A more unpredictable transport sector

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At a time of historic record levels of deals in the Swedish transport sector, new demands are being placed on its leadership. That is the view of Joacim Sundell, partner at the management consultancy PA Consulting, which has worked with transport customers for over ten years.

PA Consulting employs approximately 3,500 management consultants divided into different groups of strategists, engineers and innovators who work with both private and public clients in Europe and the USA.

Joacim Sundell is the CEO of the consulting company's Swedish operations and has worked with customers in the transport sector for ten years. He explains that it is an industry characterised by gigantic projects with a lot of money at stake. One example is the selection of an operator for Stockholm's metro. This is a huge deal with the contract worth between SEK 40 and 50 billion. Specifically, it is about choosing a company to operate the subway from 2025, a role that is currently held by the Hong Kong-based operator MTR. The procurement is being handled by the Swedish Transport Administration and is the largest ever in Swedish history. The contract is attracting interest from both domestic and foreign operators, and Joacim Sundell sees this as a general development where more and more foreign players want to enter the Swedish market. This is not that surprising because contracts worth billions are currently being procured in the sector.

In Stockholm alone, approximately SEK 90 billion is expected to be procured over the next ten years, half of which is made up from the metro contract. In addition, bus line operators will be procured for between SEK 5-10 billion, and the Stockholm's metro capacity will also be expanded.

"There are big deals that will be done in the near future and they affect all of us, the transport system is part of our everyday life and to a large extent it is also you and I who pay for it through our taxes," says Joacim.

He outlined how the sector is large and is made up of a complex system with many players. The organisations that the companies must court are the Swedish Transport Administration and the regional authorities that procure construction, maintenance and traffic. In summary this is made up of the following players:

• Those who procure traffic, construction and maintenance: The Swedish Transport Administration and the regions and municipalities, for example for special public transport.
• Those who drive on rails and roads: the operators
• Those who build and maintain rails and roads: construction companies and specialised contractors

Losing 90% of its customers
This is an ecosystem that must work every minute, all year round.

"When you lift the bonnet and see all the problems that exist, it is surprising that it works at all," says Joacim.

He explains that one challenge is the structure of the system: there are many very different players who must work together to succeed in providing a system that works for citizens. You have to look at your own part, but also see the whole picture. Another challenge pointed out by Sundell is the system's inherent need for predictability and consequent sluggishness with long contracts, fixed assets such as roads and railways, extensive safety requirements and so on.

During the pandemic, a number of industries were stress tested, including the passenger transport sector. Public transport lost around half of its passengers, in commercial traffic the loss was up to 90%.

“The crisis hit the industry hard, which traditionally struggles with small margins. Travellers disappeared overnight, and as time goes on, attitudes towards travelling may also change."

He explains that as more people continue to work from home or virtually and in some places there is a continued perceived insecurity of being in crowded environments. Another effect of the corona crisis is the intensification of a skills shortage.

“During the pandemic, there were also many employees in the industry who retrained to avoid being unemployed. And right now there is a major shortage of staff in the transport sector,” says Joacim.

In addition to being CEO of PA Consulting's Swedish operations, he is also a new member of the jury for Affärsvärlden's Leader of the Year award. This award was established in 1984 and this year's winner will be announced on November 24.

What have you learned from the pandemic at the leadership level in the transport sector?

“There is a greater willingness to develop, using the help of innovation and technology. There is already a huge amount of information in the transport system that can, and will, be used by the leaders in the sector. Using this information, smart systems can increase punctuality, free up more capacity, optimise routes and make each trip a little safer. Used properly, there are great revenue opportunities for operators and great cost savings for public sector providers.”

Joacim gives the example of smart services available for driving. Similar information could also be used by passengers on trains or public transport. If, for example, there is a blockage on the train route between Malmö and Stockholm, an alternative route using other means of transport could be suggested to the traveller.

"The challenge is that the entire industry needs to put the customer at the centre and enable more flexible travel through joint ticket solutions, packaged traffic-wide services and provide traffic information for your specific needs in real time."

Joacim believes that the new business models of the future can also be shaped by how the agreements are constructed, and that these agreements can accelerate the development of new digital services.

“The Swedish Transport Administration, the regions and the municipalities have an opportunity to review what procurement agreements should look like in the future. For example, they could create clearer incentives for suppliers to maximise customer satisfaction. But it is also about creating more innovation platforms where the industry can work together with pilot projects. It must be okay to make mistakes and learn from them over the longer term to increase customer satisfaction, streamline operations and create a better transport system. We must be bold enough to see the gaps in a stress-tested system and tackle a more unpredictable market than we had in January 2020.”

You sit on the jury for Leader of the Year, an award that Afv has awarded since 1984. But for you, it is your first time on the jury. What has struck you in terms of leadership awards in general?

“It's a very well-known jury, and it's great fun for me to be there and discuss leadership. I think it can be difficult to determine how much each individual has contributed to the work on a change. It is not always clear when a development began, nor who or what actually initiated a change.”