Recently, we had the opportunity to meet with the management team of Nobina AB, the Nordic region’s largest and most experienced public transport service operator. In many parts of Europe, segments of mass transit are outsourced to private companies, as opposed to being operated directly by the public transit authority (PTA). Nobina, which focuses primarily on bus service, has operated in the space since Nordic countries began to pursue a policy of privatization in the 1990s. With intimate knowledge of the region and years of experience, the company has built a competitive advantage around its ability to profitably bid on bus transit tenders, while providing quality service to PTAs and, ultimately, its riders. This is an interesting niche business whose progress we will continue to monitor over time, especially as urbanization in the Nordics (as in much of the world) continues to drive the need for more (and better) mass transit solutions.
To that end, our discussion with management not only helped me learn more about Nobina, but also touched on several topics related to the future of mobility. As countries around the world seek to reduce their carbon footprint, governments are seeking to incentivize use of public transportation through more extensive, user-friendly service, creating an opportunity for transport operators like Nobina, as well as other transit infrastructure businesses. There is also the desire to reduce the environmental impact of mass transit itself- for example, though China leads the world in the use electric buses, the West is seeking to catch up. Nobina management sees this as a positive for many operators given that electric buses, despite their higher upfront costs, have reduced maintenance and energy costs. As a result, the company has found many of its recent contracts involving the partial or full use of electric buses.
While this is a more immediate innovation, Nobina is also looking further into the future: in Stockholm, the company is working with bus manufacturer Scania to test autonomous buses. Aside from the obvious savings that result from reduced personnel costs, autonomous buses may also help to create transit systems that offer riders a better experience. Our discussions with Nobina revealed many of its contracts already include incentives based on factors like punctuality and reliability of service, even during rush hours or periods of traffic disturbance. “Smarter” buses which communicate with all of the entities in the transport ecosystem may be able to make achieving these goals easier. While many discuss vehicle-to-everything (V2X) communication in the context of passenger vehicles, this revolution impacts mass transit as well. One of the companies we currently own in our recently launched Focused European Equity Strategy, Kapsch TrafficCom, is among the companies leading the charge in V2X technology, which will allow transit operators like Nobina to better stick to their timetables, keep their riders informed on arrival and departure times, and allow various modes of mass transit to “talk” to each other, and react to traffic conditions in real-time. While these solutions will take time to roll out on a wider basis, we believe Kapsch’s offerings represent a window into the future of mass transit, especially for innovative transit operators like Nobina.