8.4 – Urban Transport Challenges

Author: Dr. Jean-Paul Rodrigue

The most important transport challenges occur when urban transport systems cannot adequately satisfy the requirements of urban mobility.

1. Urban Transportation at the Crossroads

Cities are locations having a high level of accumulation and concentration of economic activities. They are complex spatial structures supported by infrastructures, including transport systems. The larger a city, the greater its complexity and the potential for disruptions, particularly when this complexity is not effectively managed. Urban productivity is highly dependent on the efficiency of its transport system to move labor, consumers, and freight between multiple origins and destinations. Additionally, transport terminals such as ports, airports, and railyards are located within urban areas, helping anchor a city within a regional and global mobility system.

Still, transportation infrastructure and terminals also contribute to a specific array of challenges. Some challenges are ancient, like congestion (which plagued cities such as Rome), while others are new, like urban freight distribution or environmental impacts.

a. Traffic congestion and parking difficulties

Congestion is one of the most prevalent transport challenges in large urban agglomerations. Although congestion can occur in all cities, it is particularly prevalent in those above a threshold of about 1 million inhabitants. These structures are large and complex enough to create conditions that generate a systematic congestion level. Further to size and complexity, congestion is particularly linked with motorization and the diffusion of the automobile, which has increased the demand for transport infrastructures. However, the infrastructure supply has often not been able to keep up with the pace of mobility growth. Since vehicles spend most of their time parked, motorization has expanded the demand for road infrastructure and parking space. In turn, this created footprint problems, particularly in central areas where the footprint of parked vehicles is significant and consumes scarce resources. By the 21st century, drivers are three times more likely to be affected by congestion than in the latter part of the 20th century.

Congestion and parking are also interrelated since street parking consumes transport capacity, removing one or two lanes for circulation along urban roads. Further, looking for a parking space (called “cruising”) creates additional delays and impairs local circulation. In central areas of large cities, cruising may account for more than 10% of the local circulation, as drivers can spend up to 20 minutes looking for a parking spot. This practice is often judged more economically effective than paying for off-street parking facilities. The time spent looking for a free (or low cost) parking space is compensated by the incurred monetary savings. Parking also impairs deliveries as many delivery vehicles will double-park at the closest possible spot to unload their cargo.

Identifying the true cause of congestion is a strategic issue for urban planning since congestion is commonly the outcome of circumstances specific to a city, such as the lack of parking or poorly synchronized traffic signals.

b. Longer commuting

On par with congestion, people spend an increasing amount of time commuting between their residences and workplaces. Residential affordability is an important factor behind this trend, as housing located further away from central areas (where most of the employment remains) is more affordable. Therefore, commuters are exchanging commuting time for housing affordability. However, long commuting is linked with several social problems, such as isolation (less time spent with family or friends), as well as poorer health (obesity). Time spent during commuting is at the expense of other economic and social activities. However, information technologies such as smartphones have allowed commuters to perform a variety of tasks while traveling.

c. Public transport inadequacy

Many public transit systems, or segments of them, are either over or underused since the demand for public transit is subject to periods of peaks and troughs. During peak hours, crowdedness creates discomfort for users as the system copes with a temporary surge in demand. This creates the challenge of the provision of an adequate level of transit infrastructure and service levels. Planning for peak capacity leaves the system under-used during off-peak hours, while planning for an average capacity will lead to congestion during peak hours.

