TheGreatReset

Emergingtrendsininfrastructureandtransport

2025edition

KPMG.MaketheDifference.

KPMGInternational|

/infratrends

Foreword:Reset2025

WeareinthemidstofaGreatReset.Protectionofnationalinterestsareatthetopoftheagenda.

Economiesarebeingreshaped.Alliancesandsupplychainsarebeingrewired.Thefrequencyand

severityofweathereventsareincreasing.Andsocialexpectationsandnormsarebeingrevised.

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Whilethesechangeshavebeenunderwayforsometime,theyarenotincremental.Wearefacingchangesthataremassive,lastinganddisruptive.Andtheyrequireinfrastructureandgovernmentleaderstothinkverydifferentlyaboutthefuture.

SomeaspectsofthisGreatResetarefundamental.In2024,planetEarthsurpassedthe1.5-degreethresholdfor11ofthe12monthsoftheyear1—ittookyearstobreachtheceiling,buttheimpactofdoingsoishugelyconsequential.Andasaresult,astheworldracestodecarbonize,theenergytransitionisupendingahugepartoftheworldeconomy.

Otheraspectswillseemabitlessnewsworthyatthetimebutwillhavetremendousimpacts—thedigitalintegrationofsupplychains,forexample.Yeteachwillcreatenewchallengesandopportunities.

Inthefaceofongoingfundamentalchange,infrastructureexecutives,policymakersandinvestorswillneedtobeclear-sightedandwillingtotakerisks.Bigdecisionsshouldbemade—oftenquicklyandonincompleteinformation.Andthosewhostaretoolongattheproblemwilllikelyfindthemselvesleftoutofthesolution.Collaborationskillsarebecomingmoreimportant.Visionaryleadersareneeded.

ThiseditionofEmergingTrendsinInfrastructureandTransportisintendedtoprovokedebatetohelpinfrastructureexecutives,policymakersandinvestorsthinkthroughthefuture.Todevelopthesetrends,Iasked10

ofourglobalinfrastructureleaderstoprovidetheirperspectivesonhowaglobalresetisinfluencingthesector.Theirviewsprovideacompellinglistoftrendsandpredictionsthatwebelievewillimpacttheinfrastructuresectoroverthecomingyear.

Butourauthorsdon’tjuststareattheproblem;instead,theylookforwardtosharetheirbestpredictionsonhowthesetrendswillplayoutinthefutureandoffertheirviewsonhowbesttonavigatethem.

AtKPMG,ourgloballyconnectedorganizationofinfrastructureandtransportprofessionalsarededicatedtohelpingpublicandprivatesectororganizationsmakeconfidentdecisionsinthefaceofuncertaintyandcomplexity.Fromstrategythroughtoexecutionandimplementation,ourpeopleworkalongsideourclientstohelpthemachievetheirobjectives—efficientlyandeffectively.

Theoldstatusquohasbeendemolished.Newnormsandexpectationsarerapidlybeingformed.AGreatResetisuponus.

Tolearnmoreaboutthetrendsandtopicsraisedinthisreport,ortodiscussyourorganization’suniquechallengesandopportunities,

IencourageyoutocontactyourlocalKPMGmemberfirm.

RichardThrelfall

GlobalHeadofInfrastructure,GovernmentandHealthcareKPMGInternational

1Annual2024GlobalClimateReport,NationalCentersforEnvironmentalInformation,2024

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Meettheauthors

Clickonanauthorphototolearnmoreabouttheauthorandtheirinsights.

MoniqueGiese

GlobalHeadofShippingKPMGinGermany

JanetGreenwood

GlobalLeadforSustainableInfrastructure,KPMGintheUK

LisaKelvey

Partner,MajorProjectsAdvi

sory,

EMAHeadofInfrastructureKPMGintheUK

DavidSmallbone

Partner,InfrastructureAdvisoryGroup,KPMGintheUK

PrahladTanwar

Partner,GlobalHeadofLogistics&PostalServicesKPMGinIndia

ClayGilge

CapitalProjectsLead,Principal,Infrastructure,

CapitalProjects&ClimateAdvisor

y,

KPMGintheUS

AdamJohnson

AssociateDirector,GlobalExecutiveforInfrastructure&TransportKPMGInternational

JamieSamograd

NationalIndustryLeader,Infrastructure

KPMGinCanada

SharadSomani

HeadofInfrastructure,KPMGAsiaPacificKPMGinSingapore

JulianWatts

Partner,Engineering&AssetManagementKPMGAustralia

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Contents

Clickonthetopicsbelowtolearnmoreabouteachtrend.

