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On the future of Uber and other ridesharing/ridehailing companies
A few years ago, Uber was the darling of transportation. It and others like it were considered disruptors. They were but then eventually unraveled as their business model and practices were challenged and exposed. Here’s an article that does not mince words in describing what and how Uber is:
Doctorow, C. (August 11, 2021) “End of the line for Uber,” Medium, https://marker.medium.com/end-of-the-line-for-uber-901e3077bbbc [Last accessed: 8/21/2021]
There’s a wealth of references (links provided) in the article provided to support the arguments of the author. It is not anecdotal but an accumulation of facts from various experiences as well as a documentation of the company’s efforts to hide its flaws.
I co-authored several papers analyzing what was seen as a phenomenon. It was clear that people preferred Uber or Grab over regular taxis because of the higher quality of service they got. Similar results were obtained elsewhere and spelled the doom of many taxi drivers. Those that survived were the better serving ones like taxis in Japan and Singapore. However, the more recent of those papers have shown that what are called TNVS or transport network vehicle service have basically been deceiving and took advantage of their drivers (whom they do not want to refer to as employees). Did they help reduce congestion? They did not, and even added more cars to traffic.
Afterthoughts on ridesharing
Ridesharing/ride-hailing companies like to claim that they are helping solve transport problems. However, their disruptions seem too good to be true in a growing number of cases including those in London and California where studies have shown anomalous practices of companies particularly Uber. Grab is now the dominant company in the Philippines after Uber sold its business to Grab. Other upstarts have had little impact on Grab’s market share. The only ones perhaps that have had some success taking business from Grab are the motorcycle taxi app companies like Angkas and Joyride. Motorcycle taxis are actually quite popular though they have been informal (and illegal). Habal-habal operations though have been tolerated in many cities and towns with authorities usually turning a blind eye to their operations.
They have thrived in large cities and have practically displaced taxi companies in these cities. I would not go deep into the social impacts but there are already a lot of negatives including the growing evidence that they are taking people away from public transport in general. Their operations seem promising at the start as the original concept was to use underutilized vehicles that otherwise would have been parked for most of the day, and offering work and income opportunities to people who had the free time (e.g., home-based people who may have a few hours to spare to drive/transport other people to their destinations). The latter were assumed to be part-timers with their vehicles available for providing transport services on demand. The vehicle used might be a spare one. And I use the word ‘spare’ here as it is assumed there might be another ‘main’ vehicle that is used by another person in the family who is a full-time job who drives to work. I don’t buy that romanticized claim that one main objective of these rideshare companies is to break the monopoly of taxi companies. They ended up being the taxis with all those cars now roaming city streets for passengers (and fares).
I mention here a very recent article citing an MIT study:
Green Car Congress (February 2021) “MIT study finds Uber & Lyft increase congestion, decrease transit ridership and don’t affect vehicle ownership,” Green Car Congress, https://www.greencarcongress.com/2021/02/20210204-tncs.html [Last accessed: 2/5/2021]
There is also a published paper in 2019 that is from the perspective of TNVS drivers in Metro Manila:
Mirandilla, C.S. and Regidor, J.R.F. (2019) “Assessment of Transportation Network Vehicle Services from the Drivers’ Perspective,” Journal of the Eastern Asia Society for Transportation Studies, Volume 13, Pages 2369-2389, https://doi.org/10.11175/easts.13.2369
In the paper, their findings include the following:
“It was found that TNVS have greater impact in traffic flow compared to other modes of transportation while delivering inferior productivity. The study also found that full-time driver-operators have very high risks of financial losses, and they have lower than minimum wage income when depreciation costs and maintenance costs are considered.”
I have been writing about ridesharing/ridesourcing/ridehailing for some time now. I have also researched on its characteristics particularly in my country where it was initially hailed (no pun intended) as a solution to transport woes in highly urbanized areas. We’ve done our research with or without the cooperation of these companies. It does not surprise me that their operations have unraveled and many are exposed to be abusive. So much for being the ‘disruptive’ initiative that was praised by many before…
Emerson, S. (2019) “Uber Drivers Protest ‘Corporate Greed’ as Billionaires Cash In”, https://onezero.medium.com/uber-drivers-protest-corporate-greed-as-billionaires-cash-in-df65a7e470a7 [Last accessed: 11/18/2019]
One of my former students who did research on ridesharing showed me a new feature on the Grab app. There is a vehicle for rent option now in the app as shown in the screen capture below:
Booking by the hour means you get to set the duration of service. The conventional service is point-to-point (i.e., taxi).
Choosing “booking by the hour” will lead to a selection of vehicles and the number of hours corresponding to a type of rental.
We showed these to our suking van rental in Cebu and our driver commented that these were expensive. Still, we thought this was a good way to go around the province (not just Cebu City). Of course, such rentals may be more applicable for those who like set pieces when they travel or go on tour. If you’re the more adventurous type, then perhaps you will consider public transportation and walking. It will certainly be less expensive and give a more memorable experience however it goes.
