Commercial not consumer

With the pandemic’s lockdown measures halting personal travel in the past 18 months, infrastructure investor focus was understandably on areas of resilience in transportation. One of the bigger winners from this focus was cargo and freight infrastructure, with 98 of the 170 Transport and Logistics deals completed in Q2 2021 being in the logistics subsector[3]. As Covid-19 revealed a weakness in supply chains across the globe and, as the economy recovers, investors are seeking to future-proof their platforms to address this. As a result of this, freight wagons and loco rolling stock have performed relatively well.

In a similar shift from ‘passenger’ to commercial, businesses are more cautious about deploying capital on assets that may not be cost efficient, driving up the demand for rental companies[4] – an  example of this is Amber Infrastructure’s Three Seas Investment Fund’s acquisition and financing of Cargounit[5].  This appetite looks set to remain, with businesses cautiously navigating post-pandemic balance sheet management.

Decarbonisation of the industry

As with all verticals in infrastructure, the overarching theme for transportation is decarbonisation – driven by ESG investor focus, at the top of strategic agendas[6].  Transportation, however, presents a bigger challenge to decarbonise given its highly decentralised nature, reliance on human behaviour, and multiple forms – eg rail, road and air,[7] which all operate differently and have their respective dependencies. However, there are some key trends emerging that are aiming to tackle the challenge:

(1) Intermodal transportation – there being multiple different methods of transport in freight is not new. However its use as a way to decarbonise is new, as governments and companies use it to help achieve net-zero targets[8]. This shift to intermodal transport has seen an increase in M&A activity as investors look to diversify their assets and take advantage of potential synergies[9] – ie buying different transportation assets to enable the shift to intermodal – whilst more traditional companies, such as trucking, may look to M&A to help reassess their supply chains. An example of this is Maguerite’s acquisition of a minority stake in GTS group, a leading intermodal freight transport operator[10].

(2) Rail freight – Rail is marked as one of the most sustainable modes of motorised transportation and as such, is growing in popularity. The majority of European countries have set out clear roadmaps for the decarbonisation of their railways – examples include the first hydrogen fuel cell passenger train being unveiled in Poland[11]. The train has also been operating in Austria for over a year[12] and is approved for use in Germany. Lastly, the UK released a white paper on its review of its railway industry in which it detailed its plans for a cleaner, greener railway[13]. A new development in India aims to create a dedicated freight corridor for cargo trains, encouraging faster, more efficient transportation. This has created a clear demand for rail which is resulting in an increase in M&A activity, with an 86% increase in deal value in H1 2021 compared to H1 2020[14]. Notable among these transactions is DWS and CDPQ’s acquisition of Ermewa, a leading provider of leasing services for industrial railcars and tank containers[15] which DC advised on.

(3) Road transport – progress is being made into potentially one of the most challenging subsectors of transport to decarbonise, with a focus on how best to deploy and grow electric vehicles and the infrastructure surrounding them. As the EV charging solutions market looks set to reach USD 103.6bn in value by 2028[16], a flurry of activity is occurring; beyond larger transactions including Shell’s acquisition of Ubitricity[17], there has been recent interest from SPACs as heavy consolidation continues in the market, not only by major players but  growth companies[18], eg Fisker’s investment in Allego[19], a company that was previously supported by our strategic partners Green Giraffe[20].

Enhancing assets with technology

All industries are going through digital transformation to a lesser or greater extent and transportation is no exception. The main focus for technology behind transportation is efficiency[21], including::

  • Use of ‘big data’ analysis to help with planning and prediction of traffic and congestion
  • Artificial intelligence to improve operational functionality
  • Autonomous driving from drones to delivery trucks[22]

For investors, it will be essential to stay ahead of the curve and retain a competitive edge as new entrants with technology at their core, come to market[23].  We believe there will be an increase in M&A activity as companies look to supplement their existing platforms with the technological capability that will add long-term value.


As we continue to make progress following Covid-19, it is clear that the transportation industry offers a wealth of opportunity. With ESG and climate change shaping investment agendas across the sector, the decision is now how best to capitalise on this shift, whether through adoption of new supply chain logistics (rentals), taking advantage of synergies and scale efficiencies or through technological advances.