After a year of video-conferencing and remote technologies, we’re entering a new era of innovation in mobility, transportation and physical connectivity, explains Transurban CFO Adam Watson in this Q+A for Westpac IQ by Reuters Plus.
Road transportation is rarely mentioned in the same breath as high-tech innovation. But that is going to change as a confluence of new technologies and techniques are tested and rolled out across the world’s most congested cities.
To get a glimpse of the progress that we can look forward to from our urban transport infrastructure, Westpac caught up with Transurban’s CFO, Adam Watson.
Transurban was once a traditional engineering company, building and managing toll roads. Today it is a high-tech business, operating at the cutting edge of transport innovation through projects in Australia, the US and Canada.
When we spoke to Adam in September 2020, he was locked down at home in Melbourne.
What do you think is the impact of Covid on the use of roads in general?
We know these transport assets are critical for the communities in which they operate. That’s been tested through the current pandemic. They are critical for mobilising our communities’ front line healthcare workers, for instance. While the movement of people has been restricted, freight traffic has been very resilient despite the lockdown measures. For heavy vehicles, we are seeing more than 90 per cent still using our assets, which is remarkable when you think that most people are at home.
Do you think people will keep working from home, or change their transport choices?
We recently commissioned an independent survey, and 86 per cent expected to do most of their work back in the office, which is remarkable. In the cities in which we operate, public transport is used largely to move people in and out of the central business district, whereas roads are used mainly for moving people and products around the city. But, not surprisingly, there is an expectation that people will reduce their reliance on public transport, at least in the near term, given that it is harder to social distance.
In the medium-term, which way do you expect road usage to go?
An uplift in medium term road use is a plausible scenario, given factors such as the majority of people wanting to go back to the work place, and an accelerated growth in online shopping. Transurban has been focused for many years on developing in large urbanised cities with growing populations and we try to solve existing congestion issues. When you are in these cities that keep growing, even if there are some minor structural shifts – such as working-from-home and online shopping – they are marginal relative to the role these infrastructure assets play in urban congestion. It is possible there could be a net decline in road usage in the shorter term – and there are scenarios where there could be a net increase – but in general, we believe the use of road assets will be strong over the longer term.
Why is the development of toll road infrastructure good news?
Commercial operators think carefully about the route they use for their freight, and toll road operators like Transurban will generally provide a much more efficient outcome for them. So a ten-minute saving for a freight operator is a very strong economic incentive.
For individuals, the incentive needs to be more obvious. Some of our assets in Australia for example might be saving 30 minutes in travel time for a $5 toll.
What kind of toll road innovations are there in other cities?
Our Express Lanes in Greater Washington are ‘Managed Lanes’ that run parallel and right up the middle of ‘general purpose lane’ freeways. These are dynamically tolled, meaning the price changes in real-time, based on the level of congestion. The higher the congestion levels, the higher the price, because you are saving more time. It is remarkable the positive feedback we get with those assets. You can literally look out the window and see the roads congesting beside you and you have a really efficient travel route, running parallel. It costs to use, but you have a clear choice.
It is easier to do this in the US, which typically has lots of space, than other cities. When they work, they work really well.
How are you preparing for autonomous vehicles?
In Australia we have been partnering with the state governments in Victoria, NSW and Queensland and with motor vehicle manufacturers, like Audi, BMW, Tesla, Volvo, technology companies and data analytics companies to run trials on our assets and ensure vehicles can interact not only with each other but also with the infrastructure.
There are so many areas where the infrastructure must evolve with the vehicles. Our roads will be at the forefront of these technologies. For instance, we are currently working with the Virginia Tech Transportation Institute, Virginia Department of Transportation and major auto manufacturers in the US to trial technology to improve communications between connected autonomous vehicles and road infrastructure on our 95 Express Lanes in Virginia. This has the potential to greatly improve work-zone and first responder safety on free-flowing motorways such as the Express Lanes.
How will the adoption of zero-emission vehicles effect road usage?
Fuel excise tax has been the main financial source for governments globally to fund road development and road maintenance. So this leaves a big open question on how to fairly fund road usage.
We’re very active here because of our experience of pricing assets based on time saving. You can see a world in the future where all roads have a use-based pricing structure.
We are currently working with the US government on the I-95 Corridor Coalition, on a feasibility study around mileage-based usage.
Can payment systems integrate into other parts of the urban transport network?
Yes, Australian governments already have some systems in place, and they’re advancing new technologies for public transport where you can use a transport card that could also pay for road usage or parking, which is the interesting world of mobility as a service (or MaaS).
When you think about it, this is all about making it easier for the community to get around, regardless of the transport choice. It is about making our cities more ‘liveable’.
Our role, as an infrastructure developer, operator, service provider is to ensure that the tech advancement can interplay with the infrastructure. We’ve got to make sure the infrastructure is great.
How has Transurban itself needed to evolve to achieve this?
We have undertaken a big shift over the past five to ten years to change our focus from an engineering-focused approach (and engineering and safety remain critical and a priority), but also to look through a tech lens. About 40 per cent of our workforce is now comprised of technology staff.
How important is road innovation for the world’s cities?
Infrastructure Australia has put the cost of congestion in Australia at AUD 39 billion by 2031. So that must be addressed by all forms of transport. It becomes more pronounced in the cities like the ones we’re in, because we’re in cities that are large and urbanised. So cities like Sydney, Melbourne, Brisbane, Montreal, Washington D.C., with healthy long-term population growth. So you can think of any major city in the world that has all those characteristics.
How can you quantify the economic value of the road network?
If you’re delivering significant travel time-saving, then that enables the community to move products and services around more efficiently. It also ensures our cities are safer. The fire department, police or ambulances can move around faster and more dependably, and this flows through healthcare, insurance, and so on. So this aspect is very measurable.
In addition, being able to get products from a port to a distribution centre, and to then have online parcels distributed to be delivered to your home. Those sorts of things only work if they’re economically viable for the private sector, and for that they need to reduce their cost of transport.
Jobs is another important indicator. There are the initial construction, engineering, public service jobs created, and that’s before the wider job creation.
Historically, roads are noisy and dirty. How sustainable are your projects?
The more efficiently and safely you can move vehicles around cities the less emissions will be produced. If a car is sitting at a traffic light then there will be more emissions than if that vehicle was on a freeway or a toll road. In addition, the auto industry is producing cars that are significantly more efficient, and zero-emission vehicles are not far away. So, in the longer term, road transport could become the most sustainable way of moving around cities in which we operate.
The way we design assets also helps. For instance, when designing a tunnel, we look at the ‘gradient’ or the steepness on entry and exit to limit the time that your engine is either idling or labouring. All our projects are designed and built to the highest rating criteria under the Infrastructure Sustainability Council of Australia.
This year we entered into power purchase agreements with New South Wales and Queensland to provide 80 per cent of our energy requirements for our Sydney and Brisbane roads from renewable sources. Our goal is to halve our 2016 emissions rate by 2030 and we are doing everything we can to ensure they are sustainable. Generally speaking, smart efficient motorways minimise stop-start, which is a big contributor to energy efficient use on the roads.
How will you commute after the lockdown and will you return to the office?
I am keen to get back to the office because of the variety and the fact I enjoy the people I work with.
I use the toll road every day, genuinely! Because it gives me the fastest and most consistent travel journey to and from work. I live about 10km away and before Covid it would take me an hour on public road but 30-35 mins on the toll. Yes I’m flying the flag for Transurban, but I also get a pretty amazing saving.
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