Low ridership makes many services financially unsustainable, particularly in suburban areas where density is not high enough to justify such services. Despite significant subsidies and cross-financing (e.g. tolls), almost every public transit system cannot generate sufficient income to cover operating and capital costs. While deficits were deemed acceptable in the past because of the essential service public transit provided for urban mobility, its financial burden is increasingly controversial.

d. Difficulties for non-motorized transport

These difficulties are either the outcome of heavy traffic, where the mobility of pedestrians, bicycles, and other non-motorized vehicles is impaired, but also because of a blatant lack of consideration for pedestrians and micromobility in the physical design of infrastructures and facilities. On the opposite side, the setting of bicycle paths takes capacity away from roadways as well as parking space. A negative outcome would be allocating more space for non-motorized transport than the actual mobility demand, exacerbating congestion.

e. Loss of public space

Most roads are publicly owned and free of access. Increased traffic adversely impacts public activities, which once crowded the streets, such as markets, agoras, parades and processions, games, and community interactions. These have gradually disappeared to be replaced by automobiles. In many cases, these activities have shifted to shopping malls; in other cases, they have been abandoned altogether. Traffic flows influence the life and interactions of residents and their usage of street space. More traffic impedes social interactions and street activities. People tend to walk and cycle less when traffic is high.

f. High infrastructure maintenance costs

Cities facing the aging of their transport systems have to assume growing maintenance costs as well as pressures to upgrade to more modern infrastructure. In addition to the involved costs, maintenance and repair activities create circulation disruptions. Delayed maintenance is rather common since it conveys the benefit of keeping current costs low, but at the expense of higher future costs and, on some occasions, the risk of infrastructure failure. The more extensive the road and highway network, the higher the maintenance cost and financial burden. The same applies to public transit infrastructure that requires a system-wide maintenance strategy.

g. Environmental impacts and energy consumption

Pollution, including noise generated by circulation, has become an impediment to the quality of life and even the health of urban populations. Further, energy consumption by urban transportation has dramatically increased, as has the dependency on petroleum. These considerations are increasingly linked with peak mobility expectations where high energy prices incite a shift towards more efficient and sustainable forms of urban transportation, namely public transit. There are pressures to decarbonize urban transport systems, particularly with the diffusion of alternative energy sources such as electric vehicles.

h. Accidents and safety

The growth in the intensity of circulation in urban areas is linked to a growing number of accidents and fatalities, especially in developing economies. Accidents account for a significant share of recurring delays from congestion. As traffic increases, people feel less safe using the streets. The diffusion of information technologies leads to paradoxical outcomes. While users can access reliable location and navigation information, portable devices create distractions linked with a rise in accidents for drivers and pedestrians alike.

i. Land footprint

The footprint of transportation is significant, particularly for the automobile. Between 30 and 60% of a metropolitan area may be devoted to transportation, an outcome of the over-reliance on infrastructures supporting road transportation. Yet, this footprint also underlines the strategic importance of transportation in the economic and social welfare of cities, as mobility is a sign of efficiency and prosperity.

j. Freight distribution

Globalization and increases in living standards have resulted in growing quantities of freight moving within cities. As freight traffic commonly shares infrastructures supporting the circulation of passengers, the mobility of freight in urban areas has become increasingly controversial. The growth of e-commerce and home deliveries has created additional pressures on the urban mobility of freight. City logistics strategies can be established to mitigate the variety of challenges faced by urban freight distribution, namely delivery hours and parking.

Many dimensions of the urban transport challenge are linked to the dominance of the automobile.

2. Automobile Dependency

Automobile use is related to a variety of advantages, such as on-demand mobility, comfort, status, speed, and convenience. These advantages jointly illustrate why automobile ownership continues to grow worldwide, especially in urban areas and developing economies. When given a choice and the opportunity, most individuals will prefer using an automobile. Several factors influence the growth of the total vehicle fleet, such as sustained economic growth (increase in income and quality of life), complex individual urban movement patterns (many households have more than one automobile), more leisure time, and suburbanization (areas where mobility options are limited). Therefore, rising automobile mobility can be perceived as a positive consequence of economic development. The automotive sector, particularly car manufacturing, is a factor of economic growth, multiplying effects, and job creation, which can be actively promoted.