Trend1

Funding:TheGreatPrivatization

Trend3

Sustainability:Fixingthemissingmiddle

Trend5

Newassetclasses:Smarterinfrastructurerequiressmarterstrategies

Trend7

Resilience:Complacencywilllikelyleadtocatastrophe

Trend9

Energytransition:Prioritizingpragmatism

Trend2

Supplychain:Insearchofstandards

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Digitization:Seeingvaluefromdigitaltwins

Trend6

Construction:Innovationunlocked

Trend8

Capacity:Deliveringthepipeline

Trend10

Shipping:Hasthepartyended?

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Trend1

Funding:TheGreatPrivatization

JamieSamograd

NationalIndustryLeader,Infrastructure

KPMGinCanada

jwsamograd@kpmg.ca

JamieSamograd

JamieisthenationalleaderfortheinfrastructureadvisorypracticeinCanada.Inhis30yearsofexperiencebothinCanadaandtheUK,Jamiehasledtransactionsinseveralsectorsincludingpowerandutilities,transportation,energyandnaturalresources,andtelecommunicationsanddigitalinfrastructure.Jamie’sfocusisoncoordinatingandprovidingtransactionadvisoryservicesacrossmanyaspectsofM&Aincludingbuy-sideandsell-sideduediligence,carve-outs,initialpublicofferings,privateplacements,transactionmanagement,andfinancings.

Theinfrastructurefundinggapisgrowingexponentially.Backin2017,theG20thoughtitmighthitUS$15trillionperyearby2040.2AccordingtotheWorldBank,welikelyreachedthatpointin2023.3

Allsignssuggestthegapiswideningonbothsides.Governmentsaretryingtobalancearangeoffundingprioritiesandthatisreducingtheirfiscalcapacityforinfrastructure.Atthesametime,demandfornewandmoreresilientinfrastructureisclimbing,drivenbyeconomic,

environmental,technicalandsocialpressures.Closingthegapwillbeakeypriorityforgovernmentsaroundtheworld.

Frustratingly,thesolutiontoclosingthisgaphasbeenobviousforsometime.Governmentsaresittingonatreasuretroveofassets.Indeed,astudyof38countriesbytheIMFfoundmorethanUS$100trillionworthofassetsongovernmentbooks,includingkeyinfrastructuresuchasbridges,roadsandutilities.Andinstitutionalinvestorsaresittingonatreasuretroveofcapital.Theworld’stop500assetmanagerscollectivelymanagemorethanUS$128trillion.4Thealignmentisobvious.

Governmentsrecognizethesolutionbutarewaryofpursuingit.

2GlobalInfrastructureOutlook,G20,July2017

3Howcanweensurethat“moneyinthebank”leadsto“shovelsintheground?”,WorldBankBlogs,May25,2023

4https://

/en-ca/news/2024/10/worlds-largest-investment-managers-see-

assets-hit-dollar-128-trillion-in-return-to-growth

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What’smore,manyoftheworld’sleadinginstitutionalinvestorsareextraordinarilygoodatmanagingandevenimprovinginfrastructureassets.Assourcesofpatientcapital,theirinvestmentstrategiesalignnicelywithinfrastructurelifecycles.Andasfiduciariesoftheirclients’retirementsavings,theyarekeenlyfocusedonstabilityacrosstheassetlifecycle.

Yet—withafewnotableexceptions—mostgovernmentsremainreluctanttotransferassetstotheprivatesector.Theyknowtheyhavebuiltupunsustainablelevelsofpublicdebt.Butmanyconsiderinfrastructure

tobetheremitofthepublicsector.Andtheyworryabouttheimpactofprivatizationonservicequality,accessandaffordability.Simplyput,governmentsrecognizethesolutionbutarewaryofpursuingit.

