choices. The transportation system funded by taxes based on actual roadway usage will produce reliable revenue streams that allow agencies to maintain and update our transportation networks to meet our growing needs.

Vitaly Dzhurynskyi, Chairman of the Supervisory Board of the VIDI Group of Companies operating in the automotive market:

This is a quite understandable trend. Good roads mean access to higher-paying jobs, better education, and higher quality services. This will contribute to a more efficient use and robust development of human resources in the region. Therefore, among the key drivers is a fair toll for road usage, which will enable the state to do its part and ensure proper road maintenance.

In this case we will have a win-win situation. All of the above will become more accessible for the population of remote parts of the region. Better roads will give fresh impetus to transport, including increased sales, leasing, rent, and hire of cars. In general, this will support the development of the entire region.

Viktor Zagreba, Chairman of the Board of NGO Vision Zero:

Looking at public transportation, this segment is constantly facing problems with funding. No country is an exception to this. Ukraine has long been standing apart on the European continent for its bus transportation has always been and is profitable (not on all routes, though). In our country, private operators even bribed officials to drive on the routes. However, not only criminal and unethical has this “business model” appeared to be but also unreliable, and it is already failing the test of time.

The owners of these local bus companies will have to reduce their operations or even withdraw from business altogether as it becomes far less attractive in terms of gains. On the other hand, local self-government bodies will take pains to create communal enterprises. Considering Ukraine's aspiration to join EU, it is high time for the country to switch to planning, funding, and monitoring practices that are typical in European countries, where the local authorities collect fare from passengers and add funds from other sources (tax revenues) to pay public transportation providers for the transportation work performed. As another option, the Ukrainian local authorities may chose to provide municipal transportation services free of charge, as does Kharkiv, where this practice has been applied since the outbreak of war. Or, if so decided by relevant authorities, provides this service for free. For example, this practice is adopted in public transportation in Kharkiv.

Dmytro Bespalov, lecturer at Kyiv National University of Construction and Architecture, director at ProMobility:

To put it briefly, what is happening with funding of public transportation in Ukraine is a catastrophe: the public transport sector — especially the infrastructure of surface electric transport — has been underfunded at all times.

How can this challenge be effectively addressed? We need to change the approach in the first place. We should implement the European Regulation 1370 to enable cities pay public transportation providers for their transportation services based on specific routes, types of transport, and distance in kilometers. This will force city authorities to enhance the efficiency of the public transport network by reducing overlapping travel routes and ensuring at the next step that the registered timetables are kept by transport operators, thus making public transportation more attractive for passengers.

Trend 2. EVs usher in a generational shift in mobility

With a well-established network for their sale, fueling and maintenance, internal combustion engines (ICE) dominate the world. The patchwork nature of the current infrastructure for EVs may create a psychological barrier in consumers’ minds. In addition to concerns about the widespread availability and convenience of the charging stations, there exist doubts over the range and costs compared to traditional IC vehicles, as well as safety issues concerning batteries.

With that being said, the leading countries are committed to pursue the agenda for sustainable development, including in terms of sales of new cars. Thus, the USA struggles to have EVs representing 50% of all new vehicles sold by 2030; Norway intends that only electric or hydrogen cars should be sold by 2025; the European Union wants all transport to be zero-emission vehicles by 2035.

Government transportation agencies face enormous challenges in scaling EVs and their corresponding infrastructure during the next decade. Among their key tasks are building a proper EV charging infrastructure, making electric cars available and affordable, and addressing workforce challenges.

Oleg Boyarin, Chairman of the Eurocar Group of Companies, Chairman of Employers' Federation of Automotive Industry of Ukraine:

The traditional automobile industry is already receding into history. For example, we can observe that EU development plans become more and more focused on gradually shifting from ICE vehicles to EVs. In contrast to decreasing sales of gasoline and diesel cars, sales of electric vehicles are gaining a foothold in the market. In particular, last year the share of EVs reached 12,1% in the EU market. The growth of EVs is also observed in Ukraine, even despite shelling and power outages. As a matter of fact, now electric cars are not only about ecology, but also about energy security.