The growth in the total number of vehicles also gives rise to congestion at peak traffic hours on major thoroughfares, in business districts, and often throughout the metropolitan area. Cities are important generators and attractors of mobility, which is associated with a set of geographical paradoxes that are self-reinforcing. For instance, economic specialization leads to additional transport demands, while agglomeration leads to congestion. Over time, automobile dependency emerged, which resulted in a declining role of other modes, thereby limiting alternatives to urban mobility through path dependency. Future development options are locked in because of past choices, and a city can become locked into planning decisions that reinforce automobile use. In addition to the factors contributing to the growth of driving, two major factors contributing to automobile dependency are:

  • Underpricing and consumer choices. Most roads and highways are subsidized as they are considered a public good. Urban facilities cannot be built without providing road infrastructures. Consequently, drivers do not bear the full cost of automobile use, such as parking. Like the “Tragedy of the Commons”, when a resource is free of access (road), it tends to be overused and abused (congestion). This is also reflected in consumer choice, where automobile ownership symbolizes status, freedom, and prestige, especially in developing economies. Single home ownership also reinforces automobile dependency if this ownership is favored through various policies and subsidies such as tax rebates.
  • Planning and investment practices. Planning and the subsequent allocation of public funds aim toward improving road and parking facilities in an ongoing attempt to avoid congestion. Other transportation alternatives tend to be disregarded. In many cases, zoning regulations impose minimum road and parking services standards, such as the number of parking spaces per square meter of built surface, and de facto impose a regulated automobile dependency.

There are several levels of automobile dependency, ranging from low to acute, with their corresponding land use patterns and alternatives to mobility. Among the most relevant automobile dependency indicators are the level of vehicle ownership, per capita motor vehicle mileage, and the proportion of total commuting trips made using an automobile. A situation of high automobile dependency is reached when more than three-quarters of commuting trips are done using the automobile. This proportion has remained around 88% in the United States over recent decades.

Automobile dependency is also served by a cultural and commercial system promoting the automobile as a symbol of status and personal freedom through intense advertising and enticements to purchase new vehicles. Not surprisingly, many developing economies perceive motorization as a condition, even an indicator, of development. Even if the term automobile dependency is often negatively perceived and favored by market distortions such as the provision of roads, its outcome reflects the choice of individuals who see the automobile more as an advantage than an inconvenience. This can lead to a paradoxical situation where planners try to counterbalance the preference for automobile ownership supported by the bulk of the population.

The perception of automobile dependency changed over time. The second half of the 20th century saw the adaptation of many cities to support automobile circulation. Motorized transportation was seen as a symbol of modernity and development. Highways and parking lots were constructed, and streets were enlarged, often disrupting the existing urban environment by creating motorized cities. Automobile ownership levels increased rapidly. However, from the 1980s, motorization started to be seen more negatively, and cities implemented policies to limit automobile circulation, at least in specific areas, by a set of strategies including:

  • Dissuasion. Although automobile circulation is permitted, it is impeded by regulations and physical planning. For instance, parking space can be severely limited or subject to pricing and speed bumps to force speed reduction.
  • Prohibition of downtown circulation. During most of the day, the downtown area is closed to automobile circulation, but deliveries are permitted during the night. Such strategies are often undertaken to protect the character and the physical infrastructures of a historical city. They do, however, like most policies, have unintended consequences. If mobility is restrained in specific locations or during certain periods, people will go elsewhere where they can drive (longer trips) or defer their mobility for another time (more trips).
  • Tolls. Imposing tolls for parking and entry (congestion pricing) in some parts of the city has been considered seriously as it confers the potential advantage of congestion mitigation and revenue generation. However, most evidence underlines that drivers are willing to bear additional toll costs for the convenience of using a car, especially for commuting, since it is linked with their primary source of income. Thus, tolls are not necessarily a tool for dissuasion but for revenue generation.

Tentative solutions have been put forth, such as transport planning measures (synchronized traffic lights, regulated parking), limited vehicle traffic in selected areas, the promotion of bicycle paths, and public transit. In Mexico City, vehicle use is allowed on specific weekdays according to license plate numbers, implying that a vehicle will be prevented from circulating at least one weekday. Affluent families have solved this issue by purchasing a second vehicle, thus worsening the existing situation. Singapore is the only country in the world that has successfully controlled the amount and growth rate of its vehicle fleet by imposing a heavy tax burden and purchasing permits on automobile owners. Since Singapore is of small size and has an extensive public transit system, this restriction did not impair mobility. However, such a command-based approach is unlikely in other contexts.