Increasing the number of TNVS units? Not so fast!
The Land Transportation Franchising and Regulatory Board (LTFRB) is planning to increase the number of TNVS units (i.e., rideshare vehicles) in Metro Manila to meet what is perceived as the demand for them based on the numbers provided by TNCs like Grab. The problem with this number they want to eventually achieve, 65,000 units supposedly, is that this is based on current transport conditions in the metropolis. Also, this is based on data that is biased for the interests of TNCs, which obviously want to increase their driver and vehicle base in order to maximise profits. Here is a nice article that should provide some context from abroad where rideshare vehicles are actually generating more car traffic and taking people away from public transport.
Fried, B. (2018) “Uber and Lyft Are Overwhelming Urban Streets, and Cities Need to Act Fast,” Streetsblog, https://nyc.streetsblog.org/2018/07/25/uber-and-lyft-are-overwhelming-urban-streets-and-cities-need-to-act-fast/ [Last accessed: 7/26/2018]
Currently under construction are the Line 7 and Line 2 Extension projects and soon there will also be the Line 1 Extension. Also, in the pipeline are the proposed subway and rehabilitation of PNR that is supposed to revitalise its commuter line. These are examples of projects that will likely be game changers in terms of commuting with the objective of drawing people away from car use. In the bigger scheme of things, perhaps there is a need to rethink numbers for TNVS and instead focus on improving taxi services in Metro Manila. The same can be said for other cities as well where there is already a need for better public transport services to avert a transport future similar to what Metro Manila is already experiencing now.
On the Grab – Uber merger
A couple of weeks ago, I received a message from Uber confirming what was in the news for some time then, and what was rumoured a longer while back. Uber Philippines was closing shop after merging with main competitor Grab, while the mother company also acquiring a stake in Grab. Later, I also received a message from Grab (I use either depending on availability and cost.) welcoming Uber users to Grab.
The result so far has been frustrating if not disappointing to many who have relied on Uber for commuting and the typical trips that you usually associate with taking a taxi.
Recent news revealed that Grab is using an even more punitive pricing scheme compared to Uber’s surge pricing. While the LTFRB moved to scrap this, Grab has been apprehensive, stating that this was an incentive for their drivers. There is actually another side to the concept of surge pricing that LTFRB does not or seems to refuse to understand. That is, that dynamic and more expensive fares related to congestion (or road conditions) is something that’s actually related to the concept of congestion pricing. This actually penalises the use of vehicles like private cars or taxis in favour of higher capacity transport like buses or, if available, trains.
Even more recent is the news that Grab is suspending about 500 of its drivers for excessive cancellation and/or rejection of trips. Unlike Uber before, Grab drivers have the “luxury” of knowing where a potential passenger is heading. That gives the driver the option to accept or reject a proposed fare. Uber drivers didn’t know where the potential passenger was heading and to my knowledge, was stricter with penalising their drivers. The only caveat I know is that passengers can also be penalised if the driver requests for a cancellation and the passenger obliges out of good faith (e.g., An Uber driver in Cebu requested me to cancel the request as he claimed he was caught in traffic and would be penalised if he canceled. I ended up protesting Uber penalising me 100 pesos for my cancellation. Uber did not act on it in my favour.).
The issues surrounding the Grab/Uber merger though should not be there in the first place if we had good taxi services. When I say good I am referring to the quality of service provided by taxis in Singapore and Japan. Of course, they also have good public transportation there so there’s also a case for what most people will likely be taking instead of cars and taxis (which operate similarly as cars). One wonders how and why LTFRB seems to be so strict vs TNCs while being lax with taxis. Meanwhile, DOTr is scrambling on the desperate catch-up work it has to do about mass transit lines and public transport rationalisation. Good luck to us commuters!
On the negative social impacts of ridesharing/ridesourcing
I have shared a few articles before about the impacts of ridesharing/ridesourcing to taxi drivers. In the Philippines, taxis where ridesharing/ridesourcing services are available are plenty are supposed to have experienced a significant drop in their business. Yet, there has been little improvement in taxi services in Metro Manila. The Department of Transportation (DOTr) and the Land Transportation Franchising and Regulatory Board (LTFRB) have not put pressure on taxis to improve so operators and drivers are pretty much the same in terms of practices and service quality. Here is a recent article that appeared on Wired about New York taxi drivers:
Katz, M. (2018) “Why are New York taxi drivers killing themselves?”, wired.com, https://www.wired.com/story/why-are-new-york-taxi-drivers-committing-suicide/?CNDID=37243643&mbid=nl_032918_daily_list1_p4 (Last accessed 3/30/2018).
