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The global smart transportation market size was USD 92.48 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with the market witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 5.43% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is projected to grow from USD 98.74 billion in 2021 to USD 206.80 billion in 2028 at a CAGR of 11.1% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
Smart transportation applies various technologies to monitor, evaluate, and manage transportation systems to enhance safety and efficiency. It uses advanced technologies to enable a more convenient commute around a city, is more cost-effective (for both the people and the city), and is safer. Factors such as the rising urban population, increasing adoption of IoT-based technologies, and proliferation of 5G-based communication facilitate the implementation of smart transportation infrastructure.
COVID-19 Pandemic has Accelerated Adoption of Smart Transportation Technologies
As public transportation systems are extremely susceptible to disease outbreaks, transit agencies increasingly focus on data-driven decisions to adapt services and restore rider trust. Technologies such as AI (Artificial Intelligence) and IoT (Internet of Things) can help in balancing operations by adjusting to comprehensive data offered on ridership peaks and lows. Technologies used in smart transportation will provide users with detailed transport data such as real-time arrival information to avoid waiting at crowded stations and how full a train or a bus is, among other benefits.
Transit agencies and cities can optimize their services by integrating real-time information and mobile fare payments to provide sustainable transport alternatives and avoid people reverting to single-car usage. For instance, the transportation system in Israel is severely lagging. It relies considerably on fragmented and inefficient public transport and single-occupancy rides. It results in high pollution levels, traffic jams, and poor access.
To reinvent mass commuting during the pandemic, Israel introduced a large-scale pilot to facilitate low-occupancy traveling by combining on-demand transit with private carpooling. It uses a tailored algorithm to rout buses and provide the most efficient ride. More than 250 modes of transportation ranging from cars and buses were used to take over 75,000 trips within three weeks of its introduction. Although the country implemented the system to replace the rigid transportation network during the pandemic, it can save up to USD 25 million per year and be adopted for permanent use. Hence, the pandemic will accelerate the modernization of the current transportation infrastructure.
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Increasing Focus on Interoperability of Systems is a Prominent Smart Transportation Market Trends
A key area of focus for key players in the market that includes mobile network operators and automakers is increasing the coordination of communication protocols that different organizations have developed independently. For instance, the Dutch Ministry of Infrastructure and Water Management developed the Transport Operator to Mobility as a Service (MaaS) Provider - Application Programming Interface (TOMP API). It is a standardized interface that allows communication regarding booking, support, and end-user-specific multimodal trip payments.
Such a system enhances interoperability between participating companies in the intelligent transportation ecosystem. Hence, these factors will positively influence the growth of the market.
Increasing Volume of Traffic to Drive Growth of This Market
Traffic problems are rising owing to an exponential increase in suburban and rural residents moving to cities and the equivalent surge in population density around urban areas. With rapid density growth, vehicular congestion in cities has also increased, aided by inadequate highway designs and poor urban planning. For instance, traffic congestion alone cost more than USD 200 billion in 4 developed economies (U.K., France, U.S., and Germany).
It leads to a high number of accidents, money & time lost in commuting, and overall loss of economic growth & productivity. However, through remote sensors, autonomous vehicles, 5G networks, vehicle-sharing services, dynamic traffic signals, and better infrastructure, automotive safety and efficiency can be increased. Hence, these factors are driving the demand for smart transportation networks.
Ongoing Technological Advancements to Augment Growth
Internet of Things (IoT) based devices gather and transmit real-time data to people about traffic, weather, and incidents, among other activities, to plan their journeys more effectively. Increasing adoption by transit agencies in applications such as train control systems, toll collection systems, fleet telematics, and transport logistics has improved system capacity while minimizing operating costs.
Furthermore, the need to manage the increasing amount of data generated through the vast number of IoT devices used in the transport infrastructure is also creating significant new revenue streams for service providers and independent software vendors, among other solution providers. Hence, technological advancements of the current transportation infrastructure will drive the smart transportation market growth.
Lack of Standardized Technology to Restrain Growth
Smart transportation combines various elements such as hardware, software, and mobile network components developed by multiple vendors, leading to compatibility issues due to the absence of a standardized approach. Furthermore, communication protocols also differ substantially across different countries, creating problems for manufacturers regarding the global adoption of their technologies.
For instance, in China, 5G networks have been implemented in more than 50 cities. The country has also adopted cellular vehicle-to-everything (C-V2X) as the standard communication protocol for vehicular communications. However, the European Union has maintained DSRC (dedicated short-range communication) as its communication technology protocol and rejected a measure introduced in 2018 to shift to C-V2X. Hence, a lack of standardization will restrain the growth of the market.
