Why Ride-hailing Will Go Pro
October 29, 2018 | Company Blog
Much has been written about how new mobility services will improve the quality of life in cities around the world by making car ownership optional if not extinct, cutting the cost of transportation for consumers, reducing traffic and pollution, creating more open space previously devoted to parking, and more.
So far, it hasn’t happened. In fact, in many cities traffic has gotten worse since the advent of ridehailing services.
A 2017 study of traffic in New York City by analyst Bruce Schaller found that from 2013–2017, a 15 percent increase in ridehailing trips led to a 59 percent increase in the number of vehicles on the streets. Another report from the New York City Department of Transportation found that New York traffic speeds have declined some 20 percent since 2010. There are simply too many vehicles angling for the same riders.
San Francisco transit authorities recently released a similar study that blamed ridehailing for a 51 percent increase in traffic and a 22 percent increase in travel times in the city.
The problem with ridehailing in its current form is that the riders are the dispatchers and drivers don’t know where the demand is until a request shows up on their smartphones. As a result, the drivers tend to congregate near the places where the highest demand is expected — train stations, downtowns, and entertainment venues, for example — resulting in too many vacant vehicles on roadways. Viola — gridlock. It’s no wonder Schaller titled his study “Empty Seats, Full Streets,” or that New York City is taking steps to curb (pun intended) ridehailing services.
There have also been stories about additional unintended consequences of ridehailing services such as shrinking incomes for drivers, accidents due to driver error, and assaults of passengers — not an improvement of quality of life by anyone’s estimation.
What is likely to happen is that cities will partner with a new breed of ridehailing businesses that own their vehicles and that hire professional drivers, with centralized dispatching to evenly distribute vehicles based on historical and real-time demand profiles. These businesses do not want vehicles all in the same places, empty much of the time, looking for riders. That’s not economically viable. Professional ridehailing services will be more interested in vehicle utilization and revenue per vehicle than in flooding cities with cars that they don’t own, manage, or maintain.
In addition to allowing more efficient use of vehicles, ridehailing services with trained, professional drivers will likely improve the safety of passengers from accidents and from driver misbehavior.
Startup Alto is launching a service this month that uses professional drivers, and allows users to select the “vibe” they want for their vehicles — music, lighting, even scent. The company believes the big ridehailing businesses are missing a gap of users, especially women, that want a safer, cleaner, more bespoke experience. Alto calls it “transportation as hospitality.”
Where today’s ridehailing services work independently of transit operators, public transit utilization has decreased, as it has across the board in the U.S. (down 2.9 percent in 2017). A first-of-its-kind University of California Davis study of ridehailing usage found that 49–61 percent of passengers used the service in place of public transit. A subsequent study of 1,000 ridehailing users in Boston found that 42 percent of the users used the services in place of public transit.
Professional ridehailing services that work with cities will coordinate with public transit to smoothly deliver the first-mile/last-mile services that make longer-haul transit options like buses, trains, and ferries more convenient than driving. This is another area where cities will be able to make overall mobility more convenient by working with accountable service providers to manage the distribution of vehicles and schedules.
While many predict that the wide-scale adoption of electric autonomous transit will make the problems created by peer-to-peer ridehailing services disappear, it’s not likely because some of the challenges are the same. If multiple robotaxi or autonomous shuttle businesses enter the same markets and target the same high-demand areas and routes, congestion will remain.
What is likely to happen is that cities will transition to professional ridehailing services to similarly managed autonomous alternatives, with some measure of control over how many robotaxi or shuttle services will be allowed and where they will provide services. A transition period of hybrid autonomous and driven fleets will also need to be accommodated and work together.
Various predictions have been made about the impact of new mobility services on cities. Some say there will be chaos in the streets, while others present visions of far fewer vehicles on the city thoroughfares, cleaner air and more open space on land that was previously dedicated to an auto-centric infrastructure. While many stakeholders in the mobility industry promote the latter scenario, how fast and how smoothly that future arrives will depend on how well services are managed and distributed. Achieving the vision of full vehicles and sparsely used streets, and the improved quality of life promised by this vision, will require city-wide mobility management.