There is a growing body of evidence underlining that a peak level of car mobility is unfolding, at least in developed economies. Higher energy prices, congestion, fewer economic prospects, high ownership costs, and the general aging of the population are all countervailing forces to car dependency. For instance, in 2006, the number of vehicle miles traveled in the United States peaked and remained stable until growth resumed between 2016 and early 2020. The COVID-19 pandemic resulted in a sharp drop, and by 2021, car travel resumed to pre-pandemic levels. Many alternatives to automobile dependency exist, such as intermodality (combining the advantages of individual and collective transport), carpooling, ridesharing, or micro-mobility (walking and cycling). These alternatives can only be partially implemented as the automobile remains the prime choice for providing urban mobility. A significant potential change remains the development of mobile car-sharing applications, enabling better utilization of vehicle assets. Although this would not reduce automobile dependency, it can offer enough flexibility for some users not to require automobile ownership.

3. Congestion

Congestion occurs when transport demand exceeds transport supply at a specific point in time and in a specific section of the transport system. Under such circumstances, each vehicle impairs the mobility of others.

Congestion can be perceived as an unavoidable consequence of using scarce transport resources, particularly if they are not priced. The last decades have seen the extension of roads in urban areas, most free of access. Those infrastructures were designed for speed and high capacity, but the growth of urban circulation occurred at a rate higher than often expected. Road infrastructures designed to be more than adequate a couple of decades earlier were then found to run out of capacity faster than expected. Investments came from diverse levels of government intending to provide accessibility to cities and regions. There were strong incentives for expanding road transportation by providing high levels of transport supply. This has created a vicious circle of congestion, which supports the construction of additional road capacity and automobile dependency. Urban congestion mainly concerns two domains of circulation, often sharing the same infrastructures:

  • Passengers. In many world regions, incomes have significantly increased; one automobile per household or more is becoming common. Access to an automobile conveys flexibility in terms of the choice of origin, destination, and travel time. The automobile is favored for most trips, including commuting. The majority of automobile-related congestion is the outcome of time preferences in the usage of vehicles (during commuting hours) as well as a substantial amount of space required to park vehicles. About 95% of the time, an automobile is idle, and each new automobile requires an additional footprint.
  • Freight. Several industries have shifted their transport needs to trucking, thereby increasing the usage of road infrastructure. Since cities are the leading destinations for freight flows (either for consumption or transfer to other locations), trucking adds to urban congestion. The “last mile” problem remains particularly prevalent for freight distribution in urban areas. Congestion is commonly linked with a drop in the frequency of deliveries tying additional capacity to ensure a similar level of service. The growth of home deliveries due to e-commerce increased congestion, particularly in high-density areas, partly because of more frequent parking.

Still, congestion in urban areas is dominantly caused by commuting patterns and little by truck movements. On average, infrastructure provision could not keep up with the growth in the number of vehicles, even more with the total number of vehicles-km. During infrastructure improvement and construction, capacity impairment (fewer available lanes, closed sections, etc.) favors congestion. Significant travel delays occur when the capacity limit is reached or exceeded, which is common in almost all metropolitan areas. In the largest cities such as London, road traffic is slower than 100 years ago. Marginal delays are thus increasing, and driving speed becomes problematic as the level of population density increases. Once a population threshold of about 1 million is reached, cities experience recurring congestion problems. This observation must be nuanced by numerous factors related to the urban setting, modal preferences (share of public transit), and the quality of existing urban transport infrastructures.