Traffic Management System Segment to Dominate Owing to Increasing Pressure on Current Infrastructure
By solutions, the market is segmented into ticketing management systems, parking management systems, integrated supervision systems, and traffic management systems. The traffic management system (TMS) is expected to dominate the market during the forecast period. Smart traffic lights, route guidance systems, and integrating CCTV cameras to provide real-time information are prominent TMS solutions. Growing traffic volumes and inefficient usage of existing road infrastructure will propel the demand for traffic management solutions.
The parking management segment is also expected to show considerable growth in the market. It includes equipping parking facilities with beacons & sensors to lead drivers to available spots and providing information regarding on-street parking on any block through an app, among other solutions. These solutions directly lead to reduced vehicle congestion, reduced cruising, and more efficiency in terms of utilizing maximum capacity and revenue generated by the parking facility. Hence, these factors will fuel the growth of this segment.
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Cloud Services Segment Dominated in 2020 Fueled by High Volume of Data Generation
Based on service, the market is segmented into business, professional, and cloud services. The professional services segment is anticipated to exhibit substantial growth during the forecast period propelled by the surge in demand for consulting services. They provide implementation support, design advice, strategy development, among other functions for various subsystems, and help upgrade existing infrastructure systems. Hence, these factors will fuel the growth of this segment.
The cloud services segment held the largest share of the market in 2020. The increasing complexity of harnessing and managing the large amount of data generated through mobile technologies and sensors will propel the demand for cloud services.
Europe Smart Transportation Market Size, 2020 (USD Billion)
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Europe held the largest share of the market and stood at USD 36.99 billion in 2020. It can be attributed to the substantial funding for infrastructure through grant programs such as the Connecting Europe Facility (CEF), which has facilitated more than 763 projects with up to USD 22 billion in funding. For instance, in March 2021, the European Council and the European Parliament reached an agreement to renew the CEF with a budget of 25.8 billion euros to fund transport projects between 2021 & 2027. Hence, these factors will fuel the growth of the market in this region.
Asia Pacific is anticipated to exhibit a higher CAGR during the forecast period. It can be attributed to the supportive regulatory measures that have facilitated the rapid advancement of smart transportation infrastructure in countries such as China and South Korea. For instance, in 2018, in China, the Ministry of Transport issued a Notice on Accelerating the New Generation of National Traffic Control Network and Smart Highway Pilot. It focuses on infrastructure digitization, new national traffic control networks, and integrated management of road networks based on big data, among other areas.
Hence, several provinces implemented pilot projects that include Guangdong, Hebei, and Beijing, among others. Furthermore, to provide substantial support for smart transport applications, the National Intelligent Transportation System Standardization Technical Committee has issued more than 90 communication standards. Hence, these factors are driving the growth of the market in this region.
North America is also expected to show good growth in the market. In the US, cooperation between federal and state authorities has increased over policy guidance and financing, hence accelerating road testing and software development. For instance, in 2018, Pittsburgh piloted intelligent traffic signals in 50 intersections across the city. Idling time declined by more than 40%, and travel time was reduced by around 25%. Hence, infrastructure expansion, particularly in the U.S., will drive the growth of the market in this region.
Iteris is one of the Leading Players in the Market Owing to Strategic Partnerships
A broad product portfolio and considerable focus on strategic partnerships have enabled Iteris to capture a significant market share. For instance, in April 2021, Iteris and Continental AG announced a collaboration agreement to leverage automotive sensors and infrastructure-to-vehicle (I2V) connectivity to make city transportation systems across North America more efficient. It will advance connected and automated vehicle technology with real-world vehicle-to-everything (V2X) solutions.
Similarly, the company entered into a Solution Technology Integrator (STI) agreement with Cisco Systems. The company can integrate Cisco hardware and software into its smart transportation systems solutions for public agencies across the U.S. Furthermore, Iteris can now also act as a direct reseller of Cisco software and hardware to public agencies, focusing on this market. Hence, these factors will boost the growth of the company in this market.
An Infographic Representation of Smart Transportation Market
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The smart transportation market research report covers a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the key market trends and highlights key industry developments. In addition to the aforementioned factors, the report delivers an in-depth market analysis of several factors that have contributed to its growth over recent years.
Value (USD Billion)
Fortune Business Insights says that the global market size was USD 92.48 billion in 2020 and is projected to reach USD 206.80 billion by 2028.
In 2020, the European market value stood at USD 36.99 billion.
Registering a CAGR of 11.1%, the market will exhibit good growth in the forecast period (2021-2028).
The cloud services segment held the largest share of the market in 2020.
Substantial funding through grant schemes for smart transportation systems, particularly in developed countries, is the key factor driving the market's growth.
Iteris, Cisco Systems, and Thales Group are the major players in the global market.
Europe held the highest share in the market in 2020.
The increasing volume of traffic, especially in emerging economies, the need for efficient traffic management solutions, and technological advancement are expected to drive the growth of the market.
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