Foreword: Reset 2025
We are in the midst of a Great Reset. Protection of national interests are at the top of the agenda. Economies are being reshaped. Alliances and supply chains are being rewired. The frequency and severity of weather events are increasing. And social expectations and norms are being revised.
While these changes have been underway for some time, they are not incremental. We are facing changes that are massive, lasting and disruptive. And they require infrastructure and government leaders to think very differently about the future.
Some aspects of this Great Reset are fundamental. In 2024, planet Earth surpassed the 1.5-degree threshold for 11 of the 12 months of the year1 — it took years to breach the ceiling, but the impact of doing so is hugely consequential. And as a result, as the world races to decarbonize, the energy transition is upending a huge part of the world economy. Other aspects will seem a bit less newsworthy at the time but will have tremendous impacts — the digital integration of supply chains, for example. Yet each will create new challenges and opportunities.
In the face of ongoing fundamental change, infrastructure executives, policymakers and investors will need to be clear-sighted and willing to take risks. Big decisions should be made — often quickly and on incomplete information. And those who stare too long at the problem will likely find themselves left out of the solution. Collaboration skills are becoming more important. Visionary leaders are needed.
This edition of Emerging Trends in Infrastructure and Transport is intended to provoke debate to help infrastructure executives, policymakers and investors think through the future. To develop these trends, I asked 10 of our global infrastructure leaders to provide their perspectives on how a global reset is influencing the sector. Their views provide a compelling list of trends and predictions that we believe will impact the infrastructure sector over the coming year.
But our authors don't just stare at the problem; instead, they look forward to share their best predictions on how these trends will play out in the future and offer their views on how best to navigate them.
At KPMG, our globally connected organization of infrastructure and transport professionals are dedicated to helping public and private sector organizations make confident decisions in the face of uncertainty and complexity. From strategy through to execution and implementation, our people work alongside our clients to help them achieve their objectives — efficiently and effectively.
The old status quo has been demolished. New norms and expectations are rapidly being formed. A Great Reset is upon us.
To learn more about the trends and topics raised in this report, or to discuss your organization's unique challenges and opportunities, I encourage you to contact your local KPMG member firm.
Richard Threlfall
Global Head of Infrastructure,
Government and Healthcare
KPMG International
Trend 1
Funding: TheGreat Privatization
The infrastructure funding gap is growing exponentially. Back in 2017, the G20 thought it might hit US$15 trillion per year by 2040.2 According to the World Bank, we likely reached that point in 2023.3
All signs suggest the gap is widening on both sides. Governments are trying to balance a range of funding priorities and that is reducing their fiscal capacity for infrastructure. At the same time, demand for new and more resilient infrastructure is climbing, driven by economic, environmental, technical and social pressures. Closing the gap will be a key priority for governments around the world. Frustratingly, the solution to closing this gap has been obvious for some time. Governments are sitting on a treasure trove of assets. Indeed, a study of 38 countries by the IMF found more than US$100 trillion worth of assets on government books, including key infrastructure such as bridges, roads and utilities. And institutional investors are sitting on a treasure trove of capital. The world's top 500 asset managers collectively manage more than US$128 trillion.4 The alignment is obvious.
Governments recognize the solution but are wary of pursuing it.
What's more, many of the world's leading institutional investors are extraordinarily good at managing and even improving infrastructure assets. As sources of patient capital, their investment strategies align nicely with infrastructure lifecycles. And as fiduciaries of their clients' retirement savings, they are keenly focused on stability across the asset lifecycle.
Yet — with a few notable exceptions — most governments remain reluctant to transfer assets to the private sector. They know they have built up unsustainable levels of public debt. But many consider infrastructure to be the remit of the public sector. And they worry about the impact of privatization on service quality, access and affordability. Simply put, governments recognize the solution but are wary of pursuing it.
Reset 2025
Much will change in 2025. In some countries, rising bond yields on government treasuries will increase the cost of capital for governments. At the same time, we are seeing the retreat of bilateral investment (particularly from China) and development aid which is further undermining emerging market fiscal capacity. For those making local currency investments, a rising US dollar is adding to financial woes.
At the same time, demand for new infrastructure will likely skyrocket this year as citizens put pressure on governments to deliver quick wins, more resilient infrastructure and more modernized services. For many countries, the ability to deliver on these expectations will likely be key to helping ensure social and economic stability going forward.
The good news is that perceptions and biases seem to be rapidly evolving.
Following national elections in more than 60 countries in 2024 (many of which saw incumbents ejected or weakened), we are seeing a change of political perspectives around the world. Many of those new governments are proving to be more commercial, more realist and more open to new ideas than their predecessors.
Citizen openness to the privatization of infrastructure is also on the rise. According to the most recent Edelman Trust Barometer, citizens globally are about 10 percentage points more likely to trust business versus government.5 This suggests that many citizens would now be more comfortable with some infrastructure assets moving into private hands and ownership.
Our prediction and advice
This year, we expect to see significant competition between states to attract and capture patient capital. Some countries will follow India's lead by creating a National Asset Monetization Pipeline (NMP) alongside central bodies to accelerate growth and attract private investment within specific sectors (for example, the NHAI in the roads sector or the SECI in renewable energy).
Many will focus on creating clear and consistent pipelines of assets to bring to market, supported by clear regulatory regimes and transparent oversight that protects citizen outcomes while encouraging innovation, reinvestment and reasonable returns for private sector investors. Clear cost/benefit messaging to citizens — often by aligning the sale of a particular asset with the development of a new asset or service — will likely also be key.