Congestion is a recurrent characteristic in large cities and became more acute in the 1990s and 2000s and then leveled off in many cases. For instance, average car travel speeds have substantially declined in China. Many cities experience an average driving speed of less than 20 km/hr with car density exceeding 200 cars per km of road, a figure comparable to many developed economies. Another important consideration concerns parking, which consumes large amounts of space and provides a limited economic benefit if not monetized. This can be very constraining in automobile-dependent cities as each facility has to provide parking space proportional to its activity level. Parking has become a land use that significantly inflates the demand for urban land.

Urban mobility also reveals congestion patterns. Daily trips can be mandatory (workplace-home) or voluntary (shopping, leisure, visits). The former is often performed within fixed schedules, while the latter complies with variable and discretionary schedules. Correspondingly, congestion comes in two major forms:

  • Recurrent congestion. The consequence of factors that cause regular demand surges in the transportation system, such as commuting, shopping, or weekend trips. These patterns are predictable. However, even recurrent congestion can have unforeseen impacts in terms of duration and severity. Mandatory trips are mainly responsible for the peaks in circulation flows, implying that about half the congestion in urban areas is recurring at specific times of the day and on specific segments of the transport system, such as a bridge.
  • Non-recurrent congestion. The other half of congestion is caused by random events such as accidents and unusual weather conditions (rain, snowstorms, etc.), which can be represented as a risk factor that can be expected to take place. Non-recurrent congestion is linked to the presence and effectiveness of incident response strategies. As far as accidents are concerned, their randomness is influenced by the level of traffic, as the higher the traffic on specific road segments, the higher the probability of accidents.

Behavioral and response time effects are also important in a system running close to capacity. For instance, braking suddenly while driving may trigger what can be known as a backward traveling wave. It implies that as vehicles are forced to stop, the bottleneck moves up the location where it initially took place, often leaving drivers puzzled about its cause. The spatial convergence of traffic causes a surcharge on transport infrastructures up to the point where congestion can lead to the total immobilization of traffic. Not only does the use of the automobile impact traffic circulation and congestion, but it also leads to a decline in public transit efficiency when both share the same road infrastructures.

4. Mitigating Urban Congestion

The first assumption in mitigating congestion concerns if some trips are necessary, which is a decision left to the user. Thus, outside demand control, congestion mitigation deals with a mobility level that needs to be accommodated. In some areas, the automobile is the only mode for which adequate transportation infrastructures are provided. This implies less capacity for alternative modes such as transit, walking, and micromobility. In low-density areas, no public infrastructure investment can be justified in terms of economic returns. Longer commuting trips in terms of average travel time, the result of fragmented land uses, and congestion levels are significant trends. A convergence of traffic is taking place at major highways serving low-density areas with high levels of automobile ownership and low levels of automobile occupancy. Energy (fuel) is wasted during congestion (additional time) and supplementary commuting distances. In automobile-dependent cities, a few measures can help alleviate congestion to some extent:

