U.S. Smart Transport Needs Global Reach
American companies risk losing market share to foreign competition
American companies exploring opportunities in the intelligent transportation market are preparing to parachute into an industry forecast to be worth $200 billion through the next 20 years. But these firms are somewhat paralyzed by the uncertainty of the market, and are waiting for someone or something to push them out of the plane.
That shove may come from a concern familiar to many in the electronics market -- foreign competition.
"If we don't find a way to bring technologies to the marketplace, the United States will be left out of the industry," said Jack Kay, CEO of JHK & Associates, an Emeryville, Calif.-based firm that specializes in advanced traffic information systems.
In fact, concern is spreading among the intelligent transportation community that Japanese and European companies, which already have some high-tech transportation products for their homelands, will bring their developed technologies to the United States and dominate the still-emerging market.
Japan, for instance, already has 850,000 electronic maps installed in its vehicles, and those navigation systems are supplied by 24 Japanese companies. There's nothing stopping these firms from bringing their technologies across the Pacific.
The only solution, experts say, is for the United States to create its own industry, and soon. But America's companies have yet to be inspired to free-fall into a not-yet-existing marketplace, so how can the U.S. jump-start the industry?
"America must rapidly put in place an advanced transportation infrastructure" within the next five years, said Christine Johnson, chief of intelligent transportation activities at the U.S. Department of Transportation. Once communications links and travel management systems are established around the country, a healthy market will emerge for smart cards that allow drivers to speed through toll booths, for electronic maps that show drivers where traffic is heavy, and other advanced technologies that need an infrastructure to work from, she said.
And businesses seem to agree. If the government develops the infrastructure, American companies would have the confidence to believe there is a viable U.S. market for advanced transit technologies, said Kay of JHK & Associates, which is a subsidiary of San Diego-based Science Applications International Corp. Then firms would be willing to bet on a U.S. market, he said.
In fact, some say American companies could even turn the table on foreign competition and capture significant revenues from offering U.S.-developed products to other countries.
An American architecture will help
The first step toward the U.S. realizing an advanced transportation infrastructure is already underway. The United States is working on a systems architecture to help companies develop transportation technologies that are interoperable. Industry teams led by Loral and Rockwell are devising the systems plan under a Transportation Department contract.
"The architecture will create large markets for advanced transportation technologies and will keep the costs of the products down," said Kan Chen, a University of Michigan professor who is currently working for the U.S. Department of Transportation monitoring international ITS activities. The architecture, along with standards being developed by the International Standards Organization, will help create a market for technologies that can work across the U.S., he said.
But in addition to helping spur the domestic market, some say the development of a systems architecture could help American firms break into foreign markets. The architecture could give U.S. firms a competitive edge in the global marketplace because they would be offering a set of interoperable transportation products, said Johnson.
International possibilities have not eluded America's firms. U.S. companies interested in the intelligent transportation market are already trying to figure out how to break into foreign markets. Firms are evaluating which governments will be buying intelligent transportation systems, said one executive who would not allow his name or his firm's name to be used.
An untraditional foreign market for U.S. firms
The international market opportunities for U.S. firms may not be in Western Europe or Japan, where the two strongest markets are today, said Chen. The United States has been playing catch up to these two regions since the 1980s, even though America led the pack in developing smart transit technologies in the late 1960s.
The U.S. intelligent transportation program, however, did not have continuous funding, so Europe and Japan moved ahead in deploying the technologies, Chen said. Japan alone has spent billions to install smart transportation technologies. But there are many more nations that have only recently started to consider the benefits that intelligent highways offer.
Countries that are emerging as possible markets for U.S. firms are Australia, Korea, Mexico, and other recently industrialized nations, Chen said. China, emerging markets such as Thailand, and any place where significant traffic is building, will also offer opportunities for American technologies, Kay said.
Some of the technologies that American firms are likely to excel at include electronic toll collection, products and services based on the Pentagon's Global Positioning System, and personal communications devices that offer traffic information.
A final market segment that U.S. firms will be well-suited to capture is for automated highway technologies, said Kay. The Transportation Department-led effort to create a prototype of an Automated Highway System will give firms experience in developing advanced vehicle control elements, he said.
Building from its technology strengths, experts say the United States could become a leading provider of intelligent transportation systems. But first, America's companies must believe that when they jump into the business head-first, there will be a large U.S. marketplace to land in.