There were a lot of issues already in the global transport sector; way before Covid-19. From mobility to the wider transport market, we have seen trade barriers, changing customer preferences, lower oil prices and car sales slumps, which have all affected businesses in the industry in different ways.
However, Covid-19 is adding an additional layer of disruption on top, forcing them to cut workforces or even file for bankruptcy. In recent weeks, we have seen many examples of struggling companies who have been impacted by the global pandemic; with some having to make huge cuts to staff and, in some extreme cases, even file for bankruptcy.
Some of the larger e-ecommerce companies, are trying to thrive in these uncertain times, taking a ‘business as usual’ approach and continuing acquisitions and investments. But, for most, this is a time of survival, with cuts to innovative divisions and a return to more traditional processes that are, currently, more profitable in the short term.
To find out more about how Covid-19 will impact future mobility trends, for better and for worse, I spoke with Christoph Domke, Senior Director, Clean and Smart Mobility Lead at FTI Consulting.
“I think it’s a perfect storm of challenges coming together which is incredibly complicated to manage,” he explains. “Going forward, one of the key questions will be which mobility sectors are on the winning and losing sides?”
The attitude of people towards mobility concepts and overall transportation is changing. In the short term, people will go back to private vehicles. Private micromobility is likely also going to prosper as the sales of bikes are surging.
In contrast, car- and ride-sharing activity, shared micromobility concepts and public transportation are heavily impacted, as people stay and work from home and riders’ numbers have significantly dropped in recent months. Some even had to suspend their operations and find ways to adapt their offerings.
However, when we look at the medium to long term, we have to look at what the trend will be, whether that’s a return to normal public transport routines, an increased effort on safety and health and the demand for certain mobility concepts.
This, of course, will be a driving force in what happens to businesses in the transport sector.
Despite what is going on today, there are many innovators still pursuing new businesses, acquisitions and innovations, not to mention people and businesses adapting to help with the pandemic such as manufacturing ventilators or face masks.
“I’m seeing a lot of restructuring happening at the moment,” continues Domke. “And there is still a lot of need for people looking for investment opportunities, however, now with a much stronger focus on the most promising Mobility ecosystem players.”
The Future Of Autonomous Vehicles
Domke says that, although the passenger car segment has been hit hard, the logistics industry has been less affected. However, it has also struggled with the lockdown, with the transport of goods being blocked into certain countries, it has highlighted the importance of autonomous vehicles.
“It is a good wake-up call for many, who will realise that such things as autonomous delivery vehicles can overcome issues we are facing today, such as contamination concerns,” he adds. “Through this, autonomous technology in this area will be developed much quicker due to the industry identifying even more benefits, especially when you look at the increased focus on health and safety.”
On the other hand, we have seen cutbacks on autonomous technology, along with other future transport divisions in large corporations. For example, General Motors terminated Cruise Automation, which was a promising autonomous technology division of the US automaker.
“Players operating in the autonomous vehicle and technology space have been significantly affected by what has been happening for the last few months,” adds Domke. “ Various leading automotive and transport companies around the world have announced that they will be cutting down R&D expenditure in their autonomous divisions, instead of their more profitable divisions.”
For now, the benefits on the freight side are clearer, as people can see where they can save money and improve services for customers in the supply chain.
When you look at autonomous passenger cars, there are two clear leaders who will almost certainly survive. Waymo and Mobileye should be okay due to their sheer size and backing, but smaller companies in the autonomous passenger car area will struggle to stay afloat. Increased consolidation activity is the consequence.
“Yes, this technology is future-oriented, but companies need to save money, which means less investment into these areas, especially on the car side. Ultimately, traditional automotive players have priorities at the moment,” warns Domke.
Back To Work – But Not As We Know It
Consumer behaviour is changing. With uncertainty surrounding the pandemic, such as how long it will last and whether there will ever be a vaccine, people are changing the way they live.
The attitudes of people going to work in the future will change drastically if this continues. On one hand, we will see people drive into work who are worried about the virus but, on the other, people are ditching their cars and using bikes or walking into work. This will also affect areas such as buying and leasing, again further effecting businesses in this space. And then, of course, you have public transport.
“Is it too early to say what will happen for certain with all Mobility-related trends, concepts and technologies but, over time, we will start to see it unravel,” says Domke. “This also depends on incentives, government regulation, consumer behaviour and experiences, and other aspects of the market.”
With many people going into their eleventh – yes, eleventh – week working at home, people are earning and spending much less. This has a huge impact on business, especially in the travel and tourism sector.
Although some companies have announced that they will return to work in the coming month, many have announced that they will not make a decision until towards the end of the year, as they have adapted to working from home and want to protect their workforce.
Fundamentally, many people do not feel comfortable getting on the tube with social distancing in place. So what does this mean for mobility?
“The mobility industry is known for its agility and willingness to succeed in times of turmoil,” adds Domke. “So expect it to recover better than such areas as finance and tourism. A lot of people have been asking who will be the most dominant player in the industry in the next 10 years’ time and it is unclear. However, after the recent months, I would not be surprised if a vehicle manufacturer is still among them.”