Transportation trends in 2020 (podcast) | Deloitte Insights

Envisioning transportation in a post–COVID-19 world Transportation trends 2020

11 September 2020

Transportation agencies were in the process of making mobility systems more seamless, sustainable, accessible, affordable, and safe—and then came COVID-19. Avi Schwartz and J. Bryan Nicol discuss what comes next. 

“When we shut down parts of the economy, the roads were empty. I remember driving through Manhattan and it was really eerie and scary and sad because there is literally no one on the road in midtown, where there’s always millions of people. As the economy picks up, and one day it will, and when we get beyond COVID-19, and one day we will, those roads and planes and trains and busses and scooters, they’re going to be packed again. Transportation is literally the lifeblood of our economy. We need good, healthy infrastructure to sustain that and to grow it.”

—Avi Schwartz, Deloitte Transactions and Business Analytics LLP

Tanya: When you think about how much transportation has changed in the last 15 years, it is astounding. Who would have ever imagined we would willingly get in a car with someone we’ve never met and let her drive us home from a restaurant? Or that we’d hop on an electric scooter and when we get to our destination, use an app to lock up the wheels and then go on about our day?

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I’m Tanya Ott and today on the Press Room I’m talking to two Deloitte leaders who have been tracking transportation trends for years. J. Bryan Nicol is a managing director with Deloitte Transactions and Business Analytics LLP. He works with transportation and infrastructure entities from the local to federal level. Before that, he was the state transportation commissioner for Indiana.

Bryan Nicol: I’ve had the great fortune to see both the challenges from a public sector standpoint of delivering, maintaining, and operating a significant piece of infrastructure around transportation, highway bridges, public transit, airports, and then on the private side to be able to help many of my former colleagues, help manage their systems, look at their systems in terms of bringing innovation and new program delivery methods to infrastructure and transportation-type projects.

Tanya: Avi Schwartz is a principal at Deloitte Transactions and Business Analytics LLP, leading the infrastructure and capital projects team for the government and public services division.

Avi Schwartz: We’re focused on serving federal, state, or local governments that have large infrastructure spends.

Tanya: If you want to get a glimpse into where mobility is headed in 2020 and beyond, these are your guys.

Avi: What does transportation mean? There’s a new convergence of public and private. So maybe in the old days, we would think of transportation as trains, planes, and automobiles. And the government would provide this big infrastructure. But now you can more personalize that experience. The methods that we’re using to do [this involves] a lot more robotics. We can inspect bridges and other infrastructure with drones. And I just had a conversation with a company that had balloons we could send up to avoid having to use drones to inspect infrastructure. There’s always new technology players and then technology players on the personal side. So, your phone now becomes the way you interact with transportation—not a map, not a ticketing system or a booth. All of those things together are changing the way we think about transportation infrastructure.

Bryan: How can we have our transportation system—whether it be transit, getting on a train, moving to a scooter for the last mile—how do you make that integrated and frictionless for the traveler? How do you look at it from a customer experience where you understand with your phone, as Avi said. How that experience can be better and you can know the full cost of your trip and make choices along the way? Maybe you have plenty of time and you don’t have to get there at a certain time and you can be a little more flexible about the mode you choose or the way in which you make your destination from point A to point B happen. But then, other times you may want to pay a little bit more to get there faster. There’s a combination of the digital revolution that we’re seeing, the innovation accelerators that are happening, whether they be the connected or electric vehicles, these electric scooters, and then what we call artificial intelligence. How can artificial intelligence take all of this data and all of this information to help reduce the trip times or manage congestion or nudge behavior so that customers can have the best option for them at that time while not bogging down the entire transportation system?

Tanya: One of the things that San Diego has been looking at, that is very central to what they’re doing, is the idea of mobility hubs where users could go to one location and seamlessly transition from one type of transportation, maybe it’s bus or train or light rail, to another type of transportation. Tell me a little bit more about how that works.

Bryan: The interesting thing about a mobility hub, it’s taking advantage of multiple options in one place and letting travelers then move from whatever option they’re using at the time. Maybe they’re on a train and they can hop off and grab a scooter. Or the weather may be such that they can take a different sort of option from a traveler standpoint. The whole notion of a mobility hub is to provide connections and provide mobility, but also to maximize the infrastructure that’s in place. So they take advantage of those key nodes so that people can make choices along the way, but also have very efficient, frictionless travel.

Avi: Listening to Brian, I was thinking of my early work experiences. I was a commuter from a suburbs into New York City. All commuters have that nightmare of missing the last train out. What the mobility hubs are doing, the overall flexibility and mobility options, is decoupling your transportation life from one type of transit asset. Nowadays, you could maybe take a subway-bus combination, or replace the train with a light rail. And that enriches your experience as a transportation user and gives you flexibility. That flexibility is all-important in making better and different decisions for your personal situation.

