Smart Transportation Market Forecast to Reach $292.5 Billion by 2026

July 08 14:43 2021
Smart Transportation Market Forecast to Reach $292.5 Billion by 2026

Smart Transportation Market
Advancement in Parking Management and Smooth Flow of Traffic Driving the Growth of Smart Transportation Market

Smart Transportation Market forecast to reach $292.5 billion by 2026, at a CAGR of 16.5% during 2021-2026. Increase in urban population, various government regulations, growing smart city initiatives assist in developing connected vehicle technologies such as Vehicle-to-Vehicle (V2V) and Vehicle-to-Grid infrastructure (V2I). For instance, Indian government provided funding of $7.6 billion for the development of smart infrastructure and management services under the smart city initiative program over a five year period from 2016 to 2021. Such investments and initiatives are likely to improve the smart transportation market. Continuously growing urban population, rising number of road services, incidents and rapid vehicle modernization are some of the key issues that drive the development of the global market for smart transportation solutions. Growing implementation of road safety technologies since the last decade are expected to drive the market forward in competition for smart transportation. In turn, the Governments are taking road safety measures taking into account for the “cost-of-loss” arising from loss of life and damage to infrastructure.

Smart Transportation Market Segment Analysis – By Type

Roadways account for the highest share in the smart transportation market. According to the report given by United States Environment Protection Agency in 2019, the transportation sector generates the largest share of greenhouse emissions accounting for 26 percent of total emissions globally. The adoption of smart transportation solutions, such as compressed natural gas, smart fuels and connected vehicles, helps in reducing the total vehicle carbon emissions and enhancing the environmental safety. The railway sector is expected to grow at the fastest rate over the forecast period. It carries billions of tons of freight and passengers each year, which results in the development of efficient smart rail infrastructure and technologies. The government of various countries are also taking up initiatives and implementing regulations for the development of the smart railway system. In some countries including China, the government has invested $28 billion in various PPP projects for implementing smart railways.

Smart Transportation Market Segment Analysis – By Application

Smart traffic management solutions hold the highest CAGR of 20.2% during forecast period 2021-2026. With the growing traffic congestion, pollution, and accidents, smart traffic management are gaining popularity in various countries. For instance, in January 2019, the China-based firm, Didi Chuxing together with Chinese traffic management authorities launched a smart city traffic management solution known as DiDi Smart Transportation Brain which uses artificial intelligence (AI) capabilities to promote the transformation and upgrading of the taxi and bus industries, and help cities develop sustainable smart transportation ecosystems. Similarly in 2018, Government of India has approved to fund $8.9 billion to use artificial intelligence to decongest traffic and monitor violations. These kind of technologies are likely to accelarate smart transportation market trends.

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Smart Transportation Market Segment Analysis – By Geography

In 2020, North America dominated the smart transportation market share for about 34.2%, due to rapid deployment of smart transportation solutions, which offer features such as real-time traffic information, parking management systems, smart signaling systems, electronic toll collection, and real-time information for public transit systems. For Instance in 2016, The US Department of Transportation invested approximately $160 billion for smart cities solutions. These projects are intended to provide better parking and traffic management solutions there by creating the demand for smart transportation market. Similarly, Asia Pacific is the fastest growing region in the smart transportation market. The economy of APAC is majorly influenced by countries such as China and India. In these countries, the government are implementing several initiatives for smart city development. For instance, in 2019, India plans to invest over $250 billion in smart city development. Similarly, China’s smart cities initiatives is forecast to reach $38.92 billion by 2023. These investments will enforce smart city development, thereby creating opportunity for smart transportation market growth.

Smart Transportation Market Drivers

Advancement in Parking Management and Smooth Flow of Traffic.

Rise in use of vehicles results in increase in parking issues worldwide, which can be overcome with the introduction of advanced parking management system (APMS). APMS assists people to find parking spots quickly, thereby enhancing the visitor’s experience. Similarly, Smart transportation systems give city managers the ability to better control the flow of traffic and provide the best routes for emergency and law enforcement personnel responding to incidents, as well as trucks delivering goods. For instance, in June 2016, the Texas Transportation Commission announced the approval of a $1.3 billion plan to reduce vehicular congestion in the most congested roadways in Texas which is set to drive transportation infrastructure modernization through 2021. These kind of investments will create the demand for smart transportation market.

Rise in demand for efficient transportation

Smart transportation utilizes information technology and artificial intelligence to efficiently manage and coordinate advanced public transportation systems. For instance, in Germany, they are using artificial intelligence to optimize traffic light control and reduce the waiting time at an intersection. The application of smart transportation network allows the traveling population to be aware of the traffic for better coordination and to ensure safety of the drivers. Over the past decade, traffic congestion has continued to increase globally. For instance In the U.S. alone, traffic congestion cost $305 billion in 2019, an increase of $10 billion from 2018. Increase in congestion will ultimately increase demand for smart transportation market.

Smart Transportation Market Challenges

High Investment in Improving Infrastructure

High investment in improving the infrastructures of existing transportation industry is obstructing the growth of smart transportation market size. For instance, China is investing approximately $551 million per year in Intelligent Transport System (ITS). Improvement of existing roads or rail projects requires long time period which further increases the resource and cost of the project. Similarly, complexities in advanced transportation pricing systems, infrastructure development and lack of internet penetration in underdeveloped countries further need heavy investment for to improve supporting infrastructure for smart transportation.

Smart Transportation Market Landscape

Technology developments and acquisitions are key strategies adopted by players in the Smart Transportation market. In 2020, the market of Smart Transportation market revenue has been fragmented by the top five players accounting for 52% of the share. Top 10 companies in Smart Transportation include Accenture PLC, International Business Machine (IBM) Corporation, Kapsch, Alstom, SA; Cisco System, Inc., and General Electric Company (GE).

Acquisitions/Technology Launches

In April 2019, Cisco and Dimension Data announced a new co-innovation agreement, to develop a deeper collaboration environment and framework to jointly solve clients’ business needs.

In March 2019, Siemens upgraded its smart transportation product portfolio. The new eHighway system, according to the company, is twice as efficient as conventional internal combustion engines. This Siemens Mobility innovation supplies trucks with power from an overhead contact line.

Key Takeaways

Asia-Pacific is the fastest growing region in the smart transportation market owing to the government initiatives for development of smart city solutions in this region.

According to Smart transportation market analysis, technological innovations such as Vehicle-to-Vehicle (V2V) and Vehicle-to-Grid infrastructure (V2I), are making transport systems more efficient, reliable and brought major changes in the way everything operates.

Smart traffic management solutions hold the highest share in smart transportation due to smart traffic management systems, which are inbuilt with sensors and regulate the flow of traffic by reducing traffic congestion.

Major players in Smart Transportation market outlook include Accenture PLC, International Business Machine (IBM) Corporation, Kapsch, Alstom, SA; Cisco System, Inc., and General Electric Company (GE).

Related Reports:

A. Intelligent Transport System Market

B. Road Safety Market

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