The future of the Scottish transportation sector

The future of the Scottish transportation sector

8th December 2016

Growing the national economy is a key priority for the Scottish Government. As a nation, Scotland aims to become an internationally recognised country where new skills and talent can be nurtured and companies can be successful. This means operating in a global market and increasing productivity in order to develop prosperous Scottish cities and rural economies. We recently covered the Top 10 technology driven sectors in Scotland (you can access part one here and part two here). We explored energy and low carbon technologies, financial and business services, food and drink, life sciences and healthcare and sustainable construction in part one and focused on technology and engineering, creative industries, aerospace, chemical sciences and tourism in part two. Today we’re exploring the Scottish transportation sector and the impact technology will have on the industry landscape.

Transport is a critical component of Scotland’s national infrastructure and vital to the economic well-being of the country. The overall infrastructure, including ports, rail, road and airport transportation, and the companies that rely on these assets, are absolutely vital to the overall economic landscape. Transportation plays a vital role in terms of bolstering economic prosperity, whilst improving the work/life balance of Scotland’s population. The key message in terms of future economic growth is clear. Scotland needs to develop transportation products, services and infrastructure that meet the current and future needs of the consumer whilst maintaining a focus on low carbon technologies and innovation. The Scottish government is committed to addressing the challenges associated with reducing carbon output and this requires a new way of thinking when it comes to the design and development of low carbon technologies that can improve consumer experience and increase operational efficiency.

Let’s take a look at some of the ways technology will play a vital role when it comes to innovation within the Scottish transportation sector:

– Technology (particularly mobile) can be used to enhance journey times and connections. This makes it quicker (and easier) for passengers to enjoy a robust and reliable experience whilst travelling internally and abroad.
– Productivity: New apps can be deployed to manage internal workflows, staff and scheduling (see our work with Workplace) and security (see our work Pinpoint) can reduce operational costs and generate new streams of revenue
– Technology will impact international logistics in order to deliver new experiences for customers in terms of goods/order tracking
– Low carbon technologies can be used to reduce carbon emissions, enabling Scotland to become a world class hub of sustainable excellence in transport.
– The development of new mobile apps will lead to increased quality for consumers in terms of accessibility and cost and help to create a competitive market that provides outstanding choice and value.

Key Market Trends

People are travelling more

The reality is that people in Scotland now travel more than ever before. Increased economic prosperity has altered consumer behaviour and enabled people to think about travel in new ways, leading to a steady increase in the overall number of journeys taken per person. It’s estimated that the average distance travelled per head, per year, increased by almost 60% between 1985 and 2005. For businesses, technology now plays a crucial role in understanding and catering for the needs of the modern, mobile-savvy consumer. Consumers are now constantly connected to their smartphones and using mobile apps to access transportation services with greater speed and efficiency. Apps such as Uber are having a seismic and highly disruptive impact on traditional transportation services and businesses need to be ready and prepared for changes in the future. It’s not just consumer habits that are changing as access to mobile technology grows, businesses can also harness the power of mobile to develop innovative new apps that increase existing revenue, unlock vital new revenue streams, cut costs and enhance overall operational efficiency. One great example of this, is the app recently developed by Waracle in collaboration with Scotrail, you can access the case study here.

Technology will redefine aviation

In Scotland people are travelling more by plane now than ever before. The dramatic growth in the number of people utilising air travel services has grown dramatically in recent years. This growth in usage has largely been driven by a decrease in the cost of air travel services and greater consumer choice when it comes to the availability of flights and exciting new destinations. It’s estimated that between the years of 1970 and 2005 the number of Scottish travellers utilising air travel services grew by an astonishing 700%. What’s more, these trends are set to continue in terms of increased usage and consumer demand for air travel. It’s estimated that in the future, between now and 2030, that the number of people in Scotland travelling by plane will increase by 150%.

Aircraft engineers are constantly developing new innovations that enable the aviation industry to become more efficient. On a global scale, when it comes to technological advancement and innovation, aviation is one of the most sophisticated industries in the world. Unlike cars, which possess the ability to refuel more frequently, aircraft, particularly long-haul, must establish means of carrying all of their fuel for a single journey. The fact is that fuelling aircraft is an expensive business and fuel tanks occupy a huge amount of space on commercial aircraft. The problem being that increased fuel on-board equates to shorten the range of a particular aircraft due to the increased weight. The presence of larger fuel storage tanks can also dramatically impact wing size requirements and influence the payload that an aircraft can conceivably carry.

Each new generation of aircraft are now capable of producing double digit enhancements when it comes to fuel efficiency and optimisation. This means that when a new aircraft is deployed, it possesses the ability to carry 25% more fuel than it’s previous counterpart. If you compare today’s aircraft to that of the 1950’s, modern aircraft produce more than 70% less in terms of CO2. However, new technologies possess the ability to have a dramatic impact on overall carbon emissions and output.

More people will use public transportation services

In recent years the number of people in Scotland using public transportation decreased but numbers are back on the up again, as demand for buses and train services increases. Buses are still the most dominant form of public transport and have benefitted in recent years through the integration of web and mobile based booking systems and the use of mobile technology to enhance internal processes and workflows.