  • Ramp metering. Controlling access to a congested highway by letting automobiles in one at a time instead of in random groups. The outcome is a lower disruption in highway traffic flows through better merging from the ramp.
  • Traffic signal synchronization. Tuning the traffic signals to the time and direction of traffic flows. This is particularly effective if the signals can be adjusted hourly to reflect changes in circulation patterns. Trucks can pass traffic lights through delayed signals, reducing the risk of accidents through sudden collisions with a car breaking at a yellow light. Therefore, trucks are less likely to be the first vehicle at a red light, which increases capacity because trucks have lower acceleration.
  • Incident management. Making sure that vehicles involved in accidents or mechanical failures are removed as quickly as possible from the road. Since accidents account for 20 to 30% of all the causes of congestion, this strategy is particularly important.
  • Vehicle restrictions. This can take place over access and ownership. Vehicle access to specific parts of a city, such as a central business district, can be restricted permanently, or at certain points in time. This incites users to rely on another mode to reach these destinations. Several cities and countries (e.g. Singapore) have quotas in the number of license plates that can be issued or require high licensing fees. To purchase a vehicle, an individual thus must first secure a license through an auction. Such strategies, however, go against market principles.
  • Sharing vehicles. Concerns two issues. The first is providing ridership to people (often co-workers) having a similar origin, destination, and commuting time. Two or more vehicle trips can thus be combined into one, which is commonly referred to as carpooling. The second involves a pool of vehicles (mostly cars, but also bicycles and scooters) that can be leased or shared for a short duration when mobility is required. Adequate measures must be taken to effectively match supply and demand with information technologies providing effective support.
  • HOV lanes. High Occupancy Vehicle (HOV) lanes ensure that vehicles with two or more passengers (buses, taxis, vans, carpool, etc.) have exclusive access to a less congested lane, particularly during peak hours.
  • Congestion pricing. A variety of measures are aimed at imposing charges on specific segments or regions of the transport system, mainly as a toll. The charges can also vary during the day to reflect congestion levels so that drivers are incited to consider other time periods or other modes. This can involve lanes being restricted to vehicles willing to pay a toll.
  • Parking management. Removing parking or free parking spaces can be an effective dissuasion tool since it reduces cruising and enables those willing to pay to access an area (e.g. for a short shopping stop). Parking spaces should be treated as scarce assets subject to a price structure reflecting the willingness to pay. Further, planning regulations indirectly subsidize parking by enforcing minimum parking space requirements based on the facility type and land use density.
  • Public transit. Offering alternatives to driving can significantly improve efficiency, notably if it circulates on its infrastructure (subway, light rail, buses on reserved lanes, etc.) and is well integrated within urban development plans. Financial incentives can be offered, such as discounted monthly passes for commuters. However, public transit has issues (see the next section about urban transit challenges).
  • Micro-mobility (Non-motorized transportation). Since most urban trips are over short distances, non-motorized modes, particularly walking, cycling, and e-bikes, have an important role in supporting urban mobility, also known as micro-mobility. Providing adequate infrastructure, such as sidewalks, is often a low priority as non-motorized transportation is often perceived as not modern despite the important role it needs to assume in urban areas.

All these measures only partially address the congestion, as they alleviate but do not solve the problem. Fundamentally, congestion remains a sign of economic success but a failure to reconcile rising mobility demands and acute supply constraints.

5. The Urban Transit Challenge

As cities become more dispersed, the cost of building and operating public transportation systems increases. For instance, as of 2021, about 194 urban agglomerations had a subway system, the vast majority being in developed economies. Furthermore, dispersed residential patterns characteristic of automobile-dependent cities make public transportation systems less convenient for supporting urban mobility. Additional investments in public transit often do not result in significant additional ridership. Unplanned and uncoordinated land development has led to the rapid expansion of the urban periphery. By selecting housing in outlying areas, residents restrict their potential access to public transportation. Over-investment (when investments do not appear to imply significant benefits) and under-investment (when there is a substantial unmet demand) in public transit are both complex challenges.

Urban transit is often perceived as the most efficient mode for urban areas, notably large cities. However, surveys reveal a stagnation of public transit systems, especially in North America, where ridership levels have barely changed in the last 30 years. The Covid-19 pandemic made matters worst since many transit systems, as of 2022, did not recover to pre-pandemic demand. The economic relevance of public transit is being questioned. Despite mounting costs and heavy subsidies, most urban transit developments had little impact on alleviating congestion. This paradox is partially explained by the spatial structure of contemporary cities, which are oriented along with servicing individual mobility needs. Thus, the automobile remains the preferred mode of urban transportation.