Tanya: So what we’re really talking about is having transportation very user-focused and not siloed. Users can interact with it in the way that it is most convenient for them. They can use the kind of transportation services that are most convenient for them and give them a lot more flexibility.

Avi: I think so. And, pushing the envelope a little bit, if we change the way a user interacts, that makes it more personal. Does that change the way we can pay for some of these assets? We always talk about we don’t fund our system enough, and there are very few transit systems even pre–COVID-19 that we’re able to fund their deferred maintenance backlog appropriately. You could pick up the paper and find different transit agencies that have suffered the consequences. But if we personalize it a little bit and we change our experience, does that change our expectation? Is it going to be more okay, and Bryan, you talked about this before, to pay more for a more convenient approach? Maybe we’ll be used to and more comfortable paying for things in different ways. Can governments find ways to capture that, to go from those pennies or dollar transactions that we’re used to making on our phones today, and can that somehow, through social finance, almost magically go from that to funding multibillion-dollar assets? And what changes do we make to create more partnership between the traditional funding models and some of the newer models that are unlocked by this very personalized experience that we’re talking about?

Tanya: But a lot of the infrastructure that we know, the trains, the highways, things like that, those are really fixed at this point. Is there much we can do to change those things?

Bryan: That’s an important notion. There’s this mix of both public and private transportation providers and there are certain fixed assets, but even some of those fixed assets can be operated by a private-sector company. Some of those lines are blurring. But even more important than that is the user doesn’t really look at who owns the asset. What the user looks for is the experience. How can I seamlessly move to where I want to go with the least amount of friction and with some convenience built in? It’s the notion of mobility as a service: It may be that the transit system, which is a public entity in most cases, gets me part of that way, and then a bike share, which is a private entity, can help me get the rest of the way. But on my phone it looks like one trip. What I want to be able to do is have that platform integrated so I don’t have to look up a separate app and try to figure something out. It’s there for me and I can focus on getting to where I need to go in the best possible way that meets my current travel situation.

Tanya: And I want that app to be able to let me pay just once for the whole thing.

Bryan: Absolutely.

Avi: Bryan, you’re talking about moving to the app and paying in one place. What are some of the changes that traditional transit agencies and state departments of transportation are going to have to make? I know you’re working with some clients now thinking about the future. If we’re going to usher this in, government agencies that have been responsible for these networks for years are going to have to change, aren’t they?

Bryan: Absolutely. One thing the governments are saying is that customers want good information, actionable information, and they want to understand what is in front of them as they make these decisions and not have the scenario that you played it out of you, where you’re more worried about, am I going to make that train or not? [In this scenario] you’ll know that information in advance. The data and the analytics that are involved can actually help travelers in a completely different way. And agencies, as a result of that, are looking at their mission in a new way, looking at the transportation and mobility scenarios of the future. And COVID-19 has accelerated that. We’re now in a virtual environment. We’re now more digital than we were six months ago. How do we come out of this COVID-19 environment into a post–COVID-19 mobility environment that not only helps me get from point A to point B, but most importantly, does so safely. Safety is the cornerstone of every agency—wanting to make sure that people are safe, both from collisions, the traditional kind of crashes and things we hear about on our highways, but also now a whole new threat of safety. So the safety mission has been amplified. Now we have the technology to help us understand contact tracing and where am I in relation to others and how does that play in the overall scheme of things? While protecting my privacy, I can now travel in a completely different way into the future. Agencies are focused on that kind of flexibility and that kind of effort to be able to look at their customers in a new way with these new tools and these new sets of mobility options in front of them.

Tanya: So we’ve named it a couple times now, and I want to dive into that because this report was written in a way that was broader and sort of pre–COVID-19. I know you alluded to this a little bit, Bryan, but how does COVID-19 have you guys thinking differently about how we have to approach the future when we can be surprised by something like this?

Bryan: Well, let me just use one example that actually existed, pre–COVID-19, but was a precursor. When you go to the airport and put a couple of fingers down. Now, that is contact. So what are the contact-less options that now maybe a facial recognition software can say, that is Bryan Nichol and he has a ticket and he can go through. No one else gets that information. I’ve already provided the information to them, but it allows me to not have contact in a COVID-19 or post–COVID-19 environment and move very efficiently through that airport to where I need to go. Customers now have a heightened awareness, and it’s incumbent upon agencies and private transportation providers to understand what that means, to put safety first.

Avi: We’re really still in the middle of the crisis portion of this. From a transportation perspective, revenue from ridership is obviously way down. It could have been as much as 70% down when we had the peak numbers of closures in all the different state jurisdictions.1 That’s creeping back up. But as Bryan said, CARES Act funding [may be] helping agencies close the gap, at least the operating gap, but has not yet addressed anything on the deferred maintenance or the so-called infrastructure funding gap, but there is some work being done to sort of close the operating gap. What happens when we come back? Will there be fewer trips? There are still a lot of unknowns, but to me, one of the silver linings of this is agencies are going to have to almost convince their customers to come back. And in a way, that’s not a bad thing. We’re going to have to go out there and make actual structural changes so it is safer. So we can then say, hey, our train, plane, bus, automobile, whatever it is, is safe or is safer and is at an acceptable level of risk compared to other regular traffic accident risks.