Vitaly Dzhurynskyi, Chairman of the Supervisory Board of the VIDI Group of Companies operating in the automotive market:

For a long time, debates worldwide have been raging about pros and cons of gasoline and diesel engine cars. Withs today's avid interest in EVs, these disputes have reached new heights. At the same time, we increasingly see the emerging of the hydrogen-powered fuel cell technology. It also has a lot of pros and cons. Internal combustion engines emit harmful substances into the atmosphere. One could think that electric cars do not. However, the electicity is generated from burning coal or oil, or using nuclear fuel, which gives similar harmful emissions. In addition, how will the disposal of used batteries affect the environment? This is a many-faceted issue because the lion's share of emissions are produced by trucks, buses, and tankers.

To change the situation, we need a technological breakthrough in production of EVs so that they become the only choice and, thus, solution to the emission problem. For a start, it is necessary to replace lithium in production of car batteries with a new material that will allow batteries to hold much more energy, say, in the amount sufficient for a 30-ton truck to run the distance that it can cover with full diesel fuel tanks; in addition, this energy can be absorbed more easily and quickly. However, Japanese manufacturers act as a counterweight to this European trend. For example, Toyota states, “If the market demands electric cars, we will produce them; but we will continue to offer hybrids and develop the hydrogen-powered fuel cell technology”.

Trend 3. Modernizing transportation systems in an inclusive, equitable way

Use of transport only in large cities and on profitable routes does not foster the development of regions; on the contrary, it accelerates the stagnation of remote parts of the country. Citizens in rural areas often travel long distances to access essential services such as specialized health care, higher education, and others. Regulators need to be more flexible and seek a balance between efficiency and inclusion, while providing their communities with better access to public transportation closer to home.

In this context, the US government has implemented its Justice40 initiative, within which 40% of the overall benefits of federal investments in climate and clean energy will flow to disadvantaged communities. In France, where 54% of the rural population has no access to a bus stop within a 10-minute walk, carpooling is being promoted as an alternative. Citizens can go to the closest assigned carpooling stopб enter their destination through a mobile application and share a travel with neighbors

About 15% of the world’s population lives with some form of disability. Cities worldwide are using innovative approaches to make public transportation more equitable and accessible for everyone. In 2022, for example, Transport for Wales successfully tested a new onboard digital service called Hearing Enhanced Audio Relay (HEAR) that offers passengers with hearing loss customized journey announcements on their smart devices in real-time.

Oleg Boyarin, Chairman of the Eurocar Group of Companies, Chairman of Employers' Federation of Automotive Industry of Ukraine:

The whole world is taking positive steps towards mobility, with one of them being gradual shifting of people from private vehicles to public transport. According to The Royal Automobile Club Foundation for Motoring (RAC Foundation), the average car is driven almost 5% of the time, that is just one hour a day. At the same time, motor vehicles require operational costs. Instead, affordable, convenient, and green public transport is about smart mobility, alleviating transportation costs, relieving traffic congestion, and reducing emissions.

Vitaly Dzhurynskyi, Chairman of the Supervisory Board of the VIDI Group of Companies operating in the automotive market:

We have already pointed out the quality of the roads as the key factor. And the development of regions may be achieved not so much through reducing the transport concentration in large cities and on profitable routes and providing equal transport opportunities to residents of remote regions, but through ensuring that citizens in rural areas can access essential services in their own communities (particularly including people with disabilities) or, at least, through providing such services from mobile service points on scheduled days. For example, mobile offices of Ukrposhta, state banks, etc. In the same way, key donor projects are focused on mechanisms — mobile Administrative Services Centers (ASC) — for providing administrative services that cannot be fully delivered online. The Ukrainian industry of special-purpose vehicles production is ready and waiting.

