Global Transport Infrastructure Investment

Growth by Region

• Transport infrastructure investment will likely be modest in the near future in well-developed Western Europe.
• Capacity becomes an important hindering factor with overall increases in trades and changes in material flows requiring substantial infrastructure investments.
• Large-scale development of transport networks will likely continue in many Asia-Pacific economies, given the shift in economic power, rise in Asian wealth, and rapid urbanization.
• Roads are the most significant subsector for transport spending in the Middle East, even with mega-projects like the metro for Qatar airport.
• Sub-Saharan Africa is the fastest-growing regional infrastructure market, with over 10% average projected increase for 2020-2030, mostly for roads and ports.

Transport Infrastructure Investment

• Transport infrastructure investment is projected to increase at an average annual rate of approximately 5% worldwide from 2014 to 2025. Source: Oxford Economics

APAC Economies

• APAC economies vary significantly in size and ease of conducting business

APAC Challenges

• Lack of supply chain infrastructure can cause delivery times from Singapore to Indonesia to take up to 6 weeks.
• Numerous trade measures in the last 5 years implemented in India (350), China (160) and Indonesia (140) cause changing or unclear regulations.
• Complex customs exist in APAC as 50+ countries do not have unified custom processes

APAC & Global Trade Wars

• The US trade deficit with China climbed to a record level in 2017.
• The gap between Chinese goods imported ($347 billion) to the US and American goods exported ($375 billion) to China increased.
• Retaliation cycles may occur, with US brands such as Boeing, Apple, and Intel, along with industries such as soya beans, vulnerable to reprisals.
• Companies could redesign products to remove rare materials only available in China or persuade an Australian mining company to find an alternative source.

Global Trade Wars & Supply Chains

• China exports approximately four times as much to the US compared to what the US exports to China.
• Factories are shifting out of China to avoid trade wars, boosting volume for logistics firms like Kerry Logistics in Malaysia.
• Tariffs may require automakers to relocate their production to match local demand.
• Tesla is moving to mitigate geopolitical risks by urging its suppliers to shift key component production out of China and Taiwan by next year.

US Imports

• US trade is primarily focused on cars.
• Mexico's most important US imports consist of car parts.
• Germany's most important US imports consist of cars.
• Japan's most important US imports consist of cars.
• Korea's most important US imports consist of cars.

Key Implications for Supply Chains (SCs)

• Invest in high-potential APAC markets and trade lanes.
• Redraw manufacturing strategies.
• Develop an omni-channel strategy using a strong e-commerce channel.
• Review multimodal transportation solutions.
• Partner with a logistics provider that offered end-to-end solutions.

Europe and Logistics Policy

• The European Commission prioritizes Infrastructure, seamless systems, research, development and training, regulation, cost efficiency, sustainability, co-operation, and public-private partnerships.

European Logistics Platform (ELP)

• Created to tackle challenges in the logistics sector like an overstrained infrastructure, climate change, deployment of new technologies, risk management, trade barriers, customs processes, and e-Commerce development.
• The ELP has been created to gather policymakers and industry stakeholders to collectively.
• The EU Logistics sector represents 11% of EU GDP.

EU Infrastructure Underinvestment

• Europe is home to three of the largest ocean carriers, the top trio of freight forwarders/logistics companies, and leading air cargo operators.
• Europe's infrastructure inadequacy was demonstrated by the closure of the Rhine Valley Alpine rail track.
• Hamburg has been hit by trucking congestion in the city due to traffic peaks caused by the increasing numbers of mega-vessels calling at Europe's third-largest container port.
• The French government has failed to come up with the 4.5-billion-euro financing of a planned 66-mile canal linking Paris to the 12,500-mile Rhine-Scheldt network, initially due in 2017 and then 2023.

Analysis of transport infrastructure investment growth by region. Focus on Western Europe, Asia-Pacific, Middle East, and Sub-Saharan Africa. Roads, ports and large-scale transport networks developments are included.