OREANDA-NEWS. June 02, 2010. Rising demand, constrained financial resources and existing bottlenecks in supply as well as the need for efficient demand management are challenges transport infrastructure operators will be facing in the next 20 years. These are the headline findings from the second report in PricewaterhouseCoopers "Transportation & Logistics 2030" series, carried out in cooperation with the Supply Chain Management Institute (SMI) of the European Business School (EBS), reported the press-centre of PricewaterhouseCoopers.

Respondents predict that shortages in transport infrastructure will remain until 2030. They expect that industrialised countries will lead in transport infrastructure provision, with an average probability of occurrence of 60%. Although emerging markets, such as India and Russia, currently heavily invest in transport infrastructure, they will not be able to close the gap completely by 2030. The survey participants expects that strong regulatory measures, such as toll roads or congestion charges, will compensate for the increased level of investment in transport infrastructure.

Alexander Sinyavsky, Partner Transportation & Logistics Leader, PricewaterhouseCoopers in Russia, commented:
“Gaps in financing are a paramount concern for all levels of infrastructure, local, national or international. The challenge for both the public as well as the private sector will be to identify ways of cooperation and to create the best win-win situation.”

Klaus-Dieter Ruske, Partner and global transportation and logistics leader at PricewaterhouseCoopers, noticed:
“Demand will be managed through regulatory measures, such as toll roads and congestion pricing, by matching demand and supply at it most efficient point."

Governments, in industrialised as well as emerging countries, are facing enormous challenges in attributing sufficient capital to transport infrastructure investment. Therefore, respondents think that the financing of maintaining existing infrastructure will be more difficult than attracting investment in new infrastructure.

Transport infrastructure is one of the critical success factors for a country's or a region's competitiveness, with the potential to accelerate economic growth and investment opportunities. Competitive advantages will also be realised by taking full advantage of the potential of logistics clusters, where industry, academia and government collaborate closely. The panellists think that of such clusters will activate new potential in transport infrastructure development (with a probability of occurrence of 75%).

Awareness about sustainability and climate change is omnipresent, since the effects of transport infrastructure and transport networks on the environment are profound. These impacts should be assessed from a holistic, long-term perspective, particularly in light of the fact that respondents think environmental costs will become an integral part of assessing the full cost of a transport infrastructure project. Furthermore, they expect that by 2030 transport infrastructure operators will participate in the emission trading system by obtaining pollution permits, indicated by a probability of occurrence of 78%.

The overall health of the world economy has direct relevance for transport infrastructure, as GDP is a main indicator to forecast demand for transport infrastructure, in particular that is needed for freight. A PwC analysis suggests that, by 2019, the output of emerging and developed countries will be nearly equal, but this parity will not last for long as the E7 (China, India, Brazil, Russia, Indonesia, Mexico and Turkey) will retain much stronger growth potential. From 2020 onwards, the E7 will break away from the G7, with combined E7 GDP being projected by PwC to be around 30% higher by 2030 than total G7 GDP. While such forecasts are certainly indicative of general trends, the impact of the economic crisis has shown that long-term projections must be handled carefully. In 2010 uncertainty about the pace of recovery from the crisis remains.

Roy Cummins, Chief Commercial Officer Global Ports Investments Plc (GPI) (a part of N-Trans Group), said:
“Economic growth will require continued capital expenditure in transport infrastructure over the coming decades. Emerging countries such as Russia will catch up in regards to the supply of transport infrastructure, owing to demand-driven investment from the private sector, as is already becoming apparent in the port industry.”

Population density is a key indicator for the assessment of future needs for public transport infrastructure development. The world’s population is continuing to expand and is expected to grow by 1.4 bn by 2030. According to the United Nations, in 2015 emerging markets will already account for nearly three quarters of the world’s urban population. Countries such as Russia will experience no change in population density, and in some countries such as Germany, Poland and Japan, population density is even likely to decrease. Governments around the world are already beginning to address the challenges that rising trade flows and population growth will bring, necessitating innovative and effective transport infrastructure solutions. Many landmark projects can be found in emerging markets. Russia intends to construct 20,000 kilometres new railway lines by 2030, representing an increase of 24%.

Promoted as the biggest infrastructure project in history, China announced in March 2010 that three railway corridors are planned. One will connect Beijing and London; the second one will connect the Asian countries Malaysia, Burma, Vietnam and Thailand and China and the third one will connect China, Russia and Germany. China and Burma have already started construction work, however financing seems to be the biggest issue facing the project.

According to the International Transport Forum report, transport infrastructure investment has accelerated strongly since 2003 in Central and Eastern Europe (CEE) and the Russian Federation, while its pace remained subdued in Western Europe and the United States.