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INTRODUCTION

Security issues in transportation were a significant industry driver in 2002. But the need for government mandates and the establishment of standards slowed adoption. The industry as a whole recognizes the need for technology to track cargo and trucks. The potential market is huge.

However, in 2002, companies were tentative about investing in significant technology, until regulators indicate what the mandated requirements will be. A number of technologies are potential options, once standards and requirements are in place. The new Transportation Security Agency will play a key role in determining the minimum requirements that all fleet into structure managers will need to meet.

Telematics includes a connection from the vehicle to an outside network for data transmission. The industry is struggling to determine whether or not the connection needs to be an anytime, anywhere connection, in addition to determining what the content will be delivered over the connection for a fee.

The OnStar Service remains this flagship for telematics service providers in the U.S. in 2002, despite low customer retention after the initial year, Ford Motor Co. and Qualcomm Inc. ended their jointly developed Wingcast service prior to its launch. The service had been designed to compete with OnStar. ATX Technologies remains OnStars primary competitor.

Telematics systems have found only tepid market acceptance, as consumers' wallets are stressed by the current economic conditions. Each family has a limited amount of money to budget each month for communications charges. Telematics competes with cellular telephones, cable TV charges and Internet Service providers. Telematic service providers (TSPs) have found it difficult to put together a package for which consumers are willing to pay a monthly fee.

Industry watchers anticipated a sharp contraction in 2002, and events did not disappoint. Auto companies have not turned away from telematics completely, but with the failure of Wingcast, future investments may be more tentative.

Navigation systems are now an option on the over 90 different vehicle models worldwide. After market options continue to increase. However the price points for the systems, which are mostly dependent on the flat Panel screen display, remain too high for the technology to gain acceptance to the mainstream drivers-except in Japan.

In the U.S., invehicle entertainment systems have found a market niche greater than anticipated. U.S. commuters deal with the longer time behind the wheel with video or television broadcast. Most systems currently sold are installed in the overhead console of the vehicle, though screen mounted in seat backs are gaining in popularity.

Drive by wire continues to develop. Hybrid electromechanical systems will be available in the 2004 model vehicles that will debut in the second half of 2003. Steering by wire systems will precede braking in the US due to the size and weight of the average vehicle. Development is further along in both Europe and Japan, where vehicles tend to be smaller and lighter.

Far more than in the consumer sector, telematics technology has found acceptance amongst fleet owners and operators. The ability to track cargo offers fleets and their customers increased visibility, important both for today's "just-in-time" supply chains and security concerns.

In the recent past, the development was dominated by larger interstate trucking fleets. And however, more recently smaller fleet spend less than truckload sleep have attracted developer interest. Smaller fleets represent over 80% of the total trucking market. New systems introduced offer lower cost hardware and hosted data services.

This publication is a compilation of technical and -related developments that have taken place in the transportation technology sector during the past year. Not just ITS, but the application of related technology to rail and aircraft as well. It is a report on improved safety systems, sensors and new sensor technology. It focuses on electronic toll collection (ETC), vehicle navigation, traffic management, highway construction, research and development, fleet management, commercial vehicle operations (CVO), airports and air terminal systems and global positioning systems (GPS).

Also included are funding, joint ventures and other arrangements, decisions and competition.

Traffic congestion is an issue for governments around the world as the number of automobiles exceeds the design limits of highways and roadways. In many countries, land and money to build new highways are scarce. Thus advanced transportation technologies are supported as a means of alleviating congestion on existing highways.

The total revenues for advanced transportation technology systems are estimated to be $2.1 billion for 2003. BCC predicts that these revenues will reach almost $2.7 billion by 2005, which represents an average annual growth rate (AAGR) of 14.3%. Fleet management systems will account for the lion's share of revenues, followed by traffic management systems.

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