September 14, 2018

The Rise of the TSP: Uber’s “real competitor”

Further evidence of the rise of the ‘Transportation Service Provider’ – a single entity that, Uber-like, tries to consolidate as many transportation choices as possible.  Especially, in particular, Uber.

From The Sun:

But what if Uber has larger ambitions for Express Pool and the rest of its suite of services, and it’s actually aiming to compete directly against public transit system? Andrew Macdonald, the company ’s Toronto-based vice-president for Uber’s Americas operations and global business development, was unfazed by the question. He said he sees Uber and transit as complementary services in taking on Uber’s real competitor: individual vehicle ownership.

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I’ve been predicting the rise of the “Transportation Service Provider” — a consolidator of every mode of movement imaginable, integrated with technology, and designed to provide consumers with a suite of services for which they pay (as with telecommunications) one provider with a lot of money.

This is based on the assumption a single provider or oligopoly can emerge. Look to see some of today’s giants try to get even bigger and more diverse as fast as possible in order to dominate the market.

Here’s the latest example, via Michael Alexander.

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This proposal for New York City isn’t likely to be passed, but it raises the question: What should be the surcharge for ride-hailing services to use public infrastructure and to control congestion?
From the New York Times:

With Uber and Lyft cars taking over Manhattan streets, a state task force has proposed a surcharge of $2 to $5 on rides in for-hire vehicles as part of a broader congestion pricing plan to keep traffic moving and raise money to shore up public transit.

But now a prominent transportation expert, Bruce Schaller, contends that those fees are simply too low to deter most passengers from calling cars, and in any case, would result in only a temporary reduction in congestion before being offset by the rapidly growing ride-hailing services.

In a new report on Wednesday, Mr. Schaller calls instead for charging all for-hire vehicles — including yellow taxis and Uber and Lyft cars — $50 per hour to drive in Midtown Manhattan during weekday business hours, and $20 per hour in Lower Manhattan, the Upper West Side and the Upper East Side. Mr. Schaller, a former city transportation official, said he based the fees on current parking garage prices in Manhattan.

“It takes high parking fees to really discourage people from driving into Manhattan,” said Mr. Schaller, who advised to the state task force. “Uber and Lyft and taxi passengers need the same price signals.”

The hourly fee would be passed along to passengers. By his calculation, the average fare for a ride that begins and ends in Midtown would more than double to $24 from $10. The average fare for rides from Midtown to other Manhattan neighborhoods, or vice versa, would increase to $28 from $14, he said.

It would also apply to vehicles even when they are not carrying passengers to discourage drivers from just circulating around Manhattan streets looking for business. Mr. Schaller said those fees would be billed to ride-hailing companies and taxi owners, who could pass that on to passengers through higher fares.

The result would be an immediate reduction in Midtown traffic since for-hire vehicles would make fewer trips, according to Mr. Schaller. He estimated that daily trips during the weekday would drop 11 percent to 64,000 from 72,000. He added that the top fee of $50 per hour would be charged in only a tiny fraction of the overall trips. …

Jon Orcutt, a spokesman for TransitCenter, a research and policy foundation, said that he supported Mr. Schaller’s approach of using an hourly fee rather than a per-ride fee to manage congestion “because I think we’re going to need tough measures to keep the streets moving.” He expressed doubt, though, that a $50 hourly fee would win approval from state officials, given that congestion pricing already faced significant hurdles in New York …

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It’s likely a visible Mobility Decongestion Charge or Tax – call it what you will – isn’t going anywhere any time soon.  The NDP, whenever the term comes up, reinforce their position that there will be no road tax – but they’re interested in what the regional mayors and the commission have to say.  (“Interested” is a political term in this context.  It means ‘we might read the report, but it isn’t going anywhere.’) 
All the more reason to be thinking now of less visible ways to price for transportation.  Like this.
From Wired:

Traffic Is a Disease. An Uber Tax Is the Cure

Why congestion charging won’t do much to fix gridlock in our cities—and how a traffic tax on Uber and Lyft could get cars moving again.

BY .