Besides, public transit is publicly owned, implying a politically motivated service that provides limited economic returns. Even in transit-oriented cities, transit systems depend massively on government subsidies. Little or no competition within the public transit system is permitted as wages and fares are regulated, undermining any price adjustments to ridership changes. Thus, public transit often serves the purpose of public service as it provides accessibility and social equity but with limited relationships with economic activities. Among the most difficult challenges facing urban transit are:

  • Decentralization. Public transit systems are not designed to service low-density and scattered urban areas dominating the urban landscape. The greater the decentralization of urban activities, the more difficult and expensive it becomes to serve urban areas with public transit. Additionally, decentralization promotes long-distance trips on transit systems causing higher operating costs and revenue issues for flat-fare transit systems.
  • Fixity. The infrastructures of several public transit systems, notably rail and subway systems, are fixed, while cities are dynamic entities, even if the pace of change can take decades. This implies that travel patterns tend to change with a transit system built for servicing a specific pattern that may eventually face spatial obsolescence; the pattern it was designed to serve may no longer exist.
  • Connectivity. Public transit systems are often independent of other modes and terminals. It is consequently difficult to transfer passengers from one system to the other. This leads to a paradox between the preference of riders to have direct connections and the need to provide a cost-efficient service network that involves transfers.
  • Automobile competition. Given cheap and ubiquitous road transport systems, public transit faced strong competition and lost ridership in relative terms and, in some cases, in absolute terms. The higher the level of automobile dependency, the more inappropriate the public transit level of service. The convenience of the automobile outpaces the public service being offered.
  • Construction and maintenance costs. Public transit systems, particularly heavy rail, are capital-intensive to build, operate, and maintain. Cost varies depending on local conditions such as density and regulations, but average construction costs are around $300 million per km. However, there are exceptions where cost overruns can be substantial because of capture by special interest groups such as labor unions, construction companies, and consulting firms. When there is inadequate regulatory oversight, these actors will converge to extract as much rent as possible from public transit capital improvements. The world’s highest subway construction costs are in New York. For instance, the Second Avenue subway extension in Manhattan, completed in 2015, was done at a cost of $1.7 billion per km, five to seven times the average in comparable cities such as Paris or London. This project employed four times more labor, with construction costs 50% higher.
  • Fare structures. Historically, most public transit systems have abandoned a distance-based fare structure for a simpler flat fare system. This had the unintended consequence of discouraging short trips, for which most transit systems are well suited, and encouraging longer trips that tend to be costlier per user than the fares they generate. Information systems allow transit systems to return to a more equitable distance-based fare structure, particularly with smartcards that enable charging according to the point of entry and exit within the public transit system.
  • Legacy costs. Most public transit systems employ unionized labor that has consistently used strikes (or the threat of labor disruptions) and the acute disruptions they create as leverage to negotiate favorable contracts, including health and retirement benefits. Since public transit is subsidized, the fare systems did not reflect these costs well. In many transit systems, additional subsidies went into compensation or covered past debt, not necessarily performance improvements or additional infrastructure. As most governments face stringent budgetary constraints because of social welfare commitments, public transit agencies are forced to reassess their budgets through an unpopular mix of higher fares, deferred maintenance, and the breaking of labor contracts.
  • Self-driving vehicles. Developments in information technologies underline that self-driving vehicles could be deployed in large numbers. Such a development would entail point-to-point services by on-demand vehicles and a much better utilization level of such assets. This system could compete directly with transit systems due to its convenience, comfort, and affordability.

Therefore, public transit systems are challenged to remain relevant to urban mobility as well as to increase their market share. The volatility in energy prices and the push toward decarbonization provide uncertainties in the costs of transit fleet ownership and operations and how effective it is to convert transit fleets to alternative energy sources such as LNG and electricity. A younger generation with a preference for living in higher-density areas perceives the automobile as less attractive than the prior generations. Electronic fare systems are also making the utilization of public transit more convenient. A recent trend concerns the usage of incentives, such as point systems (e.g. air miles with the purchase of a monthly pass), to promote public transit and influence consumer behavior. Yet, evidence underlines that the inflation-adjusted cost of using public transit is increasing, implying that the cost advantage of public transit over the automobile is not changing significantly. If self-driving vehicles become widely available before the end of the 2020s, many highly subsidized transit systems may have a limited competitive advantage. Under such circumstances, the fate of many surface public transit systems will be questioned, particularly in suburban areas.

Related Topics


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