Transport infrastructure: trends, challenges and opportunities in a post-COVID world

Over the past few years, Australia and the ASEAN region, like many other parts of the world, have embarked on ambitious and visionary transport infrastructure development programs. The cities of Sydney and Melbourne, for example, are well advanced with the largest transport programs in their history. 

But the huge disruptions caused by the COVID pandemic have led many to ask: are these infrastructure plans still the right ones?

The disruption caused to transport has been profound. During 2020, urban mobility decreased globally by as much as 80%, and streets were emptied across the world. Cross-border travel virtually ceased, decimating airlines, airports and rail companies. Some big changes to mobility continue to persist in early 2022. Public transport ridership remains 30% to 50% down in some cities compared to pre-pandemic levels, and mobility patterns have shifted.

Global supply chains were – and still are – hugely disrupted. Even as the worst of the pandemic appears to be receding, freight and logistics networks have yet to recover and container freight rates remain elevated at record levels.

Notwithstanding these uncertainties, governments are planning to increase transport infrastructure spending. A 2021 analysis undertaken by the Global Infrastructure Hub (GI Hub) and EY found that the G20 countries alone have already announced more than $US3 trillion on infrastructure programs clearly marked as stimulus. Of this, more than $US800 billion was for transport, representing a 45% higher-than-normal spending rate.

In light of this, it makes sense to question what paths transport infrastructure investment should take moving forward.

Infrastructure investment is a highly effective form of economic stimulus. In an earlier study, GI Hub found that after two years, the economic multiplier impacts of infrastructure spending were 1.5 times greater than those that can be achieved from other forms of spending.

However, the benefits of infrastructure investment extend far beyond purely economic stimulus. For example, it can also drive profound change and play a vital role in addressing critical issues, such as the climate crisis, environmental challenges, and income inequality and social exclusion.

Around the world, new approaches to infrastructure that embed these transformative elements into all parts of the transport infrastructure lifecycle are now emerging.

Seven major transformational challenges have been identified, with huge implications for transport, but for which well-targeted transport infrastructure investments have the potential to make big positive changes.

1. Decarbonisation

Transport accounts for 21% of total global emissions, but decarbonising the sector is a hugely complex exercise.

The main path to a zero-emissions transport sector is the transition to electric vehicles (assuming that the energy grid itself is transforming).

For transport infrastructure, that means rolling out thousands of EV charging stations on public and private property, and large investments in the energy grid to handle the increased demand. For its part, Australia has announced funding to provide 50,000 charging stations in households, and we have seen similar announcements in Southeast Asia.

Many governments are also embarking on plans to transition public transport, taxis and rideshare vehicles to zero-emission technology, as a way to meet their own obligations, but to also help create critical mass for an EV sector to take hold.

But it isn’t only about land transport.  Shipping alone generates over a billion tonnes of atmospheric CO2 each year. The recent COP26 agreements included a commitment by 26 countries to establish ‘green shipping channels’, where zero or low-emissions ports and ships would combine on certain routes. The Asia-to-Europe container route and Australia to Japan iron ore route were identified as early targets.

In aviation, sustainable aircraft fuel made from recycled biomass and waste products is in advanced development as a kind of transition solution, while research and trials of electric or hydrogen aircraft gather pace.

Back on land, other interesting trends include trials of hydrogen and solar-powered trains, and the removal of carbon emissions from infrastructure itself. Fossil-free construction is now required in some European government tenders, triggering the accelerated development of electric-powered plant and machinery, and of new materials, such as low-carbon concrete and road surfaces incorporating recycled tyres, metals and glass.

2. Critical and resilient supply chains

The COVID-19 pandemic exposed weaknesses and bottlenecks in the world’s supply chains.

Over the past two years, significant problems have emerged, including gaps in cold-chain logistics, shortages of truck drivers and a lack of containers – many are sitting on ships waiting to be unloaded. The scarcity of vital items, such as semiconductors, lithium, steel, vaccines and building materials, have also become far more frequent and widespread than before.

COVID highlighted the value of resilience, which, as a result, has become more of a driving factor behind decisions regarding future infrastructure development. 

