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30 October 2012

‘Need for sustainable transportation infrastructure drives the ITS market’

First publishedon www.ITSInternational.com
According to a new report by Global Industry Analysts (GIA), the global Intelligent Transportation Systems market is projected to reach US$22.7 billion by the year 2018, driven primarily by the need to enhance road safety by efficiently managing traffic, enforcing speed limits and easing traffic congestion.  Rising demand from developing nations to incorporate ITS solutions also bodes well for the future of the market.

The report provides a comprehensive review of trends, product developments, mergers, acquisitions and other strategic industry activities, as well as market estimates and projections for the US, Europe, Japan and rest of world markets over the period 2010-2018. Product segments analyzed include Advanced Traffic Management Systems (ATMS), Electronic Toll Collection (ETC) Systems, Public Vehicle Transportation Management Systems (PVTMS), Commercial Vehicle Operations (CVO) Systems, and others.

The report asserts that the US continues to remain the largest regional market, while the Asia-Pacific region emerges as the fastest growing regional market with China emerging as the primary revenue generator in the region over the analysis period. Advanced traffic management systems represent the largest product segment. Electronic toll collection systems market is the fastest growing product segment, displaying a CAGR of about 11.7% over the analysis period.

Growth in the ITS market in the upcoming years will be driven by developing countries as mirrored in the rising number of international bid invitations for public transport projects. Players in the ITS market are betting big on intelligent transport system in the CIVETS region. The next decade is forecast to belong to the CIVETS, a new group of tiger economies comprising Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa and popularly called the next BRICs. These countries are characterised by rapidly growing domestic consumption, rising middle class, cheaper labour than China and India, favourable demographics such as large base of young, affluent and employed population, unlike the aging, retiring baby boomers in the developed countries. As economic advancement and development spreads to this second tier of lucrative markets, the subtle shift in geopolitical power and standard of living from west to east will continue into the future. As western economies are forced to slow down with their heavy debts, and as BRICs which dominated the international arena over the last decade and half with their economic might now finally slowing down, the CIVETS are now rising over the horizon to replace BRICs.

Market prospects for Advanced Traffic Management Systems (ATMS), Public Vehicle Transportation Management Systems (PVTMS), Commercial Vehicle Operations (CVO) Systems and Advanced Vehicle Information Systems, in Europe are especially forecast to feel the heat of the potential infrastructure implications caused by the debt crisis. Austerity measures are continuing to exert pressure on credit availability in both the commercial and public sectors. In addition to the banking and fiscal crisis in the euro area, problems related to the lack of competitiveness especially in the peripheral economies is also weighing down market sentiments, all of which require to be resolved to positively aid in the region’s recovery. Land transport activity in the European Union declined largely as a result of negative sentiment in the capital markets, business case challenges and budget constraints, all of which are compromising growth prospects in few of the ITS product markets. Growth in these market segments has and will continue to decelerate into the year 2013 until Europe finds middle ground between the need for fiscal consolidation and the need for stimulating smart growth, and stability.

A key segment of the ITS industry, which is however poised to gain against the backdrop of the rising need to reduce public debt, and spending and yet build the infrastructure to bolster flagging economies is the electronic toll collection (ETC) systems market. This is primarily because Governments are leveraging newer funding mechanisms and are bringing about reforms and changes in fiscal governance. Strategies for Government funding are changing rapidly with Governments seeking to generate revenues for funding critical projects through increased taxes and public-private partnerships, among other strategies.

Transportation infrastructure in any country is critical as it represents the productive capacity of the nation’s economy and poised to benefit from the Governments’ new financing strategies. Implementation of the Road User Charging (RUC) concept and installation of ETC for toll collection, and higher fuel taxes will help Governments’ significantly reduce subsidies on road construction thus easing their debt loads. Under this scenario, demand for ETC systems is poised to gain momentum despite the prevailing economic climate.

Companies in this article

European Union
Global Industry Analysts
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