Over the last 100 years, transportation has taken some significant leaps. With the invention of the car and its proliferation to countries around the world, individuals were empowered to go where they wanted, when they wanted. However, as the boundaries of distance decreased with an increase in vehicle quality and reliability, so did the world’s desire to travel even further and at greater speeds. The latest potential advance in human transportation is the proliferation of high-speed rail.
There are two interesting dynamics driving the most recent push in rail technology: the economy and private investment. Lets briefly dive into each of these and discover why high speed rail might be the next significant infrastructure investment by developing countries.
As the economy turned south two years ago, many governments were left scrambling for ways to prop up their country. Significant ‘bail out’ funding was spread wide and far in the name of economic stimulation, much of which was earmarked for infrastructure improvement. It has been said that infrastructure spending across the world will reach $35 trillion over the next 20 years!
Although the debate goes on about the cost and viability of high speed rail, the concept has drawn in significant interest and investment. Driven by the limitations of government spending, individuals have begun to chip-in to what could become a world standard for transportation. Recently, the Thai government announced that it is opening private investment in public high speed rail systems currently under development.
If high speed rail proliferates to infrastructure systems around the world as it did in Europe in the 1990’s, significant shifts in the industry are bound to take place. Most notably, the airline industry is likely to face a potential for a decline in demand, accompanied by more shrinking margins. Further, high speed rail will present alternatives to personal vehicles and could also cause consolidation in the automotive industry.
Personally, I predict high speed rail to continue to succeed in major economies including Spain, China and the United States. As populations become more accustomed to this new option, general consolidation will occur in other supporting industries.