Recent work by ASEAN on a new productivity framework, which Australia supported through the ASEAN-Australia Development Cooperation Program Phase II, has highlighted cold-chain logistics as a major priority for ASEAN countries, along with using digital platforms to help build resilience. Partnerships for Infrastructure is working with the ASEAN Secretariat to identify practical ways to enhance container processing procedures in Member States, addressing the supply chain stressors caused by the pandemic.

An example of a different approach to the same problem is Australia’s 1,700km Inland Rail project, which will create a new rail freight route, connecting the ports of Melbourne, Sydney and Brisbane through regional Australia. It will not only create new connections, but also bypass the existing congested rail lines near those big cities.

At its heart, it is a huge investment in resilience.

3. Greater emphasis on inclusive infrastructure

Around the world, there is growing acceptance of the concept of inclusive infrastructure. Issues such as gender inequality, ethnic disadvantage and social injustice are critical, and have long been a high priority for governments. What is more recent however, is the realisation of the central role infrastructure itself plays in the lived experience of those facing these issues daily.

Transport infrastructure connects communities and therefore people. It provides access to job opportunities, education, health services, leisure, markets, friends, family and support networks.

Yet when measuring infrastructure benefits, we have tended to define benefits so narrowly that some of the greatest impacts infrastructure can provide are not factored into decisions.

This is now changing, and new policies are emerging – including some great work by Infrastructure Australia – designed to embed and to mainstream inclusion alongside the environment and economy as the basis for investment priorities.

4. Intelligent transport infrastructure

At the heart of transport infrastructure building programs is a need to expand the capacity of transport networks. 

But increasingly, technology is offering options to acquire this additional capacity through smarter operations rather than construction.

It is important to note that there are many parts of the world, including regions within ASEAN, where physical infrastructure is lacking and must still be constructed to create vital links. Yet relatively simple applications of intelligent transport systems embedded in infrastructure are yielding significant improvements in asset performance.

Smarter synchronisation of traffic lights in Melbourne increased through-put on busy roads by 18%. Vibration sensors installed on remote bridges in Australia are being used to detect weaknesses and to plan preventative maintenance without the need for costly physical inspections. And mining company Rio Tinto now operates driverless trains from a control centre situated 1,500km away, and uses machine learning to improve day-to-day mining operations.

By collecting data, often through simple and inexpensive devices, and by using that data in applications which already exist, it is possible to make very significant improvements to transport infrastructure performance.

5. Integration across sectors

As a result of the electrification of transport and the advent of intelligent infrastructure, much closer integration of infrastructure planning for transport, energy and digital telecommunications will develop.

EVs affect the energy grid. Digital capacity affects intelligent infrastructure, and the energy grid affects digital capacity too: each new data centre rolled out in support of the cloud and 5G makes huge demands on energy. All three sectors now massively alter the network requirements of each other, to the extent that they must be planned and invested in together.

6. The challenge of reviving urban mass transit

The prospect of widespread adoption of EVs has led many people to assume that the problem of motor vehicle air pollution has been solved. That may ultimately be true, but EVs won’t solve congestion, and urbanisation will continue as a global trend.

Even as people turned away from public transport due to COVID, traffic congestion in some major cities around the world returned to pre-pandemic levels despite a decline in the number of overall journeys.

This suggests governments will have to double down on public transport infrastructure investment.

7. Infrastructure finance with a purpose

The transformative potential of infrastructure is as well understood in the infrastructure investment community as it is within governments. And indeed, the higher environmental, social, and governance (ESG) standards that investors have demanded of themselves require them to look for more than just an attractive rate of return.

What’s more, analysis at EY indicates that valuations are higher for companies with strong ESG policies. Private investment now also wants to see infrastructure that is sustainable and inclusive, not just economically and financially viable, and the emergence of a market for green finance is a manifestation of this.

This is an important issue for mobilising private sector investment in the ASEAN region. With governments’ fiscal capacity constrained in the wake of COVID, many are looking to increase private investment to help finance infrastructure programs. 

Increasingly, that investment is searching for and prioritising sustainable and inclusive infrastructure.