The Future of Individual Mobility in 2020

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The Future of Individual Mobility in North-West Europe in 2020

by Maurits van den Berg, Radjes Boejharat, Eric bruinsma, Claudio Papone and Cuno de Witte.

The car industry, railroads and governments have all significant interests in the future of individual mobility. For example, a Dutch organization active in railroad transportation has been subject to the scrutiny of politics, public and media over a prolonged period. To fulfil its key role as infra provider to its customers, this organization needs to decide how and where to allocate its scarce resources now and in the future. However, uncertainties around the development of mobility and freight movement are keeping management preoccupied. To support these kind of organizations to define their strategy we have developed three scenario’s that describe the future of individual mobility in North-West Europe in 2020.


== Systems Diagram==

Click on the image to see the larger diagram.

Future of Mobility SystemsDyagram Small.JPG


== Scenario Diagram==

The scenario diagram depicts the three possible scenarios driven out of the strongest levers from the driving forces out of the mobility system. The high leverage points are shown as the red arrows, whilst the scenarios are represented by the three point star.


Future of Mobility Scenarios.JPG




== Scenario 1 - “Doors Locked”==

Summary
In this scenario there is a long period of economic recession and aging European populations have decreased living standards and prosperity. There is a trend towards collectivism and in spite of the increasing limitations of public transport, like insufficient connectivity and delays due to a limited amount of government investment in infrastructure, public transport will be the main source of mobility. From 2010 and onwards, European integration comes to a halt and Europe’s international role is diminishing. Stagnating European integration and danger of terrorist attacks have decreased the demand for international business travel. Distance working becomes very popular. The consequences of the green house effects has made the public more environmental aware which influenced their travel behaviour negatively. An overall decrease in individual mobility results in a lower demand for oil and thus moderate oil prices. Car sales plummet and airlines have huge problems as well.


The “Doors Locked” scenario


In a “Doors Locked” scenario, Europe suffers from a long period with sluggish growth or even recession. The aging of the population, stagnating European integration and immigration issues have a negative impact on the overall economy. As a result, overall demand for travel has decreased, relative to the period 2000-2005. While car manufactures and airlines are experiencing significant problems, public transport is still relatively popular. For many, it is the only affordable way of transport.

The average age of European populations will increase in the next decades, which is facing European governments with a number of key choices. In the “Doors Locked” scenario, in the period 2006 - 2010 most European countries did not make a successful transition to an economy that can support a growing number of elderly people. Many governments did not succeed to implement policy prescriptions to cope with this problem, such as raising retirement age, replacing pay-as-you-go pension systems and encouraging people to have more children. As a result, aging European populations have decreased living standards and prosperity. Pressure on health care and the social security system is high.

There will be a trend towards collectivism. Collectivism refers to those cultures where individuals are members of a close group. The group and its requirements are the norm in society. The focus is on the “we” feeling of the individual group members. Collectivism will result in limited responsibility for each individual and a higher reliance on government or other social groups.

The ageing of the population and the increasing number of young singles will result in an increased amount of single person households. These households will on the one hand be less mobile due to the loss of work related travel and will on the other hand have less money to spend due to a limited economic growth. As a result they will travel less and shorter distances, while at the same time relying more on local communities for public transportation. Collectivism can be translated in terms of mobility in a much higher reliance on the community on the where, when and how of travel. In spite of the increasing limitations of public transport, like insufficient connectivity and delays due to a limited amount of government investment in infrastructure, public transport will be the main source of mobility as it satisfies most of the population’s needs.

The investment in infrastructure is focused on extending life cycle and less on expansion. The increasing public awareness of the damage man is doing to its environment and congestion on the main highways has resulted in taxation of car usage. These funds have been directed towards environment preservation and to fix the budget deficit. This deficit has increased due to the large amounts of governmental spending on healthcare each year . The state expects that taxation will push people into the public transportation mode. Public transport is maintained at a reasonable level. Governments have delegated the responsibility for mobility from the central government to the local government. This results in slow decision making and end-less debates that revolve around funding and national versus regional priorities.

Most European countries do not succeed to keep their budget deficit within the 3% mark of the stability pact. As a consequence the euro is drifting and loosing its value. Many governments choose to focus on the problems in their own country. From 2010 and onwards, European integration comes to a halt and Europe’s international role is diminishing. The US, is still the economic superpower in the world but China and India more and more challenge that position.