Viktor Zagreba, Chairman of the Board of NGO Vision Zero:

The report highlights mass transit, carpooling, and on-demand transportation as necessary measures to meet the need for mobility in remote rural areas. In Ukraine, rural communities are in dire need of mobility solutions; multiple mobility challenges also require actions in agglomerations of large cities, connections between the suburbs and the city. The Western world has successfully adopted the practice of regional cooperation for transport connectivity, joint venture companies which provide mass transit services, “transportation unions”, local and regional railway companies. I am not aware of any precedent of this kind in Ukraine.

For the trend of a “regional approach for equitable innovation” identified by Deloitte to be implemented in Ukraine, the government must eventually make necessary legislative changes, which the state should have introduced under the Association Agreement (next year, the Association Agreement will be 10 years in effect). This may grow into a far-reaching public transport reform, which is vital in and of itself, especially today with its challenges brought by the war. While it pains me to admit it, Kyiv seems unwilling to lift a finger and to start developing such a reform; even such intentions are not observed. Let me quote a line from Deloitte's report: “the future of mobility will require a transformation of government processes and a better approach to regional transportation planning and management.”

Dmytro Bespalov, lecturer at Kyiv National University of Construction and Architecture, director at ProMobility:

Europe is desperately considering ways to extend public transport routes to the suburbs; however, in Ukrainian realities, this mission faces a major institutional problem — powers and authority of different communities. Such projects as extension of the trolleybus network from Kyiv to Brovary or the tram line to Vyshneve are not transport projects. For myself, I treat them as mere populism, or commercial interest of developers building up the capital's suburbs, which tell stories about improvements of the connection between Kyiv and its suburbs in order to make the real estate they offer more attractive to buyers. Public transport is a priori unprofitable. The extention of the trolleybus line from Kyiv to Brovary may cost a pretty penny, which gives rise to a vexed question about the source of funding: is it to be the region's budget or the capital's budget? While the regional authorities or region center's authorities may lack budget funds for such purposes, Kyiv authorities are very unlikely to be willing to pay for such works.

Anton Hagen, transport planning specialist:

As practice shows, this is a widespread and generally accepted trend, it has never receded from the foreground. If you look at large European cities — London, Paris, Berlin — they have always had a system of agglomeration interaction between cities and towns connected with suburban railways, such as S-Bahn in Germany or RER in Frence.

Similar railway connection is also relevant for Kyiv. In fact, an agglomeration has already formed around the capital; it only needs to be legally established. However, this situation places significant obstacles for development of the public transport network to connect Kyiv and the suburbs. The thing is that routes from Kyiv to Vyshhorod and Vyshneve are treated as long-distance routes; therefore, they exist separately from the capital's public transport network, and the fare charged is much higher than if they were city routes. In view of the above, we need to further develop suburban electric trains between Kyiv and its suburbs as part of city public transport, not as long-distance trains. Consequently, such trains are expected to run at shorter intervals. To get this idea off the ground, it is necessary to further develop the railway infrastructure in Kyiv and its suburbs by building multidirectional transportation arteries.

As for extention trolleybus or tram lines from Kyiv to the suburbs, I find no sense in this effort. Today, the capital's electric transport system, both surface and underground, is already overloaded. Thus, suburb trolleybuses or trams will run only to bring passengers from the suburbs to the nearest underground station. In addition, they are not fast enough, which makes them attractive for commuters. That is why European cities are focused on developing commuter rail network as it ensures frequent rapid transit and allows easing the burden on city public transport. However, commuter rail lines should run throughout the city delivering passengers to different underground lines, interchanges, and other points of attraction, not just to Svyatoshyn or Darnytsia stations.

Oleksandr Gorenyuk, national deputy of Ukraine, member of the Verkhovna Rada Committee on Transport and Infrastructure:

It is important to connect different parts of the region. These efforts should fit into a larger picture, based on an understanding of where to, where from, why, and what outcome to have in the result. Thus, a transport model is pivotal for building large integrated public transport networks covering suburban and marginalized (in terms of transit) areas. And a regional master plan is even more essential for development purposes as it ensures that engineering and construction works are carried out most efficiently. The transport model and the city/agglomeration development master plan give a solid basis for predicting real prospects of development and estimating the economic effect from connecting different parts of the region with the public transport network. The extensive infrastructure needs vast resources, but we must use the resources provided by international donors, financial organizations, and the state budget responsibly.

