by Max Clarke
Despite ambitious infrastructure investment plans in many countries, business executives take a dim view of the ability of transport systems to meet future requirements, according to new research carried out by the Economist Intelligence Unit and sponsored by the MAN Group.
Just 27% of executives surveyed believe that transport infrastructure in their countries is fully adequate to meet demand, and 49% consider inadequate infrastructure the greatest threat to their supply chains in future.
The survey was carried out in December 2009 and January 2010 among 220 senior executives worldwide, most of whom (62%) have responsibility for strategic or operational management of logistics in their companies. It shows widespread pessimism about the outlook for transport efficiency over the next two decades, including widespread expectation of rising business costs due to inefficient transport and higher toll and energy charges for users of transport systems.
To assess how different countries fare within this generally gloomy outlook, the Economist Intelligence Unit conducted as part of the research a benchmarking study of transport efficiency in ten countries. The index defines transport efficiency as operating with the lowest possible costs in time, money, accidents and environmental impact. The countries ranked are Germany, France, the UK, Spain, Poland, Brazil, Russia, India, China and South Africa.
The executive survey and benchmarking study produced the following key findings:
• Current transport conditions are best in France: France leads our benchmarking index in terms of efficiency “outputs” such as mobility, safety and environmental protection, followed by Germany. Of the ten countries in the index, the best overall scores go to France for mobility (9.4 out of 10) and safety (9.9), reflecting that country's investment in high-speed rail transport and its relatively low traffic volume per kilometre of road.
• Indicators of future transport efficiency are best in Germany:
Despite clogged roads today, Germany ranks highest for inputs into transport efficiency such as density and quality of infrastructure, investment in infrastructure and good vehicle stock. France scores a close second to Germany in this ranking of inputs to transport efficiency.
• Emerging economies lag far behind in efficiency, but are catching up:
Although China and India come in last in our transport efficiency outputs ranking, they are positioned to move up the list in future, owing to their heavy investments in infrastructure. Already, China ranks third in the “policies” portion of the transport efficiency inputs index.
• Government policy is central to solving congestion–at least in theory:
Our benchmarking index highlights the importance of public policy by showing a strong correlation between positive inputs–such as high road density, large rail passenger stock per population and high levels of investment in road infrastructure–and positive outcomes such as free-flowing traffic, safe highways and low emissions. Yet our corporate interviews suggest scepticism that governments will implement the needed policies.
• Congestion problems are widespread, chronic and expensive:
Despite ambitious infrastructure investment plans in many countries, only about one-fourth of executives surveyed say infrastructure in their countries is fully adequate. Respondents in Asia-Pacific, Eastern Europe, and the Middle East and Africa are the least satisfied with infrastructure in their countries.
• Companies expect their congestion-related costs to keep rising:
Survey respondents were pessimistic about near-term improvements in mobility. The business costs associated with blocked traffic include lost time, wasted fuel, forgone business, and a need for increased inventories and storage space. Companies expect these costs to continue to rise.
• The cost of transport itself is also expected to increase:
Both business and government officials expect that users will pay higher road and rail charges in the decades ahead, to cover the costs of new infrastructure. Tighter environmental rules will further raise the cost of transport. The higher costs of both congestion and road/rail use will prompt companies to pay closer attention to transport and logistics when choosing operating sites.
• Firms are finding inventive ways to squeeze more out of existing infrastructure:
Executives point to a range of strategies to cope with congestion, including tightening supply chains, co-ordinating shipments with suppliers and customers, and increasing night-time deliveries. In addition, logistics providers and road and rail operators are increasingly using IT systems to navigate around blockages and improve traffic flow. Nearly two-thirds (63%) of respondents consider intelligent logistics systems to be most helpful in making the most of existing infrastructure.