Prospects of local industry
The prospects of land transport industry are directly affected by the economy . As Singapore’s economy is improving, an increase in demand is expected for transport services.
Though the outlook is optimistic on lower sustainable oil prices, it is still possible for price shocks to occur, judging from the high volatility of oil prices in the past . Thus, cost containment is crucial for companies in land transport as high oil prices will put a strain on its operating costs which involve great usage of fuel.
With the deregulation of the domestic taxi market, CDG should distinguish itself from competitors through superior services and ensure its taxi operations’ high profitability under increased competition . There seems to be potential for increased profitability in the bus sector as fare increase application is approved by the Government . However, a large portion of the increase in fare collection is offset by the increase in fuel price. With SMRT taking over bus operations under TIBS holdings, CDG is facing increased competition. Despite so, the performance from the bus sector is likely to be stable as SBS Transit still has the largest bus-route network in Singapore and therefore can exploit economies of scale.
With increased ridership and higher average fares, loss arising from NorthEast MRT Line’s operation is reduced to a manageable level. It may turn profitable by 2007 and this increases speculation of CDG swapping NEL for TIBS bus service, creating cost efficiencies .
Prospects of global industry
There are bright prospects in the transport industry as high growth is expected , especially in China. Its economic development is likely to bring about an increasing demand for transport services, whereby an annual growth rate for passenger traffic and passenger-kilometer from 1996 to 2020 is expected to be 6 % and 7.6% respectively .