In the coming year substantially more mergers will occur between public transport operators, expects accounting and consulting firm KPMG. The increasing liberalisation of public transport and expansionism of the privately managed public transportation sector parties are seen as the main drivers.
KPMG notes that currently two important trends are visible in the international public transport. “In the first place, deregulation and privatisation of the existing public transport and infrastructure are becoming increasingly common. Many national governments are pointing their vision on the public sector as a result of budgetary constraints to save costs and to improve performance,” says Herman van Meel, Partner at KPMG specialised in transport & logistics.
“In addition, the huge urbanisation, especially in the emerging markets, creates an unprecedented demand for investments in new urban public transport. Many of the needed investments in new transport systems will be contracted to the private sector, either through the principle of design, construction, financing, execution and maintenance, or through separate contracts for execution and maintenance.”
At present day, the market has totally different strategies in place when it comes to these two trends. The German Deutsche Bahn, for instance, choses to focus on the European market, which is in contrast to the French players, says Van Meel. “In France for instance, the three largest players have chosen for a worldwide approach. To come to an international portfolio with enough balance between mature and emerging markets, they have pulled out of a number of European countries that in their eyes did not experience enough growth, and expanded their activities mainly in Asia, North America and Australia. To enter these markets, many companies will be forced to merge with foreign players, especially if they want to enter emerging markets, such as China, India and Brasil.”
At the same time, experience shows that entering the public transportation market is not an easy job to do, especially as a result of the special characteristics of the transport sector and the current pressure on national governments, explains Van Meel. “Apart from the fact that 'value for money', innovation and quality of services are very important, many governments chose to trust their ‘baby’ only to renowned companies which reduces the ricks of failure to the minimum.”