In a continued drive to increase efficiency in order to deliver a more effective and improved service to their customers ScotRail continue to look for ways to make their business run smoother. Part of this process involved the automation of Scotrail’s obligation to regulators in order to provide sample information throughout their rail network on passenger numbers on particular services. Up until their work with Waracle this process involved staff boarding trains with an old fashioned hand-held tally counter (clicker), writing up their numbers, taking this information to administration staff who then typed up the information and made it ready for analysing and review. Clearly not an easy or efficient process for the organisation.

ScotRail wanted to create an easier system for their staff to manage, faster to upload, less administration and more effective to analyse and it importantly it needed to be mobile. Expect this time of innovation to be a consistent theme across all areas of public transportation, from buses to rail and beyond.

People are using more cars more often

Cars still represent the most dominant form of transportation in Scotland when compared with other alternatives. Rewind back to 2003 and 23% of all journeys under one mile (and 57% of journeys between one and two miles) were taken by a privately owned car. During the same period nearly 70% of Scottish commuters travelled to work via car and nearly 20% of all children travelled to school using the same means. In addition, the vast majority of visitors from outside of Scotland access the country by car, which places increased importance on the role of road services. As the number journeys has increased, so too has the requirement for software systems that create vital efficiencies across the whole of the Scottish transportation sector. Businesses involved with road and transport efficiency can now access innovative new technologies to enhance operational performance and cope with the demand created by altering consumer behaviour.

Connected cars are becoming a thing

In 2014 it’s estimated that there were over 1.2 billion cars globally, up from fewer than 900 million vehicles in 2005. Adapting to these changing market conditions requires new and more intelligent solutions when it comes to urban rural transportation. Smart cities of the future, driven by the Internet of Things (IoT), will provide new infrastructure that will be required for the implementation of connected and autonomous (self driving) vehicles. Programs need to be developed that can assist and protect drivers, helping to avoid accidents and congestion, whilst reducing harmful carbon emissions. There are various market segments associated with the rise and proliferation of connected cars such as automotive infotainment, navigational technologies, services (and products) for electric vehicles, car safety systems, fleet management, insurance and smart tolling systems. This means that businesses involved in transportation need to think very carefully about the potential impact that some of these new innovations will have on the way they do business both now and in the future.

Let’s have a look at some of the stats associated with connected cars:

It’s estimated that by 2020 there will be 220 million cars on the roads globally that are connected to the web. It’s estimated that 88 million consumers will utilise connected services from within those cars. This represents a 45% CAGR in terms of the number of connected cars on the roads between 2014 and 2020.

Sales of connected cars will reach an astonishing $2.3 trillion by 2020. This is largely due to the fact that connected cars possess a much higher average selling price tag than the conventional car. What’s even more astonishing when exploring the numbers, is the fact that revenue generated by hardware and software services for connected cars will reach an estimated $152 billion by 2020. Driver assistance systems which include self parking features will become increasingly common and create significant new revenue streams for car manufacturers. This represents a 35% CAGR in terms of revenue generated via connected cars between 2014 and 2020.

Most consumers are still currently unaware of connected cars and what they have to offer. As things stand, 44% of consumers have never heard of a connected car and another 42% are familiar but unsure what they actually do. This is an issue relating to consumer perception as only 14% of people were familiar with connected cars and their potential capabilities. But the reality is that consumers desire the features that connected cars have to offer. Some of these features include the ability to stream music via web based services such as Spotify, surfing the web via in-car monitors, identifying accidents, congestion and traffic signals, emergency braking systems, collision warnings, night vision, fatigue warning and access to social media.

Autonomous cars are also becoming a thing

An autonomous, driver-less, self-driving or robotic car, is defined as being a vehicle that is capable of sensing its external environment and navigating without the need for human input. Autonomous vehicles possess the ability to detect external surroundings through a variety of means including GPS, radar technology, lidar, odometry and computer vision. Autonomous vehicles represent the next phase of the evolution of the connected car (cars need to be connected to the web in order to be autonomous) and global shipments of autonomous cars are expected to exceed 180,000 by the year 2020. This year Google will add 150 new autonomous vehicles to its existing fleet and it’s estimated that currently, when surveyed, 8% of consumers would be happy to drive an autonomous vehicle. However, there are barriers in terms of perception as 40% of consumers have suggested that they would not pay for an autonomous vehicle. Autonomous vehicle manufacturers will have to overcome perception issues with consumers when it comes to the safety and reliability of the user experience. In 2016, sales of autonomous cars are practically non-existent, but with a CAGR of 271%, autonomous cars are a thing of the future and symbolise a rapidly growing new market.

Conclusion

If you’re a business in Scotland involved in the transportation sector and seeking new ways to increase consumer engagement and enhance internal processes, it’s worth taking some time to consider the ramifications of these seismic market developments. You need to think about how technology, and particularly mobile apps, can be used to enhance journey times and connections, create sustainable low carbon transportation technologies and provide greater accessibility for consumers. If you’re a business seeking to understand how to adapt and innovate in relation to changing market conditions and consumer behaviour, contact Waracle today to start the conversation.

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