Reset2025

Muchwillchangein2025.Insomecountries,risingbondyieldsongovernmenttreasurieswillincreasethecostofcapitalforgovernments.Atthesametime,weareseeingtheretreatofbilateralinvestment(particularlyfromChina)anddevelopmentaidwhichisfurtherunderminingemergingmarketfiscalcapacity.Forthosemakinglocalcurrencyinvestments,arisingUSdollarisaddingtofinancialwoes.

Atthesametime,demandfornewinfrastructurewilllikelyskyrocketthisyearascitizensputpressureongovernmentstodeliverquickwins,moreresilientinfrastructureandmoremodernizedservices.Formanycountries,theabilitytodeliverontheseexpectationswilllikelybekeytohelpingensuresocialandeconomicstabilitygoingforward.

Thegoodnewsisthatperceptionsandbiasesseemtoberapidlyevolving.Followingnationalelectionsinmorethan60countriesin2024(manyofwhichsawincumbentsejectedorweakened),weareseeingachangeofpoliticalperspectivesaroundtheworld.Manyofthosenew

governmentsareprovingtobemorecommercial,morerealistandmoreopentonewideasthantheirpredecessors.

Citizenopennesstotheprivatizationofinfrastructureisalsoontherise.AccordingtothemostrecentEdelmanTrustBarometer,citizensgloballyareabout10percentagepointsmorelikelytotrustbusinessversusgovernment.5Thissuggeststhatmanycitizenswouldnowbemorecomfortablewithsomeinfrastructureassetsmovingintoprivatehandsandownership.

Ourpredictionandadvice

Thisyear,weexpecttoseesignificantcompetitionbetweenstatestoattractandcapturepatientcapital.SomecountrieswillfollowIndia’sleadbycreatingaNationalAssetMonetizationPipeline(NMP)alongsidecentralbodiestoaccelerategrowthandattractprivateinvestmentwithinspecificsectors(forexample,theNHAIintheroadssectorortheSECIinrenewableenergy).

Manywillfocusoncreatingclearandconsistentpipelinesofassetstobringtomarket,supportedbyclearregulatoryregimesandtransparentoversightthatprotectscitizenoutcomeswhileencouraginginnovation,reinvestmentandreasonablereturnsforprivatesectorinvestors.Clearcost/benefitmessagingtocitizens—oftenbyaligningthesaleofaparticularassetwiththedevelopmentofanewassetorservice—willlikelyalsobekey.

Thisyear,weexpecttoseesignificantcompetitionbetweenstatestoattractandcapturepatientcapital.

Inthisenvironment,governmentswillneedtostartassessingtheirportfoliosofassetstounderstandwhatcanbebroughttomarket,whatassetsrequiremoresupporttobecomecommerciallyviableandwhatassetsmustremainonthegovernmentbooks.Andtheywillwanttoprovidesomeguidancetoinvestorsaroundthetypesofassetstheywillbringtomarketandassociatedtimelines.Messagingtocitizensandtonationalpensionfundsandinstitutionalinvestorswillalsobekey.

Fortheirpart,institutionalinvestorswillneedtobecomemoreproactiveasagradualincreaseofnewassetscomestomarket,likelysectorbysector.Giventhecomplexityofthetransactionsandthequantumofinvestmentrequired,institutionalinvestorswouldbewisetostartidentifyingtargetsandassetclassesthataligntotheirinvestmentstrategiesandbegintheirduediligence,outreachandinternaldiscussionsassoonaspossible.

TheGreatPrivatizationiscoming.Preparationwillbekey.

Thegoodnewsisthatperceptionsandbiasesseemtoberapidlyevolving.

