Future of Transport Eludes the Seers
(Bloomberg Opinion) -- If you want to know the future of transport, make sure you never listen to the prophets.
A decade ago, the most bracing visions of travel were being promulgated by Airbus SE and Tata Motors Ltd.
The double-decker Airbus A380, which entered service in October 2007, would offer a way for airlines to transport ever-greater volumes of passengers from space-constrained airports and steal market share from Boeing Co.’s 747 and smaller twin-aisle planes like the Boeing 777.
Tata’s Nano would repeat Henry Ford’s trick and open up a giant new market with its promise of a 100,000 rupee ($1,400) car for India’s emerging lower-middle class.
The Tata Nano is in a similar state, with just one unit produced in June. As we’ve written, its vision of a low-quality and dirt-cheap vehicle misread the market. India has instead seen its best-selling cars go upmarket over the past decade while lower-income customers have stuck to two- and three-wheelers.
That rule has held in transport for decades. General Motors Co.’s famed Futurama exhibit at the 1939 New York World’s Fair correctly forecast the growth of the U.S. interstate highway network and the expansion of car-dependent suburbs, but missed the role aviation would play in intercity travel and the backlash that Robert Moses-style urban expressways would eventually provoke.
Similarly, from the vantage point of 2008 you would have seen little mention of ride-hailing companies (Uber Technologies Inc. wasn’t founded until 2009) or the Chinese high-speed rail network that carried 1.7 billion riders last year, or the way that giant container ships loaded with 2,500 boxes or more would come to dominate global trade.
Are there any guiding principles that can save us from making such dodgy forecasts?
Probably not — but here’s a try:
Invention is fast. Adoption is slow.
Just because a technology is technically feasible doesn’t mean it’s commercially viable. It’s striking that a vision of rapid, congestion-free interstate and urban car transport was still considered futuristic in 1939, three decades after the Model T went on sale. As a result, bets that the near-term future of transport will look radically different from the present tend to lose. That’s a reason to doubt prototype technologies like flying taxis and self-driving cars will be nearly as transformative over the next decade as their boosters like to argue.
The consumer is king.
Ratan Tata underestimated the tastes of Indian car buyers. The A380’s early patron Jean-Luc Lagardere missed how airlines would be driven by business-class passengers who value frequency of flights, resulting in more point-to-point trips on smaller planes rather than hub traffic on mega-jumbos. Similarly, consumer tastes dictate that electric cars will be slow to take off until the charging infrastructure is in place. Once that penetration occurs and prices start dropping below those of internal combustion engines, though, it’s a good reason to expect the transition could be rapid.
First in a series on the future of transport. Read more:
It all comes back to energy.
Almost all transport ultimately comes down to transforming potential energy into kinetic energy, so the first thing you should think about when prognosticating the future of transport is how new developments will affect energy. A couple of points flow from that: Firstly, less energy-efficient modes are only likely to be viable if they offer substantial advantages elsewhere, especially in a world increasingly afflicted by climate change. Secondly, the density of energy storage is extremely important: Major breakthroughs in rechargeable batteries will be needed before heavy trucks, aircraft and ships can replace liquid fuels.
The tyranny of distance.
There’s a reason Europe and China have large high-speed rail networks while Russia and the U.S. don’t: Their populations are mostly clustered in dense regions where trains can easily be faster and more convenient than airlines. Similarly, those expecting Asian cities to witness car-heavy urban development like that in North America rather than the more public-transport-dependent model of Europe need to consider that in population density terms, the U.S. and Canada are major outliers.
Geography defines the type of transport we need, as well as what’s viable. Ideas that lean too heavily on innovation overmastering those constraints will tend to fail.
It’s not just about markets.
A transport system designed without reference to consumer tastes and the need for returns on investment is fatally flawed. But one that assumes that governments have no role in its design has equally substantial problems. From the interstate highways, to rail operating subsidies, to bilateral air transport agreements, to taxes on fuel and mandates for electric vehicles, government policies have a decisive influence on the future of travel.
Over the coming week, we hope to outline a few ideas about where the world could be heading, and why some of the ideas currently in vogue could be as mistaken as the A380 and the Nano. As can be seen, predictions about the future of transport risk being a fool’s game. Let’s hope we can do better than some of our predecessors.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.
Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal.
©2018 Bloomberg L.P.