My thoughts on private sharing apps in Singapore

Oct 02, 15 My thoughts on private sharing apps in Singapore

So after Minister Khaw took up his post as Minister of Transport, one of the biggest news to come out was that the Ministry would be looking to review the private car sharing apps.

However, if you just read the headlines and the news excerpt, it doesn’t say much. You would need to read Minister Khaw’s blog post to understand better.

I feel his views are actually rather balanced. However, he seems to lack in-depth knowledge about how private sharing apps work and hence, the lack of detailed thoughts.

3rd party booking apps is a complex problem by itself. On one hand, it helps alleviates our current taxi congestion issue, on the other hand, there might be insufficient checks and balances on both the corporates (uber and grabtaxi), as well as on the drivers.

taxiTaxi services in Singapore is quite a unique one. Compared to most developed cities, taxi is actually decently affordable for the masses. Then you have the big confusing surcharges and what not. Another interesting characteristic of the taxi service in Singapore is that it is largely driven by people who tend to be older and more likely semi retired. The result of this is there is a mismatch of supply and demand at various times. During our peak hours, there is high demand, and although the supply is high, it seems to be insufficient. After all, if there are 100 passengers that need a ride at 8am, and there are only 80 vehicles, then it goes to say that 20 passengers would have to wait for a vehicle to complete a trip before they can get a ride. Given that peak hour demand tends to be directional (ie, from suburbs to town areas in the morning, and town to suburbs in the evening.), it is a tough incentive for a driver to want to drive from Raffles Place all the way back to Woodlands to pick a passenger at 8am, particularly when he could get a passenger at Outram or Tiong Bahru. At times of transitional supply/demand, such as after morning surcharge ends, or when taxi goes on shift change around 4pm, it is almost impossible to get cabs. One of the reasons could be that the taxi drivers are typically taking it easy. Again, this is due to the driver demographic I would imagine. Of course, another area of interest would be the taxi density in Singapore, compared to another city like Hong Kong.

uber-grabcarUberX and Grabcar are 2 private car sharing services that has gotten into the limelight due to their scale of growth. However, some distinction has to be made. As a platform, they allow private car owners to convert their cars into commercial limousine (with proper insurance and business registration.) This results into a running business cost, and even before private car sharing apps came into the market, such commercial limousine services have already been operating for private transactions such as airport transfers, corporate leases, etc. Hence, as a service, it is a legal registered business.

In the past, passenger/driver matching would have to be done via a company with arrangements for airport transfers or companies in order to get business. But with the advent of mobile apps such as Uber and Grabtaxi, such matching has become ‘automatic’ via the app. This is what happens when technology meets traditional business. Same has happened for hotel bookings, food ordering, clothes shopping, and even various e-commerce sites.

In the perspective of the passengers, all they want is to get from point A to point B. Sometimes, even willing to pay a higher cost. In fact, most friends I know who have taken UberX or Grabcar has raving reviews about the services rendered by the drivers (typically younger and more polite) and the comfort of the ride (since drivers do not drive as much, they do not get driving fatigue). In fact, seeing how some of the fares charged by Uber/Grabcar during times of peak hour can be 2-3times higher than an equivalent taxi ride, people are still willing to pay just because there is a severe supply and demand mismatch during certain time periods.

In the case of drivers, there has to be 2 distinction. Some people are doing this for a primary source of income. To be honest, without the additional incentives given by Uber or Grabtaxi, it makes more sense for such people to drive taxis instead. The income is simply not high enough for it to make sense. Then there are people who are just taking perhaps 3-6 trips a day. Probably on their way from Home to Work, they would pick up some passengers, since they are on the way. In the ideal world, it makes sense to have more of such part time drivers, as vehicles are a physical limitation, and if there are 1000 passengers from North of Singapore who wants to go to Raffles Place, it makes sense for there to be 1000 vehicles, rather than for 500 vehicles to make 2 trips.

QueueHowever, regulations and corporate direction by the companies seem to be making it more onerous for the part time driver. Rumours about having a form of limousine vocational license, or driver training, or even having more vehicle inspection would serve to formalise the industry. Uber and Grabtaxi also seem to be going towards this direction, by lowering trip fares to compete directly with taxis and by offering incentives to drivers who can clock a higher volume of trips. In the end, you get a parallel alternative to a taxi-like service. Unfortunately, when the dust settles, and the companies do not give out high incentives, with a 20% commission to Uber/Grabtaxi and the high overheads of car ownership (petrol included), then the ‘industry’ would not exist in the first place, since the full time drivers would become taxi drivers, and the part time drivers would find it too formal and too difficult to just earn a couple of bucks.

What should be done instead is to steer the private car sharing into a service complementary to our current transport model. The Government Digital Services has launched a service called Beeline SG which essentially is a form of car pooling by use of a 20 seater van and having 3-4 pick up points followed by 3-4 drop of points. I feel that this is a good model. The private car sharing economy can be complementary to all these. After all, if I live at Sembawang and work at Orchard, driving a car by myself would be an inefficient use of a car. Might as well fetch a couple of people along the way, decongest the public transport a little, and earn a couple of bucks.

What I would love to see if for private car sharing services to be further segregated from taxi. Rather that to have them become services that are similar. Trains and buses are the most affordable form of public transport. Taxis come closely, given their affordability. If people wanted to pay more for a private limousine, why not?

What do you think should be done in order to balance the incumbent and the insurgents?

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