This year, we expect to see significant competition between states to attract and capture patient capital.
In this environment, governments will need to start assessing their portfolios of assets to understand what can be brought to market, what assets require more support to become commercially viable and what assets must remain on the government books. And they will want to provide some guidance to investors around the types of assets they will bring to market and associated timelines. Messaging to citizens and to national pension funds and institutional investors will also be key.
For their part, institutional investors will need to become more proactive as a gradual increase of new assets comes to market, likely sector by sector. Given the complexity of the transactions and the quantum of investment required, institutional investors would be wise to start identifying targets and asset classes that align to their investment strategies and begin their due diligence, outreach and internal discussions as soon as possible.
The Great Privatization is coming. Preparation will be key.
Trend 2
Supply chain: In search of standards
A lack of supply chain standards is driving up costs, undermining efficiency and killing the environment.
In the era of next day delivery, one might imagine that global supply chains are tight, efficient and aligned. Yet that is not the case. In fact, the reality is that most elements of global supply chains are fractured, unstandardized and misaligned. And that is creating massive commercial and environmental challenges for companies, suppliers and customers around the world.
Looking across global supply chains, we see three key areas of misalignment. The first is infrastructure. It's not just the quality and consistency of roads, rails and ports which differ significantly (and impact the efficiency of supply chains) across markets and regions, it's also things like warehouses, trucks, pallets and operating systems. Every switch caused by inconsistent standards adds cost and carbon.
Regulation is another area of increasing friction. On the one hand, organizations need to comply with a myriad of different regulations related to transportation, logistics and trade. At the same time, governments are promulgating new regulations (like CBAM in the EU) to regulate supply chain sustainability. Even something as simple as different nomenclatures can add friction to the supply chain.
Most elements of global supply chains are fractured, unstandardized and misaligned.
The third area of misalignment relates to processes – reporting processes, operational processes, supply chain processes and system processes, for example. These tend to be locally-derived, often tailored by customer and shipment, and contain significant variations. These can add cost, carbon and risk to the supply chain as vendors try to align to different processes across their customer pool.
What supply chain leaders are increasingly recognizing is that these friction points are creating massive challenges for their business operations. Friction and inconsistency can drive up costs, create more carbon, increase risks and reduce efficiency. It can make planning and investment more complex and challenging. It can reduce flexibility and agility. And it impacts supply chain transparency. Standardization would allow supply chain leaders to create more efficient and resilient operations.
The problem is that there are no central authorities responsible for supply chain standardization. In most cases, supply chain processes and operations are defined by customers. Big retailers, for example, often dictate the rules of engagement to their suppliers, both for commercial and sustainability reasons. Global industry bodies have been slow or reluctant to drive change. Regulators are moving at different speeds and, often, with different objectives. National governments are wary of overstepping their bounds.
Nobody is really focused on driving standardization across global supply chains.
Which means nobody is really focused on driving standardization across global supply chains.
Reset 2025
This year, expect to see supply chains come under massive pressure as trade wars start to heat up and new tariffs and regulations are imposed in key markets. Indeed, based on recent rhetoric from politicians globally, all signs suggest we are entering a dynamic period characterized by the implementation of tariffs and counter-tariffs. Agility will be key.
At the same time, expect to see rising demand on companies to assess and manage their Scope 3 emissions within their supply chain. In part, this will be driven by new (and likely inconsistent) regulations on supply chain sustainability. It will also be in response to growing demand for transparent carbon reporting from investors and customers. Supply chains will be under the microscope.
The combination should force supply chain efficiency up the corporate agenda as organizations seek to create more flexible, efficient and resilient supply chains. That, in turn, should encourage governments and industry bodies to more carefully study the issue and — in an ideal world — start collaborating with organizations to lead the charge towards supply chain standardization.
Our prediction and advice
To be clear, this trend is more about a change in mindsets rather than measurable action on the ground. It takes years for standards to be promulgated, socialized and finalized. It takes even longer for them to be implemented consistently around the world. Indeed, this will be a year of conviction versus action.
These friction points are creating massive challenges for their business operations
What we will see, however, is a clear recognition that something must be done. We expect to see much greater attention on this issue from regulators keen to create greater alignment across markets in order to reduce the burden on businesses and unlock new growth. Industry bodies, led by port, air and transport groups, will likely start to build consensus around a case for change. OEMs and other giant purchasing organizations should jump on board recognizing the immense value that standardization can deliver.
For infrastructure owners, developers, operators and investors, the drive for standardization will likely bring significant long-term value. But the shift should happen fairly quickly (in relative terms). Infrastructure players should be seriously considering how they can start helping to shape and drive standards within their spheres of influence. And they should be carefully examining how the implementation of standards might influence their current plans, designs and investments.
Supply chain standardization will be a boon for companies, consumers and the climate. Infrastructure players should embrace it wholeheartedly.
Supply chain standardization will be a boon for companies, consumers and the climate.
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Footnotes
1. Annual 2024 Global Climate Report, National Centers for Environmental Information, 2024
2. Global Infrastructure Outlook, G20, July 2017
3. How can we ensure that "money in the bank" leads to "shovels in the ground?", World Bank Blogs, May 25, 2023
5. 2025 Edelman Trust Barometer, Edelman Trust Institute, 2025
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