Tete Heigrujam outlines three key trends set to propel the global electronic toll collection market from now through to 2027…
The electronic toll collection (ETC) market is set to grow at an 11% CAGR from its current market value of more than US$6.5bn to over US$10bn, as reported in the latest study by Global Market Insights. Rapid urbanisation, coupled with the rising adoption of smart transportation systems, will give the global ETC market a commendable boost by 2027. Additionally, increasing introduction of favourable government initiatives and heightened product consumption, to address problems related to road maintenance worldwide, will support demand for ETC systems.
Every day, a greater number of people are gaining awareness about the benefits of electronic toll collection, including its capability to reduce the chances of accidents by aiding traffic mobility as well as its ability to improve environmental impact.
For example, the Japanese government, in November 2020, announced the replacement of manual toll collection facilities with ETC systems due to the Covid-19 outbreak among tool collectors. This system helps in-vehicle devices pay tolls automatically and enhances operational efficiency, thereby elevating customer experiences and providing flexibility in transitioning to a new interoperability standard.
Furthermore, in 2020, the Asia Pacific electronic toll collection market captured around 20% of the global revenue share. Rapid urbanisation, a booming economy, and rising disposable income are the factors contributing to the regional market demand. Several countries across the region are embracing advanced technologies. For instance, the Land Transport Authority in Singapore has collaborated with Intelligent Transportation Society of Singapore to facilitate the Smart Mobility 2030 strategic plan, which is designed to encourage the development and adoption of ETC solutions to make road traffic safer and efficient.
The prepaid segment also held more than 45% of the electronic toll collection market revenue in 2020. Increased demand for a quick and hassle-free transaction process is driving the demand that allows direct payment of toll fees from a prepaid or savings account. A prepaid tag enables automatic deduction of toll charges and allows vehicles to drive through without stopping for transactions. Prepaid card systems are integrated with a toll management system, enabling toll operators to select vehicle classes and deduct applicable toll fees from the prepaid card. The benefit of fast and cashless transactions will increasingly support the adoption of prepaid payment methods in ETC systems.
Competition in the ETC market is characterised by R&D investments by market players directed toward the development and commercialisation of innovative solutions. Major ETC industry players include TransCore, Thales Group, Feig Electronic, Jenoptik, Tecsidel, Cubic Corporation, Efkon, and Kapsch TrafficCom, among others. These companies are incorporating varied strategies such as new product launches and business expansion to sustain their market share. In April 2021, Star Systems International launched a new windshield and headlamp tolling transponder, Zenith, which is expected to gain adoption in ETC and other applications.
Following are some of the key trends set to play a major role in fostering ETC market expansion by 2027:
- Increasing smart city initiatives
ETC systems have been gaining widespread adoption across developed and developing nations. Recently, Pikepass of Oklahoma Turnpike Authority became the first electronic toll collection system in the USA. The system can electronically debit the accounts of the registered car owners without the need to stop, resulting in low congestion near toll plazas.
There has been a burgeoning need for infrastructural improvements in developing countries such as India, which, in December 2021, announced US$500m of projects to develop green and safe national highway corridors under the Ministry of Road Transport and Highways, in addition to 65,000km of national highways with an investment of US$741.5bn by 2022.
Conventional toll collection systems there create issues such as long queues, which is especially problematic in densely populated countries like China. With an aim to overcome these challenges, several developing countries have been focusing on implementing automated toll collection systems using GPS to quickly perform monetary transactions at tolls and reduce highway congestion.
The case for intelligent traffic management solutions has further been made by the increasing mobility challenges in urban areas. Consequently, to improve the safety and performance of traffic infrastructure, governments have been turning to technology. In fact, the challenges posed by traffic congestion, inadequate parking spaces, and poor road safety are projected to result in a plethora of product innovation activities, which in turn would impel the overall ETC market expansion over the forecast spell. - Rising focus on ensuring smooth operation of smart city infrastructure
In terms of segmentation by technology, the video analytics segment is likely to hold a considerable share over the forthcoming years. This is attributable to the rising need for security of ETC systems. The integration of this technology into the system enables efficient detection of vehicles that enter or exit the toll plaza. The segmental growth will further be bolstered by the technology’s capability to play a key role in automatically ensuring traffic f low on highways, decreasing workforce requirements, and analysing the video.
Meanwhile, with regards to type, the global ETC system market from the violation enforcement system (VES) segment will gain remarkable traction, owing to the rapid adoption of VES in electronic tolling systems to identify and monitor toll evasion. Additionally, VES also deliver the capability to detect fault within ETC systems, making it a crucial aspect of the infrastructure.
The US automatic vehicle identification (AVI) system market size is projected to expand at a 10% CAGR from 2020 to 2027, driven primarily by rising adoption of ITS technologies to identify and track stolen vehicles across the country. According to the FBI, about US$6.4bn was lost in the USA to motor vehicle theft in 2019. Implementation of ETC systems along with AVI technology aids in toll collection as well as automatic identification of vehicles. The technology simplifies access control and vehicle identification process by using secure RFID tags or cards that eliminate the need to manually identify a vehicle.
Meanwhile, RFID technology in the European ETC market is set to register 14% CAGR through 2027. Several European countries are shifting toward innovative tools to increase the efficiency of transport network and achieve their sustainability objectives. For instance, RFID-based mobility monitoring and management systems were adopted by several cities across Italy in 2018. The positive outlook toward advanced technology will propel the adoption of RFID-based ETC systems across the region. RFID tags are scanned through a RFID reader mounted on an ETC system to automate deduction of toll amounts. The system enables easy exchange of payment information between the vehicle owners and toll authorities, resulting in reducing manual labour and human errors and increasing transparency in collection of toll charges. - High emphasis on reducing carbon footprint in Europe
On the regional front, the European ETC market is set to depict a commendable growth rate in the foreseeable future. This can be credited to strong government focus on reducing national carbon footprints and leveraging digital technologies. The regional market trends will further be fostered by the shifting preference from manual toll collection to digital toll systems. This is because the latter help alleviate traffic congestion, reduce air pollution, and improve public health. In fact, it is speculated that the use of ETC systems is likely to reduce fuel consumption by approximately 4.1 million litres and lower emissions by over 731 tonnes in the region.
This article was originally published in the March 2022 issue of CiTTi Magazine, click here to read the original.