52025EdelmanTrustBarometer,EdelmanTrustInstitute,2025

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Trend2

Supplychain:Insearchofstandards

PrahladTanwar

Partner,GlobalHeadofLogistics&PostalServicesKPMGinIndia

prahladtanwar@

PrahladTanwar

PrahladistheGlobalHeadofLogistics&PostalServiceswith20yearsoftransportandlogisticsconsultingandindustryexperiencespanningIndia,China,U.S.,Germany,UAE,OmanandKuwait.PrahladsupportsKPMGclientsincludinglogisticsoperators,PEinvestors,regulatorsandend-users

ontransportandlogisticsinitiatives.SolutionsincludeM&Aassistance,marketentry,commercialduediligence,growthstrategy,costoptimizationandsalesandprocurementtransformation.

Alackofsupplychainstandardsisdrivingupcosts,underminingefficiencyandkillingtheenvironment.

Intheeraofnextdaydelivery,onemightimaginethatglobalsupplychainsaretight,efficientandaligned.Yetthatisnotthecase.Infact,therealityisthatmostelementsofglobalsupplychainsarefractured,

unstandardizedandmisaligned.Andthatiscreatingmassivecommercialandenvironmentalchallengesforcompanies,suppliersandcustomersaroundtheworld.

Lookingacrossglobalsupplychains,weseethreekeyareasofmisalignment.Thefirstisinfrastructure.It’snotjustthequalityandconsistencyofroads,railsandportswhichdiffersignificantly(andimpacttheefficiencyofsupplychains)acrossmarketsandregions,it’salsothingslikewarehouses,trucks,palletsandoperatingsystems.Everyswitchcausedbyinconsistentstandardsaddscostandcarbon.

Regulationisanotherareaofincreasingfriction.Ontheonehand,organizationsneedtocomplywithamyriadofdifferentregulationsrelatedtotransportation,logisticsandtrade.Atthesametime,governmentsarepromulgatingnewregulations(likeCBAMintheEU)toregulatesupplychainsustainability.Evensomethingassimpleasdifferentnomenclaturescanaddfrictiontothesupplychain.

Mostelementsofglobalsupplychainsarefractured,unstandardizedandmisaligned.

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Thethirdareaofmisalignmentrelatestoprocesses–reportingprocesses,operationalprocesses,supplychainprocessesandsystemprocesses,forexample.Thesetendtobelocally-derived,oftentailoredbycustomerandshipment,andcontainsignificantvariations.Thesecanaddcost,carbonandrisktothesupplychainasvendorstrytoaligntodifferentprocessesacrosstheircustomerpool.

Whatsupplychainleadersareincreasinglyrecognizingisthatthesefrictionpointsarecreatingmassivechallengesfortheirbusinessoperations.Frictionandinconsistencycandriveupcosts,createmorecarbon,increaserisksandreduceefficiency.Itcanmakeplanningandinvestmentmorecomplexandchallenging.Itcanreduceflexibilityandagility.Anditimpactssupplychaintransparency.Standardizationwouldallowsupplychainleaderstocreatemoreefficientandresilientoperations.

Theproblemisthattherearenocentralauthoritiesresponsibleforsupplychainstandardization.Inmostcases,supplychainprocessesandoperationsaredefinedbycustomers.Bigretailers,forexample,oftendictatetherulesofengagementtotheirsuppliers,bothforcommercialandsustainabilityreasons.Globalindustrybodieshavebeensloworreluctanttodrivechange.Regulatorsaremovingatdifferentspeedsand,often,withdifferentobjectives.Nationalgovernmentsarewaryofoversteppingtheirbounds.

Nobodyisreallyfocusedondrivingstandardizationacrossglobalsupplychains.

Whichmeansnobodyisreallyfocusedondrivingstandardizationacrossglobalsupplychains.

Reset2025

Thisyear,expecttoseesupplychainscomeundermassivepressureastradewarsstarttoheatupandnewtariffsandregulationsareimposedinkeymarkets.Indeed,basedonrecentrhetoricfrompoliticiansglobally,allsignssuggestweareenteringadynamicperiodcharacterizedbytheimplementationoftariffsandcounter-tariffs.Agilitywillbekey.

Atthesametime,expecttoseerisingdemandoncompaniestoassessandmanagetheirScope3emissionswithintheirsupplychain.Inpart,thiswillbedrivenbynew(andlikelyinconsistent)regulationsonsupplychainsustainability.Itwillalsobeinresponsetogrowingdemandfortransparentcarbonreportingfrominvestorsandcustomers.Supplychainswillbeunderthemicroscope.

