Tech Giants in the Transport Industry

The transport sector is in a phase of unprecedented transformation: traffic congestion optimisation and reduction of greenhouse gases, interoperability of various means of transport, increasing demand for micro-mobility solutions, and digitalisation of the value chain. At the same time, the mobility experience has gradually deteriorated due to an increase in car traffic and insufficient public transport offered in some areas. Like in many industries, technology companies turn problems to opportunities to drive mobility change and increase customer satisfaction standards. The obsession of these players to involve users and build a strong relationship with them is proportional to the growth of the role of citizens in the management of their mobility.

Tech Giants are already embedding their software into mobility services: Microsoft focuses on cloud management and Alphabet is betting on Android to be ‘the’ vehicle infotainment system (e.g.: Google Maps, Waze, Voice Assistant). Android, bought in 2005 by Google, shows that the phenomenon is not new and highlights the importance of embedding an Operating System as quickly as possible in physical terminals. The impact of technology on our daily activities is undeniable. The same is true in the transportation & mobility sector. We see that the main challenges cover topics in which Tech Giants have proven their worth: Data Management, Connectivity, Autonomous Technology, Smart Mobility, and Electrification

> Data Management: technology companies are building platforms to create an ecosystem where hardware, software, infrastructure, and customers are inter-connected. In turn, it generates enormous amounts of data and requiring data aggregation and processing. Also, these platforms need secure and user-friendly data management.  

> Connectivity: To support autonomous technology (AV, application & services, IoT) strong connectivity is a must. 5G can support end-to-end connectivity and communication like, for example, vehicle-to-vehicle or vehicle-to-infrastructure. 

Application & Services: Applications & Services require real-time analytics that facilitates decision-making for suppliers and end-users. Today, traditional companies simply do not have access to all the required information data. Real-time analytics would facilitate an ecosystem with applications offering for example interactions between consumers and insurance companies. 

> Autonomous technology: Private cars stay parked for 90% of their life cycle and human error accounts for more than 90% of all car accidents. Autonomous technology will resolve those inefficiencies and traffic losses.  

> Smart Mobility: Multimodality will become a cornerstone of passenger and freight transport. Passengers must be able to conveniently buy tickets for different modes and freight should be able to easily switch between modes all along the supply chain.  

> Electrification: To meet stringent CO2 emission norms, car manufacturers are ramping up production of (H)BEV. Recent studies show that in Europe, EVs will reach cost parity with fossil-fuel vehicles in all segments by 2027. It is hard to ignore the role that Tesla, to be considered equal to GAFA companies, plays in accelerating the paradigm. With EVs comes the need for (public) charging infrastructure. The European Commission set an ambitious target to have 1 million charging points by 2025, to achieve this goal, almost 3,000 charging points should be installed every week. 

Tech players and venture capital firms currently account for 93% of investments in the mobility tech landscape.  The traditional transport & mobility players start to face competitive pressure from new market entrants such as new suppliers, on-demand mobility, Tech Giants, and even cities. The latter will play an increasingly active role in the regulation and promotion of new transport modes. 

In 2020, the COVID-19 pandemic interrupted the entire world severely impacting the transport & mobility sector as it curtailed social and economic activity. The preventative measures taken resulted in extensive mobility restrictions. Within the EU, more than 90% of flights were cancelled, car traffic decreased by 60% and public transport decreased by more than 50%. The crisis will almost certainly have an impact on innovation as companies’ budgets will be redirected to post-pandemic recovery and, as a result, private companies may face liquidity issues. Public transport users may, in addition, at first be apprehensive or even avoid public transport due to the risk of infection and opt for alternative mobility options. 

Tech Giants have extensively profited from the COVID-19 pandemic: Microsoft experienced a spike in the usage of its cloud computing service Azure and Amazon hired an additional 175,000 employees to handle the boost in e-commerce. Technology was also used to enforce compliance during the pandemic:  in China, drones were used to monitor citizens, Amazon used machine learning to monitor social distancing in their warehouses, and the city of Boston deployed a robot-dog to patrol parks to remind people of social distancing. Furthermore, drones were also used to mitigate issues in supply chains. Companies are exploring options to minimise human involvement in case of future pandemics. As a result, Proof of Concepts of delivery robots, automated trucks and ships are being tested.

Latest moves and trends by the tech giants in Transport

> Baidu is investing in AI solutions to solve the autonomous driver problem. It has recently received permission to test its driverless ‘Apollo’ vehicle on 33 roads in-and-around Beijing. Read more
> Amazon partnered with Toyota to develop its unique ‘e-Palette’. The vehicle, which will be fully unveiled at the Tokyo Olympic Games in 2021, aims to facilitate autonomous mobile commerce from pizza to package delivery. Readmore
> In 2018, the Chinese telecom company, Huawei, has demonstrated its autonomous capabilities by showing a driverless Porsche Panamera at the Mobile World Congress. Read more
> UPS has delivered cargo with self-driving trucks between Phoenix and Tucson. Read more
> Bell, Volkswagen, LG Electronics, TomTom, and many more are already using the Connected Vehicle Platform from Microsoft. Read more
> Amazon received FAA approval to use delivery drones in Virginia. Read more

Conclusion | Transport & Tech Giants: Collaboration or Fight?

Far removed from the transport sector, the GAFA platforms (Google, Amazon, Facebook and Apple) have gradually created monopolies. It started by providing the main mobility players with embedded technologies before adopting a strategy that brings together producers and users, facilitates their exchanges and, consequently, profits from these efforts directly or indirectly. Now they are active in the complete value chain. In addition to their access to large financial resources and large research teams, these actors have forged a unique relationship with citizens on an unprecedented scale. As such, collaboration seems to be the only option. Company leaders must be prepared for this changing environment to ensure their success and, potentially changing their business models drastically in the process.