By 2010, most Western governments have installed strict immigration laws. The terrorist attacks in mainport Rotterdam in 2008 and the growing aversion of the Europeans of Islamism have amplified a restrictive attitude towards immigration. This decision has also been substantiated by the forced migration into Europe that has exploded due to the increasing income inequality between Europe and especially the Northern part of Africa. As a result, Europe’s decreasing workforce is not supplemented by immigrants, which is increasing Europe’s problems with the aging population.

Stagnating European integration and danger of terrorist attacks have decreased the demand for international business travel. In addition the unexpected upraise of a mutant of the SARS virus in Asia and the fast movement into Turkey which has become part of the EU has made ‘a once far away’ problem has come close to our doorstep. Although the effect seems to be low, the impact on the willingness of the individual to move across borders, be it for leisure or work, is extremely low. Also, many households simply have less money to spend and fear global insecurity, travel for holiday and recreation is not as popular as it used to be in the late 90’s.

In the large urban areas the income differences have grown so far apart that social segregation has taken place. By nature this segregation has been skewed towards an ethnical dimension. Next generations of immigrants have lost touched with the mainstream native people. Closed communities (ghettos) are abundant. Travelling between these areas is minimal. No-go areas and ring fenced compounds are shaping the urban landscape

Oil prices are below the $50 mark, due to the effect of lower demand for fuel caused by the sluggish economy and the relatively unsafe environment. The governments try to influence as much as possible a decrease of the oil price with many diplomatic and political efforts because of the belief that a lower oil price will stimulate the economy. Even with these efforts either by direct reduction of price or by subsidy of special projects and developments, the economy does not recover very quickly. It is obvious that the oil price used to be a strong economical driver, but in this era it is not that anymore. The reason behind this is that in the ‘70s Europe produced 60% of its pro capita GDP with oil products, whilst today that is reduced to less than 30% and rapidly decreasing. This decrease is mainly due to the shift from an industrial economy towards a service oriented one. The OPEC countries understand this implication and would like to regain some more grasp on the economical developments of Europe by increasing the incentive to start producing locally due to low energy costs. But reversing the development is not easy and many industries are not willing to invest in increasing capacity in such a risky environment.

The sluggish economy has decreased demand for travel. A decreasing number of people have to undertake the daily commute to the office. Meetings between business people are not as frequent as they used to be. Distance working is popular. Favourable employers are those companies that offer good facilities for distance working and accept they loose some perceived control over their workers. Many companies have adapted their production and services processes and infrastructure such that distance working is made possible in many areas. Also, these companies introduce attractive substitutes to compensate their employees for reduced social interaction with their colleagues (daily chat rooms, social conference calls, many social events). Distance working is thriving, not because people like it but out of necessity.

Car sales plummet. Many people drive less frequently, have less income to spend and choose to use their car as long as they can. Car manufacturers suffer whilst travelling on public transport vehicles is the popular way to move around. A number of European car manufactures have exited from the business. Only three big European car manufactures are left in 2020.

Airlines have huge problems as well. Demand for international travel has decreased. Many European carriers find that their home market is not large enough to sustain a viable business. As a result, the European market has consolidated as well, by 2020 there are only three big European carriers are left.




Scenario 2 - “Middle East Pulls the Brake”


Summary

In this scenario, the tension between the oil containing countries in the Middle-East and the Western countries that ran out of oil supplies increased significantly. Oil is short of supply and its price is soaring. The shrinking economy decreases demand for travel and distance working is very popular. Government spending on defence is so high that investment in infrastructure is poor. Trains and busses are overcrowded. There will be an increasing trend towards individualism but as still many people fear terrorist attacks they try to avoid flying when they can.

The “Middle East Pulls the Brake” scenario

In this scenario, the tension between the Middle-East and the Western part of the world has increased significantly. Also, the failure of the social systems in the EU and the recession has caused the tension in the society between Muslims and natives to increase. The presence of the mythical figure of Osama Bin Laden has been kept alive. Nobody knows if he is alive or not. His grip on Muslims in combination with the neo conservative attitude of the States has been the feeding ground for increased antagonism and terrorist activity all over the world. The Mullahs who took charge of the whole Islamic world starting with Iran, Iraq and Saudi Arabia want to claim a Muslim world and urge their people to ‘burn all infidels’.


