From just-in-time to just-in-case

The Covid-19 pandemic exposed how little slack existed in global supply chains. Concentrated sourcing and “just-in-time” inventory left companies unable to respond when factories closed, ports backed up and shipping lanes seized. In the years since, companies have shifted from optimizing supply chains for cost toward optimizing for resilience by diversifying suppliers, holding more inventory and building in redundancy.

That shift, combined with a separate wave of investment in AI, power and advanced manufacturing, is reshaping the transport infrastructure needed to keep goods and people moving. Recent geopolitical developments in the Red Sea give an example of both dynamics at once.

When a disruption in the Red Sea forces commercial shipping away from the Suez Canal and around the Cape of Good Hope, it adds up to 4,000 nautical miles and one-to-two weeks to voyages between Asia and Europe.

The longer route requires more vessels and containers without increasing the volume of goods moved. And this is becoming evident in the data. Global seaborne ton-miles rose 5.9% in 2024, the fastest pace since 2011, while tonnage grew just 2.2%—a gap UNCTAD attributes largely to Red Sea rerouting (see Figure 1). This illustrates how the investment thesis for transport infrastructure can remain intact even without strong growth in global trade, as less secure and more fragmented supply chains increase transportation requirements.

A more complex supply chain needs more infrastructure

Deglobalization does not necessarily mean less trade. As companies diversify suppliers and reduce reliance on individual countries, production spreads across more factories, assembly plants and distribution hubs. This shift is already evident in U.S. import patterns: sourcing from China has declined since 2018, while imports from Mexico, Vietnam and India have increased (see Figure 2). 

One investment cycle is creating another

Investment in AI, power and advanced manufacturing is also increasing demand for transport. Data centers, semiconductor facilities, power projects and manufacturing complexes require equipment, raw materials and people during construction and ongoing connections to suppliers and customers once operational.

Much of this activity depends on existing railways, roads, ports and logistics infrastructure. Investment in U.S. manufacturing has increased sharply in recent years, though construction spending has moderated from its 2024 peak. The level of investment remains well above the pre-pandemic period, creating new centers of industrial activity that require transportation infrastructure to build and operate. (see Figure 3).

Why corporates become sellers

Large industrial companies often control transport infrastructure that is essential to their operations and important to their competitiveness and cost position. But an asset can be operationally essential without being the company's highest return use of capital. Manufacturing capacity, technology and R&D may offer better opportunities for the corporate's investment dollar.

That tension can prompt companies to sell a stake in that infrastructure, or bring in a partner, while keeping the access they need (see Figure 4). Through carveouts, joint ventures and other partnership structures, a company can redeploy capital into its core business while keeping a stake, or a long-term contract covering access and service.

Demand matters where supply is constrained

Higher demand does not in itself create an infrastructure investment opportunity. The ability of new supply to respond is equally important.

Across transport infrastructure, many assets are difficult to replicate. For example, railway corridors require rights-of-way, and ports and terminals require scarce land, permits and connections to inland networks.

The nature of the goods moving through these assets can also matter. Raw materials, agricultural products, chemicals and other manufacturing inputs may be essential to customers' operations, providing another consideration when underwriting volume risk.

This can create advantages for established owners. Existing networks may be able to add capacity in ways that a new entrant would struggle to replicate, for example by using customer relationships and operating capabilities. That can protect underlying cash flows while creating opportunities to deploy incremental capital as customers grow. Contractual arrangements, including minimum-volume commitments and inflation-linked pricing, can also mitigate exposure to fluctuations in demand.

Where supply is difficult to add, more demand can increase utilization of existing assets and create opportunities to expand them at attractive returns. 

The network advantage

Identifying where those conditions exist requires visibility into changing trade flows, industrial activity and transportation requirements. A broad transport portfolio can provide that perspective at multiple points in the supply chain—from shipping-line demand and container utilization to industrial activity across rail networks.

Those operating insights can help identify where capacity is tightening, where customers are expanding and where additional infrastructure may be needed. Combined with capital and operating expertise, they can inform both investment in existing assets and the origination of new opportunities.

A scaled platform can bring these capabilities together. Customers building complex infrastructure may require transportation expertise alongside land, power, logistics capabilities and long-duration capital—needs that can be difficult to address through individual assets alone.

A broad transport portfolio can therefore provide more than diversification. Visibility into where goods are moving, where capacity is tightening and where customers are expanding can help identify where more investment is needed—and where capital may earn attractive returns.

The opportunity ahead

Transport infrastructure helps make growth in AI, power and advanced manufacturing possible by moving the equipment, materials and people those sectors require. The companies driving that investment may also look to infrastructure partners to fund and operate the transport assets supporting their expansion. Meanwhile, more distributed and resilient supply chains can place greater demands on capacity even without exceptional growth in underlying trade.

The investment opportunity is therefore broader than a view on freight volumes. It includes opportunities to originate corporate partnerships, acquire difficult-to-replicate infrastructure, expand established networks and deploy additional capital alongside customer growth.

As the economy expands and becomes more complex, the infrastructure required to connect it can become more valuable—creating opportunities across the investment lifecycle to originate partnerships, acquire and build assets that are difficult-to-replicate, fund their growth and ultimately recycle capital into new opportunities.