Latin America and the Caribbean lags behind on digital technologies in transportation, which presents a major opportunity to boost a key economic sector, an Inter-American Development Bank study finds, in alliance with the World Economic Forum, American Association of Port Authorities – AAPA, Latin American & Caribbean Air Transport Association – ALTA, Latin America Civil Aviation Commission – CLAC, World Road Transport Organisation – IRU, Intel and Microsoft.
Despite some governments’ efforts to enhance policies on digitally transforming transportation, 40 percent of transportation authorities and 27 percent of private-sector actors in the region have yet to design a digital transformation strategy.
This gap is a key conclusion of the study Driving Forward the Digital Transformation of Transportation in Latin America and the Caribbean, carried out by BID in 2021 and 2022 in, for what researchers reviewed nearly 300 public, private, and academic documents; surveyed 223 transportation contractors in the region; and interviewed 96 industry leaders from all over the world.
The study made in conjunction with the Instituto de Columbia para la Tele-información. found that two of every three organizations now have a digital transformation strategy, while in 2019 they were barely aware of the issue. However, 43 percent of survey participants said they are behind or well behind the average for Latin America and the Caribbean, while 67 percent noted this same lag in comparison to the world’s leading countries.
The Inter-American Development Bank Group’s Vision 2025 recognizes that digital transformation poses a unique opportunity for public-private partnership on transportation and for an inclusive and sustainable economic recovery.
How to achieve the transformation
- The study recommends that government agencies create digital transformation strategies for different transportation modes and work with the private sector to design and implement them.
- It also encourages countries to spearhead projects showcasing the benefits of digital transformation in order to overcome resistance to change, foster public-private collaboration, and prepare policies for mass introduction of new technologies like electric and self-driving vehicles, the Internet of things, and artificial intelligence.
- Additionally, the report identifies the need to train people on using advanced digital technologies to meet the growing demand for professionals in this area.
During the launch event of the study, “Diálogo Regional de Políticas de Transporte enfocado en la transformación digital: Oportunidad para la recuperación económica inclusiva y sostenible” ALTA’s CEO, José Ricardo Botelho, stated: “As a result of the pandemic, the future has become more quickly present. The industry has quickly adapted by developing protocols and adopting technologies to comply with them in the safest way.Globally digital transformation is a fact, but for its wide implementation it requires working with governments, especially in a region like ours where 50% of the urban population and 25% of the rural population have internet access (ECLAC). The pandemic has also demonstrated the profound economic consequences of the absence of aviation and connectivity. Each direct job in aviation can generate between 14 and 18 indirect and induced jobs. This is an extremely important sector. Continuing work to remove standards that are neither effective nor necessary in the region will be key to having highly developed air transport in the next decade and an even larger population making use of the safest mode of transport”.
A roadmap for digitally transforming the industry
The Inter-American Development Bank recommends using public policy to incentivize the digital transformation of transportation and catalyze emissions reductions that can slow climate change.
Artificial intelligence and emissions reduction technologies are expected to continue to gain importance by 2025. The region is in the early stages of digital transformation, so it needs to consider larger investments to harness the competitiveness and sustainability benefits of new technologies.
Bringing transportation into the digital age requires greater effort, commitment, and cooperation among governments, companies, and academia in a push to build a prosperous and sustainable future.
To achieve the transformation, government agencies have to overhaul their culture and capacities. Also, countries need to foster partnerships among national, regional, and local institutions; create new incentives for technological investments or bolster existing ones; and create spaces for joint problem-solving to enable progress.
(Study) Driving Forward the Digital Transformation of Transportation in Latin America and the Caribbean: https://publications.iadb.org/es/impulsando-la-transformacion-digital-del-transporte-en-america-latina-y-el-caribe