By 2020, most oil resources in the US, Europe and other parts of the world except the Middle-East are fully depleted. Supply of oil is controlled by only a very small number of states, all located in highly instable parts of the world. Frustrated by long-term tension between the West and the Middle-East, the years-long US presences in Iraq and Afghanistan, and the still unresolved Palestinian-Israel conflict, the Mullahs decide to pull the trigger. The Middle East decides to dramatically reduce the supply of oil. Oil supply to the western world virtually comes to a stand still and oil prices suddenly increase dramatically, inflation soars, and both the US and European economy moves into a long recession. International tension increases.


The governments receive less tax income, the budget deficit increases, and the government decides to invest more in the military. Despite the efforts of the IAEA and the international community Iran has managed to produce a nuclear weapon of mass destruction. It seems that Cold War days have returned. On both sides of the conflict there is build-up of military power. Investments in infrastructure and public transport suffer, military spending is the priority.


The shrinking economy decreases demand for travel. A decreasing number of people have to undertake the daily commute to the office. Business meetings are less numerous and less frequent and business travellers try to avoid international travel. Many households decide to postpone consumer spending, spending on recreation and holidays is reduced significantly. Distance working is very popular. The high cost of travel has distance working made into an attractive alternative. People dislike travelling. Favourable employers are those companies that offer good facilities for distance working and accept they loose some perceived control over their workers. Many companies start to adapt their production and services processes and infrastructure such that distance working is made possible in many areas.


There will be an increasing trend towards individualism. Individualism refers to those cultures where there is a decreased dependence on other individuals and an increasing freedom of choices for the individual. Individualization leads to a decrease in the number of members per family and more women working - two developments that stimulate mobility. An increased individualisation can be translated in terms of mobility in the increased ability to decide about the where, when and how of travel. Due to serious limitations like congestion and parking space, caused by a cutback in government spending on infrastructure, the car can however not be the main source of mobility, resulting in an increased reliance on public transport in order to satisfy the demand for mobility. However new investments in new infrastructure can’t keep up with the sudden increase of demand. Also, the government spends a lot of money of the military and is therefore reluctant to invest in public transport. Public transport will suffer from serious limitations like insufficient connectivity and delays. As a result mobility suffers and people will travel less than desired, but still more than in the “Doors locked” scenario. The apparent mismatch between the demand for mobility and the actual mobility possibilities is only partially applicable to basic travel patterns like shopping, but is more obvious for travel patterns related to social contacts and leisure time.

Flying has become expensive. Airlines invest a lot in increased security of their flights and pass these increased costs on to their customers. Also, the cost of kerosene has increased ticket prices. Many people fear terrorist attacks and try to avoid flying when they can. European carriers experience very difficult times. Carriers without significant home markets are forced to exit their business.




Scenario 3 – “Highly Connected”


Summary

In this scenario, Europe experiences a long period with stable economic growth in the 2% - 4% range. Europe manages to overcome the problem that comes along with the aging of the population. While pressure on health care and pension costs is high, European governments have budget to invest in infrastructure. There is an increase in European integration and Europe manages to handle it immigration issues. As a result, overall demand for travel has increased, relative to the period 2000-2005. Car manufactures and airlines are still profitable businesses, public transport is less popular.


The “Highly Connected” scenario

Europe makes a successful transition towards an economy that can support an increasing number of elderly people. In the period 2006 – 2010, many governments successfully overcome resistance to a restructure of the pension systems and manage to increase the retirement age, reform pay-as-you-go pension systems and encourage people to have more children. People contribute from their increased richness into the pension scheme. Europe manages to increase productivity by sustaining an innovative business climate and investments in education and research and development. As a result, the population manages to support an increasing number of elderly people.


Individualization leads to a decrease in the number of members per family and more women working - two developments that stimulate mobility. In spite of some limitations like congestion and parking space, the car will be the main source of mobility as it satisfies most of the needs of the population. It is an affordable mean of transport and most people favour the flexibility that the car is offering. Furthermore the government has significantly invested in new infrastructure, and most congestion problems are within tolerance limits of most people.

The main type of car that can be associated with this scenario will be an SUV (Special Utility Vehicle) which underlines the drive to individualism. As a result people will travel more and longer distances, while at the same time relying less on public transportation. The increasing mobility does not only relate to basic travel patterns like shopping, but also to travel patterns related to social contacts and leisure time.

European integration is well on its way, government spend considerable attention to integrating their law and social security systems. The European monetary union continues to be successful, most European governments manage their budget deficit well according to ECB standards and the Euro is a stable currency. With the US, China and India, Europe is one of the economic superpowers in the world.