Trend 4. Making transportation networks more resilient

Connected vehicles and intelligent transportation will change the transportation network. Transportation systems are loaded with vital information, including personal data. The growing number of connected devices, as well as their integration with systems such as ticketing management, identity management and real-time processing engines, makes today’s transportation system increasingly vulnerable to cyberattack.

Still another growing risk to transportation networks stems from climate change, which will require significant innovations in infrastructure design and maintenance.

Dmytro Bespalov, lecturer at Kyiv National University of Construction and Architecture, director at ProMobility:

In recent years, our company is quite closely communicating with foreign partners. One of them is a large Canadian consulting firm, which is currently engaged in the feasibility study of electric buses. They expect the year 2025 to bring a real electric bus boom, which means that cities in the USA, Canada, and European countries will be adopting electric buses en masse; they are already preparing for this. This will really be a trend in the coming years.

In Ukraine, public electric transport is facing different challenges, being seriously hit during this winter's rolling blackouts caused by missile attacks on the country's energy infrastructure — electric transport just stopped running in many cities. This made city authorities realize that diesel buses need to be reserved for such extraordinary events. However, there are cities that consistently develop public electric transport. To name a few, Ivano-Frankivsk, Lviv, Ternopil, which persist in developing their trolleybus networks instead of destroying them. Ukrainian tram systems and the underground system are even in a more disadvantaged position. Our gross domestic product is not enough to evolve such expensive modes of transportation.

Anton Hagen, transport planning specialist:

In Ukraine, electric transport is historically dominating in public transport. This is what distinguishes us from many European countries. We have preserved extensive tram and trolleybus networks, while most European cities — in the times of heavy motorization — dismantled public electric transport and switched to diesel buses. For Europe, the introduction of electric transport is a kind of a come-back to ecological transport. For us, electric transport has always been and remains in widespread use.

We are very different in this respect, so not all approaches used in Europe are good in our realities. Building electric transport from scratch and possessing a massive network of electric transport are two different kettles of fish. It should be factored into decision regarding the introduction of, say, electric buses. In Europe, many cities opt for developing the infrastructure for electric buses and build it from scratch to replace diesel buses. However, this is not the best option if you already have developed trolleybus and tram networks. Therefore, the policy on the development of public electric transport will be slightly different in Ukraine and in Europe.

Another point I would like to make is sustainability of transport. This is very often considered in the paradigm of replacing the rolling stock in a conditional proportion 1:1. For example, one diesel bus for one electric bus or one gasoline car for one electric car. Simple one-to-one electrification of public transport is less efficient than creating a robust public transportation system of diesel buses as it becomes more attractive to people than using private cars.

Oleksandr Gorenyuk, national deputy of Ukraine, member of the Verkhovna Rada Committee on Transport and Infrastructure:

Ukraine strives to follow all global trends in sustainable development, including sustainability of public transport. However, we have a war going on. Many Ukrainian cities want electric buses to ply on routes, but what if tomorrow enemy shelling causes power outage again? Electric vehicles will appear on their routes, which materially diminishes the benefit expected by them form the use of electric buses. The war has paralyzed the development of green public transport. We need to provide people with transportation facilities to get to work, hospitals, friends or relatives. Diesel buses, which are independent of the electricity supply, are a solution under the current circumstances.

We are cooperating with our international partners to ensure that Ukrainian cities have necessary municipal public transit fleet. For example, Spain have recently handed over 32 large buses to Ukraine. These are nice roomy 12 meter long buses. European cities are getting rid of diesel buses and switching to electric ones. We should increase efforts in cooperating with the municipalities of European countries to facilitate the provision of our cities with an operating public transportation system.

