Re-Imagining Transportation in The New World
Ravi Mehta, Partner, Deloitte India & Rachit Mathur, Director, Deloitte India In the past few years, ride hailing companies have leveraged new-age technologies to fundamentally transform the transportation industry. Customer preferences changed as ‘utilization-of-asset’ started taking precedence over ‘ownership-of-asset’. However, COVID-19, as it has done in many facets of life, severely impacted the basic fundamentals of this industry. Almost overnight, customer preferences seem to have flipped from the 2Cs (Convenience and Cost) to 2Hs (Health and Hygiene). Additionally, the streams of big innovations in collaborative technology platforms and low-cost, high-quality data networks also converged to enable remote working, leading to a significant reduction in the need for transportation. The ‘double whammy’ of reduction in the need for transportation and increase in the perceived risk of non-exclusive transport, may again change the course of the passenger transportation sector (especially the public segment). Industrial (cargo) transportation sector is also facing its own set of troubles with the overall reduction in demand and simultaneous push by many governments to implement the ‘vocal about local’ agenda. Owing to limited visibility on multiple complex factors (including the timeline for the discovery of a drug or vaccine for COVID-19), it may be difficult to accurately predict the long-term future of transportation industry at this time. However, in the foreseeable future (next 8 – 12 months), it appears that the transportation industry may have a bumpy ride, resulting in the need to critically introspect and potentially re-imagine its role in the new world we live in. Leveraging data, automation and analytics for ‘contactless mobility’ The pandemic has created a complex ‘reduced needs and increased risk’ paradox in the passenger transport sector. Decreasing the risk of using public transport is a precursor to reviving demand and the risk itself emanates primarily from information asymmetry (lack of information about health status of passengers). Modelled along the lines of individual financial credit scores, creation of a real-time Personal Health Score (PHS), may potentially reduce the risk of people using public transport, while suffering (knowingly/unknowingly) from a contagious disease. This can be implemented via linking personalized health monitoring apps with apps such as Arogya Setu and centralized information platforms. However, such core structural program implementation is typically very complex, expensive and long drawn and may need multiple stakeholders (including government and private sectors) to seamlessly work together to resolve complex policy issues such as ‘private information vs. public implication’, ‘data availability vs. data security’ and ‘choice vs. control’. Hence, in the short to medium term, widespread deployment of contactless ticketing and health check booths, as implemented at Nagpur Railway station* can be used to make the transportation experience safer and touchless. Autonomous robots enabled with C-UV light technology may be used to disinfect nodal points in the transportation value chain to further decrease the risk of using public transport. Leveraging Blockchain and AI to increase resilience The industrial transport sector, too, has seen a reduction in demand due to an overall decrease in economic activity and contraction in east-west trade (which in many ways is a key barometer for global economic activity). Revival of demand in the industrial transportation sector may depend on the outcome of politically and emotionally charged ‘localization vs. globalization’ debate. History suggests that ‘globalization’ thrives in prosperity whereas ‘localization’ surges in adversity. Due to COVID-19 induced adversities, many countries have articulated their desire to tilt more towards ‘localization or in-shoring’. Additionally, companies may need to leverage alternate manufacturing and sourcing destinations, not just to reduce cost but also to increase agility and resilience of the supply chain. This reconfiguration of global supply chains may need innovative application of diverse technologies, like a Blockchain enabled network which can connect companies with global suppliers, carriers, buyers and help find smarter ways to identify the best source of materials and quickest, safest, cost-optimized routes. Artificial Intelligence and Machine Learning technologies can be infused in this network to enable better demand forecasting and fulfilment and more transparency in global supply chains. Additionally, increased use of intelligent drones can further help in improving last-mile delivery and logistics management. The transportation industry is at a crossroad in its evolutionary journey as it faces turbulent headwinds and limited visibility. While the discovery of a drug to treat COVID may aid in recovery of transportation industry, companies may benefit from adopting agile operating models which innovate to respond, strive to recover, and re-imagine to thrive. New demand patterns and safety expectations in passenger and cargo transportation are expected to push these services to evolve and navigate through unchartered territory, literally and figuratively. However, it will need significant support from other stakeholders (example, governments) to successfully accelerate onto a path of opportunity and prosperity.
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