As Covid, energy transition, and new technologies continue to challenge the transport and logistics sectors, Becrom Basu looks at how he and his team are helping disruptors, the disrupted, and ‘wanna-be’ disruptors plot a course through turbulent waters.
My name is Becrom Basu. I'm a partner in our Transport and Logistics practice, so the areas I cover are quite wide-ranging. It includes aviation surface transport, rail, bus, road, ferry, ports and logistics; also, smart infrastructure and smart transport and new mobility. And that's our catch-all for a wide range of issues, such as the sharing economy, the impact of connectivity and autonomy on transport and infrastructure.
So transport and logistics is going through significant disruption. It's being impacted by the energy transition. It's been impacted by technology, which is changing and introducing new business models such as ride-hailing and car sharing. And also, on top of that, the transport sector certainly has been impacted quite heavily by COVID — it is perhaps the most impacted of all sectors in the economy. And many players are rethinking about what that means for them in terms of the future, the recovery profile, what's actually changed permanently.
And then, if you think about logistics, COVID has also impacted logistics in quite a big way. We see the impact of ecommerce, changing flows and investments in logistics, as well as the change in philosophy we're seeing from just-in-time logistics to just-in-case logistics because of the disruption and the fragility that was highlighted by COVID.
So we are well placed to advise on the impact of this disruption. We regularly advise the disruptors themselves. We advise the disrupted, who are trying to re-evaluate their position in the market, trying to understand what they should be focusing on in terms of investments and changing their business model. We also advise the wannabe disruptors, the people who are completely reinventing their model to adjust to the new reality. And finally, we also have the perspective of governments, who are thinking about how this disruption can be leveraged to improve provision of transport to the citizens and the wider economy.
When it comes to energy transition, the technical answer is becoming quite clear. For road transport, it's more about the deep electrification of the fleet. Hydrogen and ammonia will also play a part, certainly in more heavy-duty applications. It's really now less about what; it's more about when and how. These are really quite complex commercial issues that corporates and investors are thinking about. And rather than the technical points that I mentioned earlier, this is really about how to implement and how to implement quickly whilst also maintaining a commercially viable business, and this involves complex trade-offs. There are questions here that are not easy to answer. So should you invest now, with the current technology, for example, or is it worth waiting until the technology improves and invest in the next generation? How do you finance this? How do you actually implement this in a way that doesn't disrupt your operational system as well? And these are the types of issues that we can help clients resolve.
One of the things that we're also seeing is that there is a sea change now, certainly, in the investor community but also within the public, and it's going to be much more important for corporates and investors to really think hard about what we call their social licence to grow. So if they really do want to grow in this market, they need to demonstrate that they're doing this in the most sustainable way they can. Another factor that we are also helping clients with is what will the post-COVID recovery look like — because the fact is that the old relationships between, for example, GDP and how people travel are actually broken, to some extent. New behaviours have started and the way that we understood the way people travel has also changed.
And that really requires a different way of looking at behaviour and looking at how people are likely to travel, and we've got different tools to help us do that, such as using behavioural science. We can use surveys and we can use different statistical techniques to really understand the future of travel and what people are thinking.
And another area of focus is really the digital transformation. As we look at the next generation of travellers, the majority of them are now millennials, which means they are digital natives. And really, if you are in this space, you really need to think digital first, and at the heart of that as well is being able to deliver a digital experience as well as a physical experience and also use the data that it generates to improve the service on a continual basis.
So a practical way that we're helping our clients is to think through their digital offering. And to do that, we've launched what's called a digital diagnostic, a tool to help them understand where they are on their journey in terms of digital transformation. We provide the support for our clients to make those really big commercial decisions. We help them navigate the complexity and the uncertainty that this disruption is bringing. And to do that, we help them break down that complexity into smaller issues. We then provide the analytical insights so they understand the implication of their decisions, and we provide them with the evidence base to make those really big calls.