Admittedly, the set-up for New York taxis is quite different from those in the Philippines. The medallions referred to in the article are limited and carries with it prestige and perhaps honour, considering the commitment and pride attached to them. Franchises in the Philippines are quite different and drivers will usually work for multiple operators/employers. Those who own their taxis are not so many and can be flexible in the way they conduct their business. Perhaps a significant number of drivers have even left the taxi business and now drive for TNCs like Grab and Uber.
With Uber’s sale of their business in Southeast Asia to main rival Grab, it seems now that there is suddenly and practically a monopoly of the ridesharing/ridesourcing business. Upstarts have not had a significant share of the market and by all indications will not get a bigger share in the near future. I still think that there should be pressure for taxi services to be improved and a good chance for people to shift back to taxis. But this requires effort on both sides (regulator and operator). I still mention examples of taxi operators in Cebu and Iloilo who appear to be unscathed by the entry of ridesharing/ridesourcing in those cities. Good quality taxi services will promote itself and will be patronised by commuters.
On the other uses of ridesharing/ ridehailing services
We start 2018 with another article that I found this interesting. The article is on the other uses of ridesharing, particularly for medical emergencies:
Seipel, T. (2017) “Uber reduces ambulance usage across the country, study says”. mercurynews.com. https://www.mercurynews.com/2017/12/13/uber-reduces-ambulance-useage-in-major-u-s-cities-study-says/ (Last accessed: 12/22/2017).
This article was particularly interesting to me because we are currently doing research on ridesharing. This should be a good topic for students who are looking for something current and relevant, and should fit well in the bigger scheme of things in as far as our research agenda is concerned. There is a link to the study report in the article for those wanting to get the details on the outcomes.
New study on ride-hailing
Here’s a nice article that has a link to a study conducted at the University of California-Davis written by one of the authors of the study:
Clewlow, R.R. (2017) “New Research on How Ride-Hailing Impacts Travel Behavior” in Planetizen, October 11, 2017.
And here’s an article about that same study:
Bliss, L. (2017) “The Ride-Hailing Effect: More Cars, More Trips, More Miles ” in Citylab, October 12, 2017.
As usual, I am posting this for reference not just for my readers but for myself and my students who are currently doing research on ridesharing/ride-hailing in the Philippines.
Some thoughts on the ridesharing vs taxi issues in Metro Manila
A lot have been said and written about the issues concerning ridesharing and taxis in Metro Manila. There are the personal posts you read and are being shared around social media. There are the obviously sponsored posts and articles going around. These are usually by trolls but may also include some personalities who are more than willing to lend their names to a cause they think is worth taking on. Unfortunately, the supposed victim here is also an oppressor if one tries to delve into their operations and practices. The real victims here, aside from the commuters who patronize ridesharing, are drivers and operators.
I stated Metro Manila because there seems to be no serious issues on ridesharing or taxis in other Philippine cities. Why is that? Is it because taxis provide better services in other cities like say, Cebu, Davao or Iloilo? Is it because public transport in other cities are better compared to Metro Manila? Or is it because ridesharing companies cannot compete with local, taxi-like transport like tricycles? Let me put it like this: Metro Manila public transport has deteriorated in the past decades. This deterioration comes in many forms including the very slow development of mass transit systems and the continued dominance of road-based modes.
Private vehicle mode shares have increased significantly over the last four decades. In the 1970s, the estimated split between public and private transport was about 75/25. In the 1980s, it was close to 70/30 but with public transport enjoying just about 70% shares. In the 1990s, the 70% had already been breached with public transport share estimated to be about 68%. The 2000s saw public transport shares to have been eroded further, with closer to 65% of trips using public transport. The last decade likely saw the further rise of private transport shares with the rapid increase in motorcycle ownership and use and the emergence of ridesharing such as Uber and Grab. This, despite the increase in population for the metropolis and also the increase in road public transport vehicles particularly UV Express.
These road-based modes are generally low capacity and require so many vehicles to transport so many people. And yet people choose them (e.g., purchase and ride a motorcycle, patronize Uber or Grab, etc.) because their options for their commutes are generally worse off. Motorcycles are not for everyone and not everyone can afford to or want to own a car. And yet, there seems to be a sizable population wanting (not necessarily needing) to be driven to and from their homes, workplaces, schools or other places of interest but not via conventional taxis; as evidenced from the popularity of ridesharing services.
Perhaps the only way to resolve the issue lies not only in the drastic improvement of conventional taxi services. Operators and drivers have had a lot of chances to do this but there seems to be little positive change here. Maybe, and ultimately, the solution is in the expedited development of mass transit systems like rail transit lines and bus rapid transit (BRT). And so the initiatives of the current administration along such infrastructure projects are most welcome and may stave off the decline of public transport mode shares (revival?). Better public transport should help make commutes more bearable. Commutes should be safer, faster and relatively inexpensive compared to owning and operating a car. And may I add that using conventional public transport should be more attractive than ridesharing.