When developing a suburban public transport network, the most efficient approach would be to combine different modes of transport: railway, automobile, personal electric cars, bicycle paths, pedestrian routes, etc. The rationale is to build a high-performing, sustainable, and multifunctional transport system that meets various use cases. I am convinced we also need to elaborate security scenarios as well. As seen from recent practice, in Ukrainian cities the underground stations perform a long-forgotten function of a shelter, which the Ukrainians didn't consider to be of any aid until 24 February 2022.

Trend 5. Turbocharging digital and technology innovation

While the pandemic disrupted public transportation in many ways, it also ushered in a wave of smart transportation systems. Digital was no longer a “nice to have” for transportation agencies but an imperative. The smart system must serve passengers efficiently, scale cheaply and adapt quickly. Government investments flow into building of a smart infrastructure, mobility-as-a-service (MaaS) programs, smart infrastructure, connected and autonomous vehicle technologies.

In 2022, the UK government introduced ambitious legislation to scale the use of driverless cars on highways by 2023. The government has allocated funds to improve the safety of these vehicles, which should also offer more on-demand and personalized connectivity between towns and villages in remote areas.

Italy’s national MaaS4Italy project — a single national digital platform — involves 13 participating Italian cities to test this solution. Citizens in Rome and Milan can access a single app that allows them to manage their trips from planning to payment. Spain plans to launch a similar nationwide MaaS platform in 27 cities. since 2019, Brussels has been piloting a solution called SmartMove, which aims to tackle congestion through a smart per-kilometer charge users pay for road usage, a mobility-asa- service (MaaS) platform for riders and a “nudging” tool that provides incentives encouraging people to use more sustainable transport options.

Oleg Boyarin, Chairman of the Eurocar Group of Companies, Chairman of Employers' Federation of Automotive Industry of Ukraine:

New digital solutions make mobility smarter and more efficient. An electric car is now not only a means of transportation but it can also be used as a power source for the home (Vehicle-to-Home, Vehicle-to-Grid technologies). Autonomous driving technologies are being developed and tested. And the car itself is more like a computer on wheels than just a vehicle — it is a complex device that requires software, control, protection, and information exchange systems. We must focus on preparing for such changes and create a clear development roadmap for the industry; we should drive, not just consume, innovations.

Autonomous transport is another area that has development potential in Ukraine as it increases road safety and provides a more comfortable means of transportation. Autonomous driving technologies have a variety of applications, including private cars, delivery of goods, in addition to public transport.

This may be implemented in Ukraine as it has the required production capacity, desire, ability to produce modern transport, and a powerful IT sector. What can actually give us a competitive advantage is the synergy of the latest technologies and production. However, only a well grounded and elaborated state policy based on approved and implemented development strategies and plans can make this a reality.

Dmytro Bespalov, lecturer at Kyiv National University of Construction and Architecture, director at ProMobility:

In Europe, the digitalization of public transport helps save money through optimization of many processes. In Ukraine, unfortunately, I do not see this yet. New solutions are introduced now and then, but they either are half-baked or stop middle-of-the-road, which brings the expediency of such an innovation almost to naught. Let's take electronic tickets as an example. They are meant to ensure the possibility for passengers to change transport or use several modes of public transport. In Kyiv, electronic tickets are used only as a non-cash payment, and that's all. It shouldn't be like this.

Anton Hagen, transport planning specialist:

In my opinion, the digitalization of public transport is largely overvalued. Practice shows that a good transport system can be built on the basis of old technologies whereas a highly-digitalized transport system may be poor in operation. To illustrate this, we can look at the situation in Budapest and Bucharest. Until recently, before the introduction of electronic tickets for public transport, the Hungarian capital had a well-functioning system of paper tickets, which allowed passengers to change transport. On the other hand, the capital of Romania has implemented many digital solutions but its public transport is not popular with the city dweller, as it rarely keeps on the schedule; therefore, trolleybuses in Bucharest run almost empty.

Did you find this useful?