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Ruter – the public transport operator for the greater Oslo region – has stated that all its vehicles will be emission-free by 2028. In itself, however, this may not be enough to make public transport the most attractive choice in the future.
The greater Oslo region is one of the fastest growing capital regions in Europe, with a projected population growth of 250 000 in the next 15 years. Ruter plans, coordinates, orders and markets public transport in the region – which accounts for over half of Norway’s public transport.
In this Q&A, Ruter CEO Bernt Reitan Jenssen explains why emission-free transport and self-driving vehicles are only the beginning of public transport disruption.
Today, people who live in or near cities expect to move freely. Without freedom of movement, you can feel trapped, which can quickly affect your quality of life. Freedom of movement has a very strong emotional aspect, which may help to explain why people are willing to pay hundreds of thousands of kroner for a private car. Ruter must acknowledge that we have to offer something more than just cost-effective transport.
We have now agreed to a definition of what Ruter is working to provide: sustainable freedom of movement.
If you have enough money, you can create tremendous freedom of movement. Soon you’ll be able to travel to the moon, provided you have enough money. This brings us to the difference between freedom of movement and sustainable freedom of movement.
The extreme freedom of movement many of us are used to today, may soon become unjust. It may consume shared resources, such as valuable urban area, in a way that makes us as a democracy want to regulate it somewhat. In a steadily more crowded city, not everyone can ride around in their own car.
It’s very interesting to watch how much technology relating to movement is changing and how quickly. We have already seen the effect of electric cars on the use of public transport in the Oslo region. When these cars become self-driving, the impact will be even greater.
Ruter is therefore being forced to figure out how to put together a total set of transport services that takes into account these and other developments. At the same time, we must understand the technology as well as customer needs, and examine how new solutions can turn current services topsy-turvy.
Disruption doesn’t occur when someone creates an expensive, elegant solution at the creative end of the market – it occurs when the bottom falls out of the cheapest end.
That’s what we’re facing here. The public’s expectations for transport can suddenly be satisfied by something cheaper than the services Ruter provides today. This could be frightening if we’re not prepared.
Much of Ruter’s activity is at the cutting edge of the transport sector in terms of thinking about technological development – for several reasons. We are located in a very technologically advanced part of the world, with a very high adaptation speed when it comes to technological solutions.
We also have rich customers, and labour is costly. Thus, there is a willingness to invest in technology because you reap quicker rewards.
Meanwhile, there aren’t very many available solutions that match Ruter’s needs. When we try to buy something, the market isn’t where we would like it to be. Most suppliers want to sell us gizmos and boxes – which we stopped using five years ago – while we want to purchase expertise and services.
This has led us to produce a lot ourselves. Preferably open source and module-based, so we can buy software off the shelf. This way we can create an architecture where we can put together components and open up, so we will never again be dependent on a supplier. We can test, fail quickly and cheaply, and roll out improvements each night.
This kind of digitalisation expertise is fortunately not something that can only be applied in Norway. There is a misguided perception that digitalisation is only for rich and well-developed countries. For me, digitalisation means that those who do not possess the technology today can obtain access to the same solutions at a fraction of the cost.
For example, Ruter’s old ticketing system cost us an arm and a leg. Now you can move everything to a mobile phone and be entirely cloud-based. This is ridiculously less expensive than the technology that has existed until recently. Imagine that you’re going to pay to ride a minibus somewhere in the world – there’s no cheaper way to do that than by mobile phone. Soon everyone is going to have a smartphone, regardless of where they are.
This kind of technology is going to totally change the world. It’s almost overwhelming when you understand what a fundamental game changer it is – in every area. When other markets realise that they can catch up to developments that we’ve used decades and billions of kroner on, for a fraction of the cost, they will be thrilled.
According to Tony Seba, the author of Clean Disruption of Energy and Transportation, the demand for oil will fall dramatically after 2030 and 26 per cent of this drop will occur in the transport sector – as a result of electrification.
An estimated 40 per cent of today’s fossil-fuelled vehicles will still exist in 2030, but they will only represent around 5 per cent of value creation – simply because they are not economical. Perhaps not as many people will want to buy a car if they aren’t permitted or can’t afford to drive it.
This might be frightening to many people. But on a positive note, think about how much purchasing power will be transferred from car ownership to something else. Think about how much money is currently used on cars that remain parked most of the time. If we begin to move that value – because people actually receive a service, an experience, a sense of freedom in another way – we can begin to use that money differently.
If you’re worried about the fate of the world, about whether there will be enough jobs, you can begin to look at what we no longer need to use money on. What are we going to do with that money and what are we going to do with our lives if we don’t need that money? Just imagine the possibilities if this capital were to be invested in service procurement!
There are so many free variables at play that when major changes occur it will be very exciting to see the tremendous opportunities that emerge.