Time to reset and take stock of the changes required

Marking World EV Day, James Courtney-Evans Head of Transport & Infrastructure, Corporate & Institutional Coverage at Lloyds Banking Group, examines what we’ve learned this year and what steps should now be taken.

The last five months has had a devastating impact on society, with the loss of life and the measures introduced by governments to control the spread of coronavirus.

Businesses have also been severely affected and the transport sector is no different.  All types of transport have been affected in some way.

For the heavy freight sector, there have been fewer goods moving around, and less trade overall with significantly lower volumes. This has been combined with issues of driver availability due to self-isolation rules.

Conversely, on the light commercial side, we have seen the transition to online shopping significantly accelerate, an existing trend that has been almost turbo-charged by lockdown, resulting in a huge ramp-up in demand for deliveries.

Fewer commuters? Companies are rethinking strategies after adapting to home-working

We’ve seen supermarkets faced with panic-buying and website crashes, as they’ve rapidly increased their home-delivery services. Across the sector, all have had to contend with more ‘last-mile’ logistics.

In the bus sector, we have seen passenger numbers reduce by 80%+ during the pandemic as the public have followed government advice to stay at home.

Many companies are rethinking their work-place strategies after adapting to home-working, which might see less commuter journeys in the long-term. 

Government support for commuting

However bus operators have maintained services at much higher levels, leveraging government support, which reflects just how important bus transport is for large parts of the UK population.

While current payments from government to support bus services operating provide a short-term solution; in the medium term there is a double challenge for the industry – buses need a long term sustainable economic model despite fewer passengers, and large-scale investment is needed to upgrade and decarbonise the UK bus fleet.

If a long-term impact of COVID-19 is to see more passengers transitioning from public transport to private cars, particularly older private cars, and the adoption of cleaner buses is delayed as a result – then we will see a double hit to carbon reduction targets.

Watch out – temporary is not long-term

While the impact of the pandemic has seen material drop-offs in transport emissions, these do not reflect structural long-term changes.

With transport contributing the largest individual sector share of UK emissions, a clear plan is needed to sustain these reductions beyond 2020, so that they do not rebound in 2021.

Given the scale of the challenge, these plans need to be material and to achieve net zero, they need to start today.

Behavioural changes seen during the crisis, such as home-working and reduced international travel, could lead to some permanent reductions in emissions if these changes are sustained long-term.

There are clearly concerns about safety and wellbeing on public transport, which is driving a return back to private car journeys.

How do we address these emerging issues?

To avoid significant spikes in congestion, worsening air quality in our cities, and missing governmental climate change targets, we must think through how we address these emerging issues systemically.

Many companies are investing actively and planning ahead to ensure that they have a plan focused around sustainability.

The recovery period offers a unique opportunity to make a step change to lock in some of the positive changes we’ve seen during the pandemic.

“With transport contributing the largest individual sector share of UK emissions, a clear plan is needed to sustain these reductions beyond 2020, so that they do not rebound in 2021.”

James Courtney-Evans, Head of Transport & Infrastructure, Corporate & Institutional Coverage, Lloyds Banking Group,

During the last few months, many companies have had to restrict their discretionary spend.

While this is understandable in the current environment as businesses continue to recover, ongoing investment will be needed to achieve the goals that the transport industry has set itself.

A great time to think about the risks, opportunities and challenges

Now is a good time to reset and take stock of changes required.

It’s a great time to think about the risks, opportunities and challenges for our businesses, and to set out a refreshed strategy for our roles in the transition of the sector.

Wherever you sit on the spectrum, innovation and technology need to be at the heart of how we look to the future, as well as collaborating across the industry.

This is why we think our partnership with the Innovation and Technology in Transport (ITT) Hub event and conference (Farnborough, May 12-13 2021) is so important, at this critical time.

As always, we at Lloyds stand ready to help, as discussed in our recent ‘Business As Unusual’ broadcast featuring ITT Hub’s CEO Mark Griffin.

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