Electronic Toll Collection Market with COVID-19 Impact Analysis by Technology, Offering, Application , Type, and Region

[165 Pages Report]The electronic toll collection market is projected to reach USD 10.0 billion by 2025 from USD 6.9 billion in 2020; it is expected to grow at a CAGR of 7.7% during the forecast period. Major drivers for the growth of the market are ETC as an effective solution to reduce traffic congestion, accidents, and environmental pollution; strong government support to accelerate electronic toll collection; greater convenience and flexibility of cashless payments; and increased use of advanced technologies in transportation infrastructure.

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Impact of COVID-19 on Electronic Toll Collection Market:

The world is facing an economic crisis caused by COVID-19 pandemic. The pandemic has severely affected various industries such as automotive, construction, transportation, semiconductor, etc. Manufacturing units are hampered due to shutdowns and the availability of labor or raw materials. This has resulted in a huge gap between supply and demand. Further, there is a restriction on foreign trades due to the lockdown of international borders, non-operational distribution channels, and various government laws to take precautionary measures for public health and safety.

Electronic tolling systems are a combination of several electronic components and devices, such as transponders, cameras, RFID chips, controllers, and processors. Major suppliers of components and raw materials are originated from countries such as China and the US, which are among the worst affected countries due to COVID-19. As a result, borders are sealed, and strict lockdowns are enforced as preventive measures, thereby having a direct impact on the supply chain of electronic components and devices. Anticipated delay in supply of raw materials to manufacturers who meet the requirements of tolling system integrators, as well as delay in delivery of products to integrators due to stringent regulations and guidelines formulated in the transacting countries are expected to cause sequential effects for a longer period in 2020, leading to supply chain disruptions.

Market Dynamics:

Driver: Strong government support to accelerate electronic toll collection

The ETC market is mainly driven by the initiatives undertaken by different governments to achieve congestion-free or speedy freight transportation on highways and urban areas. To encourage consumption of ETC services, countries are carrying out concessional schemes for drivers. The significant growth of the ETC market is primarily driven by the government initiatives in developing countries for the implementation of ETC systems on highways. Such initiatives aim to enable the smooth flow of vehicles and solve the problem of queues at toll plazas by collecting toll charges electronically.

Restraint: Implementation constraints in emergent nations

Road infrastructure and telecommunication technology are among the basic elements that need to be on top for the installation of an ETC system. Economically developing countries lack suitable infrastructure, along with the absence of required technology, affecting the penetration of ETC systems in these markets. Poor communications infrastructure such as lack of mobile penetration, internet, and computer; inadequate transportation; illiteracy; limitations on electricity supply; and shortage of other key resources are some of the factors that restrict domestic and foreign investments in such countries, which further obstructing the growth of advanced transportation systems, such as ETC, in such countries. Additionally, the outbreak of the COVID-19 pandemic is also expected to have a considerable negative impact on the economic conditions of these countries.

Opportunity: Rising number of public-private partnership agreements in transportation sector

ETC systems are not easy to deploy by a single stakeholder; it requires the collaboration of multiple entities, including telecom operators, infrastructure providers, manufacturers, service providers, public sector, and user groups. Thus, the public–private partnership (PPP) model can be a key to the successful implementation of the integrated ETC system.

In November 2019, new tolls on an 8-mile stretch of Interstate 395 in Northern Virginia, US, initiated operations adding to the state’s growing network of toll lanes. The 3 new reversible high-occupancy toll (HOT) lanes, which replaced the 2 high-occupancy-vehicle (HOV) lanes, are the result of a PPP between Virginia and Transurban (Australia), a road operator company that manages and develops urban toll road networks. Transurban (Australia) is expected to manage and operate the new toll lanes. Such developments in the US are observed as some of the latest additions to the growing trend in the country for PPP, creating growth opportunities for the ETC market.

Challenge: Issues related to interoperability, common, standards, as well as selection of toll technology

Current issues for implementing ETC systems are related to interoperability and technology selection. Although some toll facilities at certain locations are currently interoperable (that is, one tag can be used at all toll facilities), there is a lack of interoperability standards with other states and with toll facilities at border crossings of the states or countries. The need for interoperability between border crossings and toll roads will continue to increase, especially for the toll roads that are built near the border. Further, technology selection directly impacts interoperability.

Based on application, highways held larger share of the electronic toll collection market in 2019.

The electronic toll collection market for highways is significantly driven by its adoption, mainly in developing countries. Strong government initiatives are likely to add electronic toll collection options at existing toll plazas on highways, which is expected to create tremendous growth opportunities for the ETC market for highway applications. ETC systems play a crucial role in collecting a toll on highways, tunnels, and bridges. Conventional or manual toll collection has been transitioning to all-electronic tolling (AET) and high-tech transportation systems. Highways often have high-speed traffic, and traffic congestion may lead to fatal accidents and emission of toxic gases. To ensure safety and maintain the free flow of traffic, governments across the world focus of implementing electronic toll collection systems on highways.

The transponder-/tag-based tolling systems segment projected to account for large size of the electronic toll collection market during the forecast period.

Transponders have been widely used for vehicle identification in different countries. Transponders or tags are mounted on vehicles to communicate with the roadside equipment and carry out toll payment transaction without the need to stop a car. Transponders consist of basic information, including the identification number, toll facility, and vehicle type, among others. The vehicle identification number is linked to the customer’s account from which the appropriate toll is automatically deducted, or the customer is billed. The use of transponder-based tolling systems has ensured lower emissions from vehicles.