Transport infrastructure experienced an unprecedented decline during the Covid-19 pandemic. As the world emerges from a series of lockdowns, traffic on toll roads returns more quickly than rail or air travel. Overall volume-sensitive transport continues to re-gain ground from the cyclical rebound. Investors seem to have turned the corner and see the impact on the sector as transitory rather than permanent. But what are the long-term structural trends behind the revival in investment deal flow and some of the biggest buyouts in transport infrastructure?
More so than in other infrastructure sectors, the need for and use of transportation will increase due to demographic shifts: rising population in some regions, a booming middle class, and the on-going migration from rural areas to cities. In addition, the landscape for transport infrastructure will be shaped by the twin challenges of the digital acceleration and the drive to net zero.
We believe that the universe of investment opportunities in transportation infrastructure is growing and there is more scope for private capital. Against this background, sustainable transport in particular will benefit from the focus on reducing the sector’s carbon footprint. According to the International Energy Agency, transport accounted for a significant 27% of 2019 global carbon emissions, and its contributions have grown over time both in absolute and relative terms.
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