Show me a city where Uber has taken off, and I’ll show you a city where congestion has risen in tandem. That’s true even in cities like London …

The problem is that cities’ standard tools won’t work on the likes of Uber. Up until now, economists’ usual response to traffic has been to implement a congestion charge: set a zone where congestion is a problem, and then charge drivers a fee for driving there. …

Uber, however, breaks that model. Uber drivers aren’t using their car as a means of getting from A to B; they’re using it as a means of earning money. … Increasingly, they are the alternative to driving into town—only instead of driving in and then parking, taking themselves off the roadway, they drive in and then just continue driving, for hours and hours, making congestion even worse even as they effectively amortize the cost of any congestion fee. …

What’s more, if you charge Uber drivers, you’re charging some of the lowest earners in the city, people who really need the money they’re making. The tax might be effective, but it would also be regressive.  …

What we need instead, then, is a real incentive for the puppetmasters—Uber and Lyft—to free up road space and get cities moving again.

Such an incentive would not need to touch regular car owners at all, and it wouldn’t even require local governments to define congestion zones or times. All those political decisions about who’s in the zone and who’s out, whether bridges are included, what happens at weekends—all of them could be rendered moot. After all, cities no longer need to work out ex ante where the congestion is going to be: Uber and Lyft have that information, in real time.

And so a tax naturally emerges. Every day, or month, or quarter, whatever makes sense, Uber and Lyft would need to make a tax payment to the city government, based on the number of hours its cars spent stuck in traffic. The tax could be quite simple: 10 cents per minute, say, for any time that any car spent traveling below 10 mph on surface streets or 40 mph on highways. Or it could be more complex, involving a sliding scale of higher payments for slower traffic speeds. Importantly, the tax would be paid by the companies—Uber and Lyft—rather than by the drivers. …

Such a tax would create all the best incentives. Uber and Lyft would start charging more for journeys in high-congestion areas or at high-congestion times, reducing demand and therefore reducing traffic. …

One of the big lessons that Uber has learned—and one reason why the company continues to lose money—is that its passengers are very price-sensitive. … If fares were significantly higher for people wanting to journey through a congested area and lower for everybody else, then two things would happen. Firstly, demand for cars would naturally shift in the desired direction. Then, inevitably, supply would too: drivers without passengers would gravitate away from the congested core, towards low-congestion areas which offered a higher likelihood of picking up a fare.

On top of that, the routing algorithms would change as well. Uber and Lyft would have a financial incentive to route cars around high-congestion areas, even if the journeys took a little longer. Meanwhile, people in congested areas who were thinking of ordering an Uber would have a choice: Either pay a bit more and wait a bit longer to get your car,

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Gordon: I’ve been predicting the emergence of the ‘Transportation Service Provider’ – an agent that will endeavour to acquire as many modes of transportation (with the potential for cash flow) as possible, in order to package and market a service much like telecommunications.  For a single price through a single provider, the consumer would have access to multiple means of travel (bike- and car-share and transit, in particular), coverage for associated costs (parking, tolls, information, insurance) as well as servicing and technological upgrades.  The provider would have the cash flows, the data, and ultimately control of the transportation network.
Perhaps we’d see a company like Uber or Google move aggressively to get in early, acquire as many public and private assets as possible in order to establish market dominance, if not effective monopoly.
Well, guess what.

“I want to run the bus systems for a city,” (Uber CEO Dara) Khosrowshahi said. “I want you to be able to take an Uber and get into the subway — if the trains are running on time, you’ve got real-time data — get in the subway, get out and have an Uber waiting for you for right now. Or know that there’s a bike right there for you that gets you where you’re going in the fastest manner.”

  • from Planetizen


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Lots of coverage of the legislative committee’s report on ride-hailing:

But this recommendation shouldn’t be missed:

The Committee recommends to the Legislative Assembly that the provincial government:
13. Require transportation network companies to provide data to government for monitoring purposes, including but not limited to: wait times; trip lengths; trip start and end locations; trip start and end times; accessible vehicle trip statistics; trip refusals; trip fares; drivers’ hours and earnings; driver and passenger demographics; and consider extending this requirement to the taxi industry.

It is critical that this data-provision requirement be put in place before the arrival of ‘Transportation Network Companies’ like Uber.  They argue, after all, that they are not actually transportation companies, but instead the providers of apps, marketing, branding and information to independent contractors.  Their product is in fact their data.  Of course they would want to keep it proprietorial.
That in turn means power – power to control and manage part if not eventually all of the transportation system.  If the public sector does not establish who is actually running the show – and has the information it needs to do so – then the power shifts to the TNCs and we are entering a very different world.  And not a nice one.