Governments manage to avoid strict immigration laws, governments and the people see the immigrants a welcome addition to Europe’s shrinking workforce. Continued immigration from young people, mostly Muslim countries, is the key reason why Europe has managed to overcome the problems related to its aging workforce.

Due to special attention to the social well being of the people the once appearing divisions in society has been managed properly and in time. The gap in income has been successfully reduced due to government policies aimed at integration of minorities. Additionally the spending in education and providing incentives for work has contributed to this positive effect.

The threat of terrorist attacks has become much lower due to the fact that Al Qaeda has lost its leaders. More importantly they have lost their confidence amongst the Muslims in Europe. Political reforms in the Middle East and the resolution of the Palestinian issue has positively contributed to the denial of most of the Muslim world for the extremist fraction

The growing economy is generating a lot of tax income for the government, which the government mostly spends on health, pensions and infrastructure. The main ports and highways have expanded but within the predestined corridors and areas. The governments are strong and have a large confidence base with the people by demonstrating that they care not for the environment only but also in combination with the general well being of the people. Decision making is facilitated by joint processes between governments on all levels and mediation seems to be one of the enabling tools.

The investments in infrastructure and public transport have reduced congestion. The European effort towards one transport system has paid off. Same standards and payment methods have facilitated cross border travelling. Many people find the time on the road well spend, in the office they will experience the joys of a boosting economy.

The oil price is stable around the $50 to $60 mark per barrel. From 2006 to 2010, demand is relatively high and therefore will show an increase, though since the economical developments are positive, the investments in new cleaner technologies are ramped up and by 2010 already 20% of the new vehicles will have a hybrid engine. Eventually – roughly around 2020, this will decrease demand on oil related products, but since there is an increase in volume of travel and especially long distance, the influence on total oil consumption will not change too much, hence a stable price. The effects of the investments on infrastructure, plus the shift toward less consuming and cleaner engines, even though there is a significant increase in amounts of kilometres driven, will result in a steadily cleaner environment. The car industry will show strengths especially with the early movers in cleaner technology engines. Eventually by the end of 2020 the fuel cell car will make its introduction creating the next wave of decrease of percentage of production of GDP with oil related products.

The flourishing economy has increased demand for travel. An increasing number of people have to undertake the daily commute to the office. Business people have business meeting very frequently. Distance working is not popular. The thriving economy creates a dynamic environment, companies require their employees to contribute to the pace of change and spend most of their time at the office. Colleagues pressure other people to come to the office; distance working is seen as free riding. Social acceptance for distance working is low.

Car sales have increased relatively to the 2000-2005 level. However, significant consolidation in the car industry has taken place. A number of European car manufactures have exited from the business. Only three big European car manufactures are left in 2020.

Flying is relatively cheap and safe. Face-to-face contact remains important for most business meetings. Especially for meetings with business partners in Asia – Europe’s main business partner by 2020 - it is important to establish a good relationship, face-to-face contact is important. Concerning personal travel, many people choose to travel to popular holiday resorts outside Europe. However, many European carriers still find that their home market is not large enough to sustain a viable business. As a result, the European market has consolidated as well, by 2020 there are only three big European carriers are left.

Public transport is cheap and relatively fast. However, most people believe public transport is for teenagers and retirees. Most people prefer the car, which is a more individualist style of travelling.




Scenarios Summary



Future of Mobility Scenarios Summary.JPG




Driving Forces


Economic:

Increasing Demand for Oil
Expected Decrease of Oil Reserves
Slow Rise of Living Standards In West-Europe


Technological:

Shift to Alternative Energy Sources
Increasing use of broadband internet services with 3G mobile phone
Disruptive Technology: Wireless Local Loop
The Rapid Increase in WiFi Transmission Rates


Societal:

Movement Towards World Unification
Urbanization and Social Status
Aging population
Increasing global insecurity/instability
Increasing Individualisation-'single person households'
The widening gap between the digitally literate and the rest


Environmental:

Effects of Global Warming
Introduction of greenhouse gases emissions trading


Governmental:

Investment behaviour in Infrastructure Improvement
Increasing Environmental Taxes
Tax Shift from Ownership to Usage

Research



For an overview of our research questions see: Individual Mobility in 2020: Research Questions

For an overview of links to our research see: Individual Mobility in 2020: Links to Research


Presentation

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