IDB study shows path to digitally transforming transportation in LAC

WASHINGTON, United States (CMC) — Latin America and the Caribbean (LAC) lag on digital technologies in transportation, which presents a major opportunity to boost a key economic sector, according to a study undertaken by the Inter-American Development Bank (IDB).

The study found that despite some governments’ efforts to enhance policies on digitally transforming transportation, 40 per cent of transportation authorities and 27 per cent of private-sector actors in the region have yet to design a digital transformation strategy.

This gap is a key finding of the IDB’s study titled “Driving Forward the Digital Transformation of Transportation in Latin America and the Caribbean”, carried out in 2021 and 2022 in conjunction with the Instituto de Columbia para la Tele-información.

The 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 for the study that found that two of every three organisations now have a digital transformation strategy, while in 2019 they were barely aware of the issue.

However, 43 per cent of survey participants said they are behind or well behind the average for Latin America and the Caribbean, while 67 per cent noted this same lag in comparison to the world’s leading countries.

The Inter-American Development Bank Group’s Vision 2025 recognises that digital transformation poses a unique opportunity for public-private partnership on transportation and an inclusive and sustainable economic recovery.

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 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.

The IDB recommends using public policy to incentivise the digital transformation of transportation and catalyse 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.

The IDB noted that 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.”

The study was made possible by the support of the IDB and of the World Economic Forum, the American Association of Port Authorities, the Latin American Air Transport Association, the Latin American Civil Aviation Commission, the International Road Transport Union, Intel, and Microsoft.

It was presented at the first Regional Policy Dialogue on Transportation which focused on digital transformation as an opportunity for inclusive and sustainable economic recovery.

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