Liberalization of the transport sector, together with the advances offered by electrification and digitalization, mean that the mobility sector is undergoing rapid and significant change. Against this backdrop, companies are beginning to seize up new competitors and team up with market disruptors. Here, we present the views of sector executives on how new relationships can help innovation and why a legislative framework is needed to facilitate collaboration.
In 2019 Siemens Mobility conducted market research surveying 100 senior public- and private-sector executives across the Asian, European and North American road and rail sectors. The opinions they offered on sector disruption are telling: 72% consider market disruption and competition from new sector entrants to be a burden on their organizations. The question now is, how can incumbents in the sector turn this to their advantage?
There are collaborations that benefit everyone
The electrification and digitalization of the economy requires interdisciplinary collaboration between technology companies, the transport sector, the power sector, industry and public policymakers. This ‘stakeholder coupling’ can enable new ways of working together and can combine and elevate individual transport options to create a new mobility platform that offers the ability to connect different modes of transport seamlessly and efficiently. As a result, says Johannes Emmelheinz, CEO of Customer Services at Siemens Mobility, the boundaries between partner and competitor in the emerging mobility ecosystem are becoming less restrictive.
We can’t do everything by ourselves anymore. Competitors, suppliers and customers can all become partners. This develops into an ecosystem and boundaries between former competitors, customers, suppliers, institutes and universities are getting increasingly blurred.Johannes Emmelheinz (CEO of Customer Services, Siemens Mobility)
For example, knowledge transfer and R&D collaborations between competitors and with smaller market entrants in the Shift2Rail Joint Undertaking initiative are now yielding great results, such as the development of a traction converter that doubles performance and increases energy efficiency, and a new communication interface between vehicles and infrastructure, and between trains and trams. “In a globalised world, transportation does not stop at national borders. Key technologies for a railway system cannot be advanced nationally or by single companies,” says Roland Edel, CTO of Siemens Mobility.
… but new competition from the technology and communication sectors cannot be ignored
Siemens Mobility’s research shows that 52% of senior executives say new private-sector business models, in particular, are disrupting their industries. It’s already well known that the large US tech players are branching out to disrupt new sectors. For example, Sidewalk Labs, owned by Google’s parent company, Alphabet, is tackling urban infrastructure challenges. Marc Buncher, President and CEO of Siemens Mobility for North America, says that telecommunications companies, like AT&T, are now competing in the market for traffic software. Chinese tech companies are also beginning to emerge as new competitors to established mobility solutions providers.
Juergen Model, CEO of Siemens Mobility Greater China, says many of the Chinese tech companies, who are already providing cloud solutions and IoT operating platforms, are now trying to mine the domain knowhow for transport and smart city solutions. “This is an interesting time. Some of these companies may become our partners in the future, while others may turn out to be competitors." However, large multinationals aren’t the only ones providing disruptive competition. Innovation also comes from smaller start-ups, whose agility and approach to problem-solving allows them to thrive in the new digital economy. Marc Buncher says, “Every year, 450 new suppliers come into our market. Small start-ups are developing software to try and solve a problem for a specific city, for example, how to handle the way customers are billed as they enter the train.”
Develop capabilites early and 'hatch' your own disruptors
Most of the larger incumbents are investing heavily in their own start-ups, as well as forming joint ventures or making acquisitions, hoping to gain an edge in the market. Andreas Romandi, Head of Corporate Strategy at Deutsche Bahn, explains that Deutsche Bahn sees a lot of venture capital activity. “We are investing in start-ups and looking for ecosystem partners, especially for technical solutions. We are active in areas complementary to rail, including buses, bikes, and car-sharing. Our own entity, eMobility, co-ordinates this; it’s small now, but it will be very important for efficiency and customer experience in future.”
Regulatory frameworks can have a huge impact on how sector disruption plays out. They can be blockers to innovation
Market liberalization, where governments break up domestic monopolies, can lower barriers to entry from abroad or for smaller companies. But policy frameworks for the digital economy are not yet mature and often fail to level the playing field. Sam Chow, Arup Fellow and Director of East Asia Transport Consulting and Global Transport Planning Skill Leader at Arup, says a lack of policy direction can also bring obstacles to innovative solutions in urban transport. “I think it's a challenge for all the stakeholders, including policymakers, to decide whether to pursue a framework to promote or to discourage sector disruption. In Hong Kong, Uber is illegal. So, it will be an obstacle for people to adopt new services.”
...or act as an enabler that levels the playing field for new technology and collaboration
In the digital economy, another essential prerequisite for successful collaboration to drive innovation is data sharing. In particular, the proliferation of apps and platforms requires alignment and co-ordination. Data sharing is one of the key challenges to advancing the use of different modes of transport, and governance frameworks are urgently required, says Doug Kelsey, General Manager of TriMet Portland.
There are many stakeholders and, if they don't share their data, then the platform cannot be integrated. If no-one wants to share their data, then the government needs to create policies that tilt the playing field: if you don't share, then you don't get to play. Or, you're going to pay a premium. The more competition there is, the more companies will be willing to compete. The less competition there is, the more they can hold their cards close.Doug Kelsey (General Manager, TriMet Portland)
The views expressed herein are those of the authors; they do not necessarily reflect the views of Siemens Mobility.