Policy & Planning
February 19, 2019

Uber Update: Increasing ridehailing … Reducing mobility

The drumbeat is getting louder.

From The New Yorker:

Uber’s most significant contribution to mobility in cities may be our increasing lack of it. …

… (Ridehailing companies like Uber) create immediate declines in bus and rail ridership—declines so steep that, in the next eight years, some transit agencies would have to increase service by more than twenty-five per cent just to retain their normal ridership. Cities struggling to keep subways and buses running are being drained of revenue by tech companies and a reserve army of cars.

These cars, in turn, coagulate the arteries of the city, blocking the remaining fleet of buses, causing a downward spiral of decreasing ridership and growing traffic. …

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From Slate:

Unlike every other major North American metro area, the Vancouver region doesn’t allow ride-hailing. That makes Vancouver a unique example of what happens when a thriving North American city politely—this is Canada—passes on the ride-hail bandwagon. The result: Vancouver’s public transit system is adding riders even as usage drops in many other cities. Bike commuting is growing, and car-share services like Car2Go are booming. …

So how have Vancouverites handled the lack of ride-hailing?

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Now is the time for the new council to consider a ‘congestion charge’ when (if?) it licences Uber and other ride-hailing companies to operate on city streets.*

From the Seattle Times:

The two ride-hailing giants provided more than 91,000 rides on an average day in the second quarter of this year, according to ridership reports the companies filed with the city, recently made publicly available for the first time.

While that’s just a fraction of daily travel in the Seattle region, Uber and Lyft trips are heavily concentrated in the city’s densest neighborhoods, where nearly 40,000 rides a day start in ZIP codes covering downtown, Belltown, South Lake Union and Capitol Hill. They are almost certainly contributing to worsening congestion. …

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November 7, 2018

From The Economist

Ubernomics: The social costs of ride-hailing 

A new working paper by John Barrios of the University of Chicago and Yael Hochberg and Hanyi Yi of Rice University spells out one deadly consequence of this increase in traffic. Using data from the federal transport department, they find that the introduction of ride-sharing to a city is associated with an increase in vehicle-miles travelled, petrol consumption and car registrations—and a 3.5% jump in fatal car accidents. At a national level, this translates into 987 extra deaths a year.

What could be done to tip the balance back to benefits overall? “Congestion pricing is the most direct solution,” says Jonathan Hall of the University of Toronto. Several cities, including London, Stockholm and Singapore, have moved in this direction, charging drivers for entering busy areas at peak hours. If ride-hailing firms tweaked their pricing to encourage carpooling, that would help, too.

One of the worst things a city can do, says Mr Barrios, is to cap the number of ride-hailing cars on their streets, as New York did in August. That marked a step back towards the days when barriers to entering the taxi market were high and competition was low. A dismal outcome, as most right-thinking economists would agree.

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Some recent stories about the impact of ride-hailing companies, particularly Uber, and the longer term implications.

First, another confirming story that ride-hailing is measurably increasing congestion – from Tech Crunch:

In San Francisco … ride-hailing services are undoubtedly partially to blame (for the rise in traffic and congestion), but not entirely to blame, according to a new study from the San Francisco County Transportation Authority. …

Between 2010 and 2016, according to the SFCTA, ride-hailing services accounted for:

  • 51 percent of the increase in daily vehicle hours of delay
  • 47 percent of the increase in vehicle miles traveled
  • 55 percent of the average speed decline
  • 25 percent of total vehicle congestion citywide

So not surprising, then, that Uber wants to address the problem of congestion by supporting a mechanism that would reduce ‘free-riders’ on the streets they help congest.

From the Seattle Times:

Uber says it plans to spend money lobbying for congestion pricing in Seattle as part of a $10 million push for “sustainable mobility” policies in various cities.

The ride-hail app company and its rival, Lyft, have previously expressed support for the idea of tolling downtown streets in Seattle, where Mayor Jenny Durkan’s administration is working to develop a proposal.

But Uber’s new commitment to actively press for congestion pricing in the city, shared with The Seattle Times last week, could be the biggest boost yet for an effort certain to encounter political roadblocks, including concerns about affordability.

Uber thinks big and it thinks strategically – literally globally.   It can afford to.

From Vanity Fair:

The Wall Street Journal reported that the company had received proposals from Wall Street banks estimating its initial public offering at a market valuation as high as $120 billion, virtually twice its current private-market valuation, and larger than the combined market capitalizations of General Motors , Ford Motor Company, and Fiat Chrysler Automobiles. …

Uber … has a large, global footprint, and is possibly a primordial holding company for a series of future companies …  Uber already has one of the largest food-delivery platforms around today, and it is expanding its freight business, which has the possibility to grow infinitely. And then there’s the driverless car I.P. that the company owns, not to mention the investments in other global ride-sharing services …

“Some people see Uber as a car company,” (an Uber insider said).  “Uber sees itself as the next potential Amazon.”

I think this is bigger than even the evolution of another Amazon (if it first doesn’t buy or dominate Uber.)

We’re still thinking about transportation as essentially a problem of hardware: expensive pieces of metal crammed with technology, jamming the streets and highways. Motordom 1.0.

We analyse the problem from the point of view of the user, each distinguished by the hardware of choice: car or truck drivers, transit users, cyclists (and okay, maybe shoe wearers).

We assume this is primarily a problem for government – the owner of the streets, the licensor of vehicles, the regulator of traffic.

We need to shift our focus to Motordom 2.0 – the integration of every imaginable mode of movement, joined by information technology, delivered to us by a service provider who sells us transportation in the way telecommunications providers sell us data.  The TSP: the Transportation Service Provider.

We should be thinking not about hardware but about what Motordom 2.0 will really be about – issues of ownership, regulation, taxation and equality.  Above all, the vision we have for our urban environments, what we build, for whom, and who gets to decide.

Uber or its successor will likely want to be that decider – the shaper of cities, the creator of wealth, the leader of civilization.  Because that’s what we call what we build, how we move, and who rules over it all.

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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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