Transportation, travel, and infrastructure

Transport infrastructure trends, challenges, and opportunities

Transport infrastructure has traditionally enjoyed relatively steady market growth, driven by consistent demand around the world for airports, ports, roads, and rail. However, in recent years, this demand has been growing even faster due to two critical needs:

To replace or upgrade aging assets in developed countries
To develop new assets in fast growing emerging economies

The traditional owners and investors in this critical engine of economic growth, the governments in these countries, are facing increasing challenges to ensure modern and efficiently managed transportation infrastructure. These challenges—such as financial constraints and lack of rigorous project management practices—lead to delays and work slippage, inefficient operations, and poor utilization of infrastructure assets.

To address these challenges, governments around the world are increasingly seeking partnerships with the private sector (Public-Private Partnerships).

Advantages of public-private partnerships (PPPs)
Governments enter into public-private partnerships primarily as a means to gain access to new sources of financing and managerial expertise. Private players bring advanced capabilities in design, construction, and operation. They are driven by the need to make the asset operational in the least possible amount of time and to get it functioning as efficiently as possible to reduce construction delays and better utilize resources.

Key considerations for private investors
Private players are drawn to transport infrastructure opportunities as uncertainty in equities and lending markets makes the relative stability of infrastructure investments more attractive. More players—private equity firms, investment banks, pension funds and others—are investing in this sector globally.

Private investors must manage infrastructure better than the public sector, identifying cost efficiencies and revenue opportunities that create attractive returns. To do this they need to fully understand sources of value in assets and answer key questions about revenue streams, costs, and risks. These include:

Current and planned revenue streams

What is the demand forecast, and how stable is this demand?
What rates and pricing levels can be achieved?
How will market conditions affect pricing?

Expansion of revenue stream

What alternative pricing models can be implemented?
How can the capacity and throughput of the asset be maximized?
What auxiliary offerings can be provided, such as advertising, retail concessions, parking, and targeted real-estate development?

Cost transformation

How does an organization perform relative to best-in-class players in employee productivity, asset productivity, and margins?
What specific levers can be applied to increase efficiency?

Risk planning and mitigation

What impact will external forces—including changing supply chains, demand patterns, population shifts, and weather—have on volume or pricing forecasts?
What steps can be taken to address potential revenue fluctuations?

Level of required future investment

Have adequate investments been made in recent years?
What new capacity will be necessary to accommodate projected demand?
What investments in technology and other innovations will improve operations?

Government impact on revenues and costs

To what extent can the government be a partner in the infrastructure transaction to ensure a mutually beneficial result?
What pricing, footprint, or other limitations should governments consider?

Transport infrastructure brochure
Learn more about transport infrastructure trends, challenges, and opportunities. [PDF]