The future of urban mobility will change cities

Autonomous and shared cars, electric propulsion and other advances are transforming urban mobility. The way people move around cities is changing drastically. Technological advances and new transport services are making it possible for city dwellers to pass through the city more efficiently and safely.

These changes could have profound economic and social effects. An analysis by McKinsey indicated that in 50 metropolitan areas around the world, home to 500 million people, integrated mobility systems could generate benefits such as increased safety and pollution reduction, worth up to $600 billion.

Because each city is unique, the transition to integrated mobility will also develop differently and produce different results, from one city to the next. The pace and magnitude of the change will depend on factors such as population density, household income, public investment, road and public transport infrastructure, pollution and traffic congestion levels, and local governance capabilities. H

Trends influencing urban mobility

According to data from McKinsey & Company there are a number of trends that are influencing urban mobility systems around the world that have and will have a greater impact on the development of integrated mobility in cities.

1. Shared mobility: Travel-sharing services have grown rapidly in recent years and now compete not only with traditional car-sharing and car-pooling providers, but also with public transport and property private vehicles.
2. Autonomous driving: Advances in autonomous driving technology promise to solve road safety problems, reduce the cost of transport and expand access to mobility.
3. Electric cars: Global sales of electric cars have risen rapidly, from 50,000 in 2011 to nearly 450,000 in 2015. Purchasing subsidies, falling battery costs, fuel economy regulations and product improvements have contributed to the increase. And if battery costs continue to fall, electric cars could compete in cost with conventional cars.
4. Connectivity and the Internet of Things: Broadcasting IoT applications into vehicles and infrastructure will generate data with a variety of uses. For city dwellers, software systems can facilitate travel planning and guide self-driving cars. Transit authorities could use the same data to analyze the movement of people and vehicles, identify traffic jams, adjust services, and make long-term transit plans.
5. Public transport: Cities around the world are expanding and improving their public transport networks. Adding stand-alone features to these can reduce operating costs, while new deployment models, such as car-sharing fleets, can make transit more flexible and accessible.
6. Infrastructure: The United Nations Population Division projects that the global urban population will increase by more than two-thirds by 2050. Such an influx of people could put more pressure on the city’s roads, bridges and tunnels. But infrastructure improvements, which favor public or shared transit, could reinforce a change in car ownership.
7. Decentralization of energy systems: If the cost of renewable energy generation continues to fall, then intermittent distributed generation will produce a significant share of global electricity over the next 15 years. These trends could accelerate electricity collection by making electricity cheaper, cleaner, and more reliable.
8. Regulation: As advanced mobility services and technologies have penetrated cities, public officials at the municipal, regional and national levels have responded by establishing a number of new regulations. National or state regulations, such as tax exemptions and incentives for electric vehicles, have given a boost to integrated mobility in many cities. To capture the benefits of integrated mobility, governments may want to consider creating regulations that encourage consumer-friendly developments, while promoting broader public goals such as clean air and lower Congestion.

Benefits of integrated mobility

Overall, integrated mobility systems could improve the lives of city dwellers in several respects.

• One is environmental quality. As travel takes over self-driving cars, shared mobility services increase, and the use of public transport, carbon dioxide exhaust emissions, nitrogen oxides and fine airborne particles in cities must go down. This will help reduce health problems, such as respiratory diseases, heart attacks and preterm births, which are aggravated by air pollution.
• The well-being of citizens should also improve, as smarter forms of urban transport will prevent traffic accidents. The World Health Organization estimates that 1.25 million people died in road accidents in 2015. But a shift towards self-driving cars would prevent many accidents, and the consequent slowdown in traffic, eliminating the human errors that are the cause of most accidents.
• Then there is the problem of traffic congestion, which costs more than 1% of GDP globally. Congestion could be alleviated by connected self-driving cars and sophisticated traffic management systems such as dynamic tolling.
• Other benefits of advanced mobility include access to mobility for citizens who are unable to drive or live far from transportation hubs.
• And the extra time people will gain by using self-driving cars, car-sharing and public transport more than they do now.

All of this does not mean that the transition to integrated mobility is not also inconvenient. Changes in employment could, for example, occur as more self-driving cars and electric cars develop, reducing the need for drivers and mechanics. Municipal officials will also need to ensure that the cost of mobility is equitable, that increases in kilometres, passengers and vehicles resulting from the use of self-driving cars do not worsen pollution, traffic or safety, and public transport improves the mobility system as a whole.

Commercial traffic

But technological advances can not only change and improve urban traffic, so can commercial traffic. This type of traffic obstructs the streets of the city, contributes to pollution and increases the cost to businesses. But, according to McKinsey, there are many ways to improve this.

Cities are at the heart of the world economy, accounting for more than 80% of the world’s GDP. Roads, train tracks, and other forms of transport are the arteries that nourish that heart. When these become stuck or weakened, the results are severe. Businesses, residents and cities suffer, and economic costs are high, as much as there are losses of 2 to 4% of the city’s GDP, in wasting time, wasted fuel and higher costs for businesses as when these vehicles companies accumulate higher fuel and labor costs.

Commercial vehicles contribute disproportionately to urban pollution and congestion. They are more likely to make stops and block traffic. In general, they generate higher emissions of nitrogen oxide and other emissions. And there will probably be many more commercial vehicles on the way, due to economic growth and the expansion of e-commerce.

The future of commercial transport

Improving these conditions will be difficult. By 2030, one billion more people will live in cities. Infrastructure spending, on the other hand, is not keeping up. To deal with all this, people and businesses are going to have to use roads and other assets better and be willing to adopt new technologies.

Different solutions are already emerging that could relieve pressure. Autonomous commercial vehicles, for example, are probably the most attractive at first in places with high labour costs. Drones will work best in expansion cities where there is ample space to land. Electric cars can and will eventually work everywhere.

McKinsey has identified solutions along the merchandise delivery value chain. Some of these solutions, such as order grouping, route optimization, and overnight deliveries, could be implemented more or less immediately. Others, such as the use of droids, robots, and self-driving cars, are realistic, but it is probably many years away from large-scale deployment.

Solutions to improve commercial transport

Each of these ideas can help improve the movement of goods, unblock the streets of the city and reduce pollution. And when businesses and cities work together to combine two or more solutions, the benefits get even bigger: up to 30% fewer vehicle emissions and 50% lower delivery costs.

All solutions make sense in themselves, however, commercial transport in cities will actually undergo a transformation when the work is joint. Different combinations of work for different types of cities, different clients (B2B versus B2C), and different uses (same day versus traditional delivery).

For example, the use of electric vehicles to deliver from THE UCC and overnight will optimize the use of cargo and speed up delivery while reducing costs and pollution.

While McKinsey believes that these approaches, alone and in combination, will be good for the global economy and environment, it is five sectors that particularly face challenges to their current revenue and operating models: retail, logistics, sector automotive and energy. However, if sectors adapt creatively, they could make substantial profits.