This article is a collaborative effort by Riccardo Boin, Timo Möller, Vadim Pokotilo, Andrea Ricotti, and Nicola Sandri, representing views from McKinsey’s Travel, Logistics, and Infrastructure practice and the McKinsey Center for Future Mobility.
Solving for urban mobility is a pressing challenge, and a highly complex one, as it involves multiple transport modes—including road infrastructure and public transport networks—and a diverse set of stakeholders such as governments, municipalities, city councils, and service providers. What’s more, what works in one city may not work in another. Solutions are often city specific and bespoke which means that they are difficult to replicate and scale. Moreover, the application and protection of the equity principle, requiring the transport system to provide all the population with the same level of access without any discrimination, is of foremost importance when addressing mobility challenges.
This article examines recent trends affecting urban mobility, and highlights the digital technologies and infrastructure advances that can respond to these trends to address the issues that many cities face. It also details the key challenges of implementing technologies and innovations at scale—keeping in mind that the process of connection and/or data exchange between infrastructures and users must comply with local privacy and data protection regulations that change according to specific geographies. As there is no one-size-fits-all solution, the article concludes by providing case examples that could help stakeholders to identify the best way forward for their specific context.
Cities enable social interaction and spur innovation. As a result, they are an integral part of the global economy—generating more than 80 percent of global GDP. Consequently, the urban road network is an essential enabler of economic growth and access to services. But density and urban sprawl put pressure on resources. Cities represent two-thirds of global energy consumption and account for more than 70 percent of greenhouse gas emissions. 5 “Urban development,” World Bank, October 6, 2022. Given the transport network’s size, any sustainability-related changes have significant potential to reduce emissions, pollution, and congestion.
However, traffic systems are becoming more complex to orchestrate. Three major trends are shaping the urban mobility ecosystem.
OECD projections indicate that total demand for urban passenger transport will more than double by 2050, compared to 2015. 6 ITF Transport Outlook 2021, OECD, October 2021. Additionally, recent COVID-19-related changes in consumer habits have posed significant challenges on urban roads, specifically the increase in last-mile delivery vehicles as a consequence of the e-commerce boom.
As transport infrastructure capacity becomes more constrained, and traffic volumes increase, stakeholders may have to prioritize road safety awareness, and accident reduction. And as consumer preferences continue to influence delivery patterns, infrastructure may need to be adjusted to accommodate freight and single-parcel delivery option such as electric vehicles, e-scooters, and e-bikes.
Would you like to learn more about our Travel, Logistics & Infrastructure Practice?Shared mobility, and electric and autonomous vehicles have disrupted urban mobility. Depending on customer acceptance of shared mobility, regulations in each country, and the progress of technology, spending on shared-mobility services could reach $500 billion to $1 trillion in 2030. 7 “Shared mobility: Sustainable cities, shared destinies,” McKinsey, January 5, 2023. In parallel, the future of the automotive industry is looking increasingly electric, due to shifting consumer behavior, ongoing improvements in battery and charging technologies, and regulatory moves. 8 “Why the automotive future is electric,” McKinsey, September 7, 2021. For instance, the Advanced Clean Cars II regulations mandate that all new passenger cars, trucks, and SUVs sold in California will be zero emissions by 2035. 9 Kira Bindrim, “NY implements 2035 all-EV plan after California clears the way,” Bloomberg, September 29, 2022; “Advanced Clean Cars II regulations: All new passenger vehicles sold in California to be zero emissions by 2035,” California Air Resources Board website. As far as autonomous vehicles are concerned, consumers may want cars with more advanced autonomous functions (including L2+, L3, and L4) which give the autonomous system greater control. L3 and L4 systems for driving on highways will likely be commonly available in the private-passenger-car segment by around 2025 in Europe and North America, although steep upfront costs may limit such advances to premium vehicles. 10 “Autonomous driving’s future: Convenient and connected,” McKinsey, January 6, 2023.
These developments have implications for urban mobility infrastructure ecosystems. Growing use of shared mobility services, with the associated increase in fleets of these modes, has added to congestion. Transport infrastructure will likely become more constrained as space will have to be allocated for electric vehicle charging infrastructure (EVCI) and parking facilities dedicated to micro-mobility and/or shared mobility.
These insights were developed by the McKinsey Center for Future Mobility (MCFM). Since 2011, the MCFM has worked with stakeholders across the mobility ecosystem by providing independent and integrated evidence about possible future-mobility scenarios. With our unique, bottom-up modeling approach, our insights enable an end-to-end analytics journey through the future of mobility—from consumer needs to modal mix across urban and rural areas, sales, value pools, and life cycle sustainability. Contact us, if you are interested in getting full access to our market insights via the McKinsey Mobility Insights Portal.
As these trends unfold, cities are growing and evolving, and their citizens’ needs are changing: Livability and quality of life will become increasingly important and shifting consumer preferences may shape the cities of the future. McKinsey research indicates that leading cities expand transport networks and infrastructure, and provide good road networks, bike lanes, and pedestrian infrastructure. Furthermore, increasing the number of dedicated public-transport lanes, optimizing bus routes, completing road construction or modernization projects, and implementing digital upgrades all help improve the commuter experience in such cities. 16 “Building a transport system that works: Five insights from our 25-city report,” McKinsey, August 11, 2021.
Most importantly, as more people switch to new transport paradigms, there will be a greater need to collaborate, coordinate, and synchronize decision making and visibility across the transport ecosystem. The need for coordination already exists—many cities face a pressing need to manage vehicle flows, as well as volumes of pedestrians and cyclists, that make up urban life.
Advances such as the Internet of Things (IoT), data analytics, artificial intelligence, and cloud computing create a mix of connectivity in cities that can enable solutions for reshaping the urban mobility landscape. Several actors from different industries have invested in mobility digitalization and new technologies. The range of business across the mobility value chain include established technology companies, systems integrators, tech and mobility startups, original equipment manufacturers (OEMs), digital platforms, providers of software and hardware components, and payment companies.
In this context, Intelligent Transport Systems (ITS), urban congestion charging, and Mobility-as-a-Service (Maas) platforms are among the most advanced systems and solutions currently in development:
ITS refers to systems in which technologies are applied in the field of road transport—including infrastructure, vehicles, and users—and in traffic management and mobility management. 17 Directive 2010/40/EU of the European Parliament and of the Council on the framework for the deployment of Intelligent Transport Systems in the field of road transport and for interfaces with other modes of transport, Official Journal of the European Union, July 7, 2010. For ITS to work, both hardware and software components are needed. Hardware includes IoT devices like road-side units, sensors, detection cameras, controllers, traffic lights, and toll booths. Examples of software include packages that enable advanced traffic management, environmental traffic management, vehicle-to-everything (V2X) communications, adaptive traffic control, advanced traffic planning and simulations, and data analytics.
ITS can play a significant role in improving road safety, reducing congestion, optimizing transport efficiency, enhancing mobility, and reducing energy use and environmental impacts. A European Commission report found that the largest cumulative socioeconomic benefits of ITS include reduced travel times and increased efficiency (66 percent), reduced accident rates (22 percent), and fuel consumption savings (11 percent). 18 Study on the deployment of C-ITS in Europe: Final Report, European Commission, 2016. Furthermore, ITS can help to smooth mobility demand at peak hours and provide a way to optimize freight transport through better capacity management.