That process of convincing customers is changing the way some transit agencies used to think: If you build it, they'll come. That’s not actually always true. Why that’s important is it opens up new opportunities for funding. If you want to have a private-sector partner help fund some transit asset, you’ve got to have a way to pay for it. That means that riders have to use it. If you create an agency that’s more engaged with the public, that has to convince the public to come back, that is going to help them think more about rebuilding their transportation assets with the customer in mind. That will then open them up for more private-sector participation because they’ll be building assets that are bankable, that are credit-worthy, that the public will invest in. So, although there’s going to be a real period of, frankly, turmoil in figuring out how to close these budget gaps and what to do with projects that were already on the books, there could be a longer term real shift in how these projects are planned for and how different stakeholders are engaged more as customers and not just as an average weight widget that has to be transported from part of point A to point B.

Tanya: Avi, you allude to these massive budget disruption that COVID-19 has presented. That’s particularly true for governments. Bryan, I’d love for you to talk about how willing governments are going be to spend money on infrastructure when they’re facing massive budget problems.

Bryan: Certainly, infrastructure over the past almost 30 years has been severely underfunded. There’s been deferred maintenance, as Avi mentioned a little bit ago, where the assets [are] built and they don’t maintain it in the proper way and then it breaks down. The line has to be shut down or the bus just simply doesn’t run or the bridge has to be posted, [and] certain traffic can’t go over it. We’ve had this deferred maintenance and budgets that simply haven’t kept up with the demand. All of this points to an underfunded system. We were beginning to see the ability of the public sector and the private sector to come together to advance projects. Now, that’s slowed down some. That may come back. There will be different partnerships that will exist as new transportation companies and mobility providers come into the mix. Think about where we were just a couple years ago when there wasn’t a scooter in any major city in the United States. Now most major cities have electric scooters and there’s an efficiency to that last mile for a lot of people. What public agencies are going to have to grapple with is their operating budgets have evaporated and they’ve had 80 % or 90 % less passengers on the transit system.2 The same can be said with tolled highways or that people aren’t buying as much gas, so they’re not paying into the highway trust fund. So we’ve got this conglomeration that COVID-19 has exasperated, but what it points to is an absolute need to reinvest in our infrastructure, the basics, and plan for the ongoing maintenance and operation that has a whole bunch of new twists to it. Technology, artificial intelligence, a more seamless way to travel on a system that’s well cared for: That will be the trick. And it’s not an impossibility. When we built the interstate system, never before had it been imagined that we could have a high-speed facility, much like the trains in our center cities where we can move people and goods efficiently and very safely across this massive system. We have to expand it. We have to improve it with technology and take care of it for the longer term.

Avi: You were asking, will your government be able or willing to continue to fund it? When we shut down parts of the economy, the roads were empty. I remember driving through Manhattan and it was really eerie and scary and sad because there is literally no one on the road in midtown, where there’s always millions of people. But you have to think about the converse. As the economy picks up, and one day it will, and when we get beyond COVID-19, and one day we will, those roads and planes and trains and buses and scooters—they’re going to be packed again. It reminds us, or it should remind us, of the link between transportation and our economy. Transportation is literally the lifeblood of our economy. We need good, healthy infrastructure to sustain that and to grow it. Once we get past the initial response to COVID-19, my hope and my vision is that agencies that have responsibility for transportation and infrastructure more broadly are going to have opportunities and responsibilities to build more and better and safer, because that is the way our economy works and it’s what our economy relies on. It’s what built our economy so successfully after World War II. When we come back and when the economy comes back, we’re going to have to come back to infrastructure spending.

Tanya: Bryan, Avi, a fascinating conversation about transportation, something that touches all of us. And we will definitely drive our listeners to the full report at the website. Thank you so much for being here today.

Bryan and Avi: Thank you very much; it’s been a pleasure.

Tanya: Bryan Nicol is a managing director and Avi Schwartz leads the infrastructure and capital projects team for the government and public services division at Deloitte Transactions and Business Analytics LLP,.

In their report, Transportation trends 2020, they’ve got a map of innovation. Like the country’s first public connected vehicle test bed in California3 and in West Georgia, a stretch of interstate outfitted out with pavement that uses traditional solar cells—protected in a frame—that allows the road surface to generate clean energy under heavy vehicles.4You can find that full report at deloitte.com/insights.

We’re on Twitter at @DeloitteInsight and I’m on Twitter at @tanyaott1.

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