Making inroads: Kapsch's plan to conquer Latin American's highways with free-flow tolls

Austrian intelligent transportation solutions (ITS) provider Kapsch has gone live with Brazil's first multi-lane free-flow toll contract. 

The service, deployed by concessionaire CCR on a stretch of the BR101 highway between São Paulo and Rio de Janeiro states, started operating this month.

The company is optimistic that this will just be the first of many other highway contracts in the country, as it has already received interest from concession-holders in other states, senior Latin America VP Samuel Kapsch tells BNamericas in this interview.

Brazil already had electronic toll-paying systems, using tags attached to vehicles and implemented by companies such as Sem Parar, ConectCar and Veloe, but these still mean that vehicles have to pass through fast-track toll lanes. Kapsch's technology, however, creates a "virtual toll" for a road, that is, a toll that requires no barriers or booths.

Radiofrequency emitters positioned along the road read the vehicle's plates and the automatic payment tag, a digital payment sticker installed on the windshield, allowing calculation of the amount to be paid based on the distance travelled by the vehicle.

New rules in Brazil's national traffic code and from land transport regulator ANTT allowed the installation of these systems starting in 2023.

The group's first free-flow project in Latin America was deployed in Chile around 20 years ago, followed by Ecuador. And it is now in talks to take its tolling system to Argentine roads. 

Considering all types of tech solutions for transportation and traffic, the 130-year-old company Kapsch claims to have around 70 projects in Latin America in terms of implementation, software development, operation and support. Globally, it operates in more than 80 countries.

BNamericas: How important is Latin America for the company and how important was it to secure this contract with CCR? 

Kapsch: We are a company that's 130 years old now and we've passed through a lot of different products. We passed through TVs, batteries, telecommunications. Around the year 2000 we decided to go to tolling systems and multi-lane free flow solutions, so without barriers. From there the next logical step was traffic management overall.

Already 20 years ago we entered Chile with our free-flow solution. Chile was actually one of the first countries in the world where we implemented this. Currently in the region, we have these solutions in Chile, Ecuador and now we are entering Brazil as well. 

Up to about a year ago it would've been very difficult for anyone to imagine this was going to come to Brazil that quickly. It's an exciting thing for us to be in the country. 

Bringing this kind of tolling technology to Brazil to, first of all, help a lot of people in their daily commutes, spending less time in their cars and having more efficient and cleaner transit. Less stopping at toll plazas of course means you produce less CO2. 

BNamericas: Why do you say it would've been hard to imagine Brazil with this system?

Kapsch: Because the legal framework wasn't 100% there yet. And there also hadn't been really any, let's say, huge public push on our side.

The government at some point in time would've come out with some resolution there, but it wasn't expected that this would be so quickly. And it was exciting for us to install the solution in record time.

We've been with this in Chile for over 20 years, but now that we are implementing the first multi-lane free-flow in Brazil we are hearing interest from other countries around the region that want to explore the possibilities.

Putting this project forward has really been a tremendous international effort, which also shows the importance of Brazil for Kapsch as a company. It shows that all eyes within the company are currently on Brazil.

BNamericas: How is your go-to market? Do you work directly with concession-holders, regulators? How do you get your system to be implemented on highways?

Kapsch: Our client is always the concessionaire. We do work with regulators, but we sell only to the highway operators. Depending on the scope of a project, we go directly or with partners. 

Now, moving away from tolling technology, it's important to say that we're in more than 11 cities in Brazil with our urban traffic technologies. 

And we often do work with partners or we have external contractors for very specific short-term tasks.

BNamericas: When is Kapsch's system expected to be fully up and running on BR-101?

Kapsch: The system's inauguration was on January 27. Now we have one month in this testing and trial phase with ATT to make sure everything runs smoothly. 

On March 1 they'll start the charges.

BNamericas: Are you in talks to take the system to other highways in Brazil?

Kapsch: We've already received interest from other clients and there are also talks with the same client [CCR], of course. 

The first thing that has to be done is to deliver this project at our full capacity. We don't want to get ahead of ourselves. We have a big vision for multi-lane free-flow in Brazil, and this is the first project, this is something very new to the country and right now all efforts are on delivering this as well as possible – and using this as a kind of a showcase, a success case.

BNamericas: How about Latin America? You mentioned interest from other countries in the region.

Kapsch: We've heard interest, for example, in Argentina. There are, if I'm not mistaken, two multi-lane free-flow implementations in the country by us. Now there's one more interested party.

After the project in Brazil a lot of concessionaires are trying to see how this would work in the current situation in their respective countries.

BNamericas: How about the rest of your portfolio? How's that in the region?

Kapsch: Urban traffic management is a very strong segment for us. In Latin America we are in 19 cities at the moment and Buenos Aires is kind of our flagship.

We are also in a very good position to integrate both fronts, intelligent transportation systems and tolling systems, because with the pandemic a lot of people left the cities to live in smaller cities or areas or villages nearby, and they come and go to work every day. 

A city without information on what is coming from highways is a blind city. 

We're also seeing a lot of initiatives around the smart city and we definitely want to be a key player there.

BNamericas: Are you investing in expanding headcount and technology? What's the capex planned for the year for the region?

Kapsch: We have around 600 people in our team in Latin America. A relevant chunk of this is part of our development team that works with us on a global level. 

So, part of our application centers, which are responsible for the projects, are based in Latin America, in Argentina. Talent doesn't only help us at a Latin American level, it also gives these professionals the chance to work with us at a global level.

Capex plans always depends on growth. We've been growing very steadily over the last three, four years. We expect growth to be 25% this coming year. So, we're definitely having more [employee] additions. 

We are very personnel-heavy. We do manufacture a few components regarding cameras, regarding controllers for traffic lights for cities and regarding the tags, but not the ones that are used in Brazil. They are another technology, DSRC, which we've used in Chile. 

And we do have material costs. But we don't have production in Latin America. Our manufacturing plant is in Austria and we have another one in the US.

BNamericas: Are there plans to produce in the region?

Kapsch: It’s definitely interesting. There's a lot of potential. I won't comment on the exact plans, but I think especially Brazil would be an interesting market to look at for manufacturing.