Karri Salminen

Digitalization opens new paths for transport, future cities

The transportation sector is facing its greatest change since the invention of the car. Forces of change include increasingly strict emissions policies, the growing number of cars, and the possibilities for many new services enabled by digitalization and the sharing economy.

The multi-trillion dollar transport sector represents a significant component of our global economy. In the European Union, Canada and the United States, transportation expenses for most households are second only to housing. For industry, together with logistics, transport has an enormous impact on competitiveness.

Yet, this highly regulated sector has seen no significant new system-level innovations in decades, and long-standing challenges remain as the system continues to rely on private car use:

  • Private cars are used only 5% of the time, and, most often, by just one person at a time.
  • The transport sector accounts for one-fifth of all carbon dioxide emissions worldwide.
  • Human error leads to more than 1 million deaths in road accidents each year.
  • The number of cars worldwide, currently about 1.2 billion, is expected to reach 2 billion by 2035. This has created a situation where objectives for smooth traffic flow, emissions and safety cannot be met.
  • For some cities and regions, traffic and transport have become obstacles for improving quality of life.

The transport system is in urgent need of change. To respond, business models of leading transport companies and manufacturers are undergoing massive transformations, and investments are being channeled to those operators with the best innovation.

Enabling “mobility as a service”

Innovation in one sector often comes from another sector. This is the case for transport. Mega technology trends such as digitalization and virtualization, and the rise of services and automation, are combining with the transport crisis and changing user needs to drive new thinking around a service-driven transport system called “mobility as a service” (MaaS).

In practice, what this means is seamless cooperation between different transportation modes to deliver "door-to-door" services. For example, new services could be based on car and ride sharing and the seamless linking of private and public transport into a single service entity.

Fixed timetables and stops will be a thing of the past, and we will move to real-time reserved services that meet customer needs flexibly. Physical mobility will be replaced more and more by virtual services, as distance or “tele” work, meetings, medicine and teaching become more popular.

Information has become the fifth form of transport. We are transitioning from ownership to utilization and from transport networks to information networks.

MaaS is a mobility-operator based business model where the customer purchases the transport services they need easily, affordably and reliably. Mobility operators tailor their services through digitalization with the objective of providing an overall inexpensive service entity for each need. New MaaS mobility operators have already started to pilot their subscription-based service packages, so this is a reality already, not just a dream and hope for the future.

This is a great opportunity for new innovations, new business and, at the same time, making the world a better place to live. Digitalization makes this a reality with its new services and disrupting transportation modes. New services require new thinking and a change of attitudes for end users, but the benefits are enormous.

I invite you to read more blogs on future cities.

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