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Gord Price: I’ve been predicting the rise of the “Transportation Service Provider” – a consolidator of every mode of movement imaginable, integrated with technology, and designed to provide consumers with a suite of services for which they pay, as with telecommunications, one provider with a lot of money.  Assuming a single provider or oligopoly can emerge.
So look to see some of the giants try to get even bigger and more diverse as fast as possible in order to dominate the market.  Here’s the latest example.

SAN FRANCISCO — It’s Uber, but for bicycles.

For the first time in Uber’s history, the company is offering rides on roads in the United States using something other than cars. Starting next week, it will let certain users in San Francisco reserve pedal-assist electric bicycles through its app. The idea is that people will see the bicycles as a cheaper and faster alternative — not a huge stretch of the imagination for anyone who has been stuck in Friday evening gridlock traffic in San Francisco.

Uber is not supplying its own bicycles. It is working with Jump Bikes, a bike-sharing service that secured a permit in January to put 250 motorized bicycles — making it easier to tackle San Francisco’s steep hills — in locations throughout the city.

The pilot program is the latest indication of Uber’s ambitions to move beyond its ride-hailing origins. It is also working on autonomous trucking services, while aggressively expanding into the food delivery market with Uber Eats.

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From the Seattle Times:

A new study in New York City says the growth of the app-based ride services could work against cities’ goals of unclogging streets and reducing vehicle emissions, as well as potentially undermine other transportation options, such as public transit and taxi services.
In Seattle, where congestion ranks high worldwide, transportation officials say transportation network companies (TNCs) such as Uber and Lyft may worsen traffic during commute hours, but they don’t have the specific data to tell. …
According to University of Washington professor and traffic expert Mark Hallenbeck, Seattle’s dense neighborhoods have more at stake in terms of how the app-based services clog roads. People in those areas rely more on the companies compared with those in the suburbs to evade parking hassles, for example.
“Ride-hailing apps have potential to add to congestion,” he said in an email, as well as contribute to less curb space in busy areas such as downtown when drivers are picking up or dropping off passengers. That “puts even more pressure on the city to figure out how to use the limited curb space they have.” …
According to the New York City study, ridership with TNCs there tripled between June 2015 and the fall of 2016, when 15 million passengers used the services per month.
“The secret to success in New York City over the last 20 years is the transit system’s ability to absorb the growth in travel from population and economic growth,” Bruce Schaller, a former senior official at the city’s Department of Transportation and the report’s author, told The New York Times. “If all that growth translated into more use of private cars or taxis and Ubers, it’s not a sustainable way to grow the city.” …
In the Seattle area, transit ridership actually increased last year, nearly doubling that of any other U.S. metro area, according to figures compiled by King County Metro Transit, using preliminary data from the Federal Transit Administration.
Compared with less dense places, such as the suburbs, the UW’s Hallenbeck said neighborhoods such as Seattle’s Capitol Hill, Ballard, downtown and Pioneer Square provide more opportunity for ride-hailing trips to take away from transit.
“This is a price for service question. How much are people willing to pay for a faster, more direct service?” he said in the email. “My understanding is that this (Seattle) has not been a very big market.”
But Hallenbeck believes it will grow when or if the quality of transit service declines, such as when buses become overcrowded like in New York City.

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If the billionaires behind Uber and Car2Go can offer “ride shares” and “car shares,” as in an earlier post, how about “the gig economy.” How positive and liberating that sounds!
“I don’t have a job, I have a gig!”, says the 20- or 30-something working hard with no tenure and no benefits. Benefits? Apparently it’s mainly the employers who have them under this system.
“Inside the Gig Economy” offers some insights from the FT Alphaville site.

FT Alphaville has been tracking the gig economy’s transformation into a neo-feudalism movement for a while now. What we’ve discovered is that those who use, love and defend the apps don’t always have a good understanding of what really contributes to their convenience. Many will do and say almost anything to protect them, whilst failing to grasp the key point of the criticism: none of this is necessarily sustainable or representative of a productivity efficiency.

(Should I [personally] care about this? I’ve been freelance since 1979, but the world I got established in is a totally different one from today’s. I may have made only a few hundred dollars a month when I was starting out, but if rent was $100 I was laughing.)

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