Thecombinationshouldforcesupplychainefficiencyupthecorporateagendaasorganizationsseektocreatemoreflexible,efficientandresilientsupplychains.That,inturn,shouldencouragegovernmentsandindustrybodiestomorecarefullystudytheissueand—inanideal

world—startcollaboratingwithorganizationstoleadthechargetowardssupplychainstandardization.

Ourpredictionandadvice

Tobeclear,thistrendismoreaboutachangeinmindsetsratherthanmeasurableactionontheground.Ittakesyearsforstandardstobepromulgated,socializedandfinalized.Ittakesevenlongerforthemtobeimplementedconsistentlyaroundtheworld.Indeed,thiswillbeayearofconvictionversusaction.

Thesefrictionpointsarecreatingmassivechallengesfortheirbusinessoperations

Whatwewillsee,however,isaclearrecognitionthatsomethingmustbedone.Weexpecttoseemuchgreaterattentiononthisissuefromregulatorskeentocreategreateralignmentacrossmarketsinordertoreducetheburdenonbusinessesandunlocknewgrowth.Industrybodies,ledbyport,airandtransportgroups,willlikelystarttobuildconsensusaroundacase

forchange.OEMsandothergiantpurchasingorganizationsshouldjumponboardrecognizingtheimmensevaluethatstandardizationcandeliver.

Forinfrastructureowners,developers,operatorsandinvestors,thedriveforstandardizationwilllikelybringsignificantlong-termvalue.Buttheshiftshouldhappenfairlyquickly(inrelativeterms).Infrastructureplayersshouldbeseriouslyconsideringhowtheycanstarthelpingtoshapeanddrivestandardswithintheirspheresofinfluence.Andtheyshouldbecarefully

examininghowtheimplementationofstandardsmightinfluencetheircurrentplans,designsandinvestments.

Supplychainstandardizationwillbeaboonforcompanies,consumersandtheclimate.Infrastructureplayersshouldembraceitwholeheartedly.

Supplychainstandardizationwillbeaboonforcompanies,consumersandtheclimate.

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Sustainability:Fixingthemissingmiddle

JanetGreenwood

GlobalLeadforSustainableInfrastructure,

KPMGintheUK

janet.greenwood@kpmg.co.uk

JanetGreenwood

JanetGreenwoodisKPMG’sGlobalLeadforSustainableInfrastructure.In2024JanetwonTheTimesConsultantoftheYearandManagementConsultanciesAssociationExperiencedLeaderAward.SheisChairoftheMajor

ProjectsAssociationsSustainabilityAmbassadors,amemberoftheInstitutionofCivilEngineer’sInspiringEngineeringExcellenceBoardandfoundermemberoftheCambridgeUniversityCentreforSmartInfrastructureinConstruction’sCarbonCode.

APolicyFellowoftheInstitutionofCivilEngineers,shehasextensiveexperienceindeliveringsustainability,socialvalueandcarbonprioritiesinmajorconstructionprojectsandsupportingbuiltenvironmentclientstodelivertheirmostchallengingprogrammes.Shehasover30years’experienceinthebuiltenvironment,havingworkedacrosssectorssuchaswater,wastewater,flooddefenseandtransport.

Sustainabilityhasmovedfromamatterofprincipleinto—simply—goodbusinesssense.Nowthebigchallengeisinclosingthemissingmiddlebetweenactionandambition.

Executivesarerecognizingthatembeddingsustainabilityconsiderationsintodecision-makingissimplyeffectiveleadership.Whowouldn’twanttoknowwheretherisksareinthesupplychain?WhatCFOwouldturndowntheopportunitytoidentifywheretheycancutwaste,costs(and,bytheway,carbon)?Wouldanyboardnotwanttomitigatetheirexposuretorisingcommodityprices?

Wehavestartedtoseebusinessandpoliticalleadersthinkmoreholisticallyabouttheimpactoftheirdecisionsandactions—notjustoncarbonemissions,butalsoonecosystems,biodiversity,societiesandindividuals.Withthis‘wholesystem’lens,leadersarenotonlyformingabetterviewoftheirrisksbutalsoidentifyingclearopportunitiesforaction.

Whowouldn’twanttoknowwheretherisksareinthesupplychain?

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Businessleadersarestartingtorealizethatweareapartof,notapartfrom,nature.Considertheairyouarebreathing.Oneoutofeverytwobreathsyoutakeusesoxygenproducedbyforestsandtrees.Theothercomesfromtinyplanktonfeastingonwhaleandfishexcrementin

theoceansandseas.6Weknowwearelosingthefighttoprotectourforests—globaltreecoverhasdeclined12percentsince2000.7Weareonlynowwakinguptohowmuchdamagewe’vedonetoouroceans.

Theimpactonpeople,businessesandenvironmentsisalreadyevident.Stormsandclimateemergenciesarebecomingmorecommon.Businesscostsarerisingasleadersgrapplewithnewsupplychainandfinancingrisks.Thenaturalenvironmentsonwhichsomanybusinessesdependareunderattack;since1970,themonitoredpopulationofmammals,birds,amphibians,reptilesandfishhavedeclinedbyanaverageof73percent.8

Thankfully,therecognitionthatwearereliantonnatureisbecomingmainstream,inpartasaresultofhelpfulinitiativesliketheTaskforceonNature-relatedFinancialDisclosures(TNFD),whichhaspublished

recommendationsandguidanceaimedathelpingorganizationsreportonnature-relatedissueswithintheirbusinessesandtakeactiononthem.

Theimpactonpeople,businessesandenvironmentsisalreadyevident.

Manyorganizations—publicandprivate—havemadepubliccommitmentsthattheyarenotsettingthemselvesuptomeet.

Reset2025

Whichbringsusbacktothemissingmiddle.Therealityisthatmanyorganizations—publicandprivate—havemadepubliccommitmentsthattheyarenotsettingthemselvesuptomeet.Theyrecognizetherisksthatlieahead,yetthefocusremainsoncost-driventhinkingratherthanfocusingonvalueprotectionorvaluecreation.

Inspiredbyamoreholisticviewoftherisksandopportunities,webelieve2025willseegovernmentsandbusinessesstarttofocusonresettingthatmissingmiddle.Itwillbeayearwhereleaderstrytoalignambitionwithaction,intentwithinvestmentandobjectiveswithoutcomes.

Ourpredictionandadvice

Drivenbykeyregulationsandmotivatedbyprudentcorporatesupplychainmanagement,weexpectbusinessandgovernmentleaderstostartaskingtherightquestionstoenactsustainablechange.Buildingownerswilllikelywanttoknowtheoriginsandfootprintofthematerialstheyuse.Operators

Itwillbeayearwhereleaderstrytoalignambitionwithaction,intentwithinvestmentandobjectiveswithoutcomes.

shoulddemandmoretransparentsustainabilityinformationfromsuppliers.Governmentswilllikelyleveragetheirspendtoembedsustainabilityrequirements(particularlyinprioritypolicyareaslikehousing).

Thatwillrequireleaderstoreassesstheircommitmentsandpoliciestohelpensurethat—onaday-to-daybasis—theirorganizationsaredoingthingsthatactuallyalignwiththeirobjectivesandambitions.Itcanalsorequireaclearunderstandingofwhat’swithintheirdirectsphereofinfluenceandwhatisnot.Formany,thatwilllikelymeanfocusingmoreclearlyonhighqualitydatainformingdecision-making,andcapitalportfoliomanagementtoidentifyeveryasset,theiroperatingcondition,theirperformanceandtheirvaluetotheorganization(anditsobjectives).Onlythencantheappropriatesolutionsandroadmapsstarttobecomeapparent.

Wehaveenteredanewerainthetransitiontoasustainablefuture.Thewaytotrytosuccessfullynavigateitisbyaddressingthemissingmiddle.

6Howmuchoxygencomesfromtheocean?NationalOceanService,NationalOceanicandAtmosphericAdministration,June16,2024

7GlobalForestWatchDashboard,accessedJan22,2025

8LivingPlanetReport,WorldWildlifeFund,2022

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