Of taxis and smart phones: balancing innovation and regulation

Sharon Masterson, Corporate Partnership Board, International Transport Forum

app-based-ride-taxi-servicesNecessity is the mother of invention – or is it? It could be argued that the time-honoured adage only holds when we know what we want or need. But what if we don’t? “If I had asked people what they wanted”, Henry Ford famously quipped, “they would have said ‘faster horses’.”

While the car was a revolutionary innovation, it was not immediately disruptive. Early cars were expensive luxury items, so the market for horses and carts remained intact until the Ford Model T created a mass market by making the new technology affordable, thanks to more efficient production methods.

What the transport sector is facing today in many areas follows a similar pattern. True, this time around, innovations are not as disruptive to the eye as motor cars replacing horses. Instead, current disruptive forces in the mobility sector hide under the hood of largely familiar-looking vehicles and in the invisible “cloud” – for instance in the shape of autonomous driving, electric mobility or app-based transport services.

But there are parallels. Take ride-hailing via smart phones: The technology has been on the market for several years. Not even the leading players like Uber or Didi Chuxing, its Chinese rival, have come to dominate the provision of mobility. They are rapidly gaining ground against the traditional forms of moving about in a car, however, and within a decade or two could well become dominant. In a recent survey in China, 8 out of 10 respondents aged 18 to 35 said they had already used a car-hailing app.

The potential of app-based transport has certainly fired up investors: Uber recently received USD 3.5 billion from Saudi Arabia’s sovereign fund, and Didi Chuxing raised USD 7 billion from investors and lenders, including 1 billion from Apple. Today, Uber is the world’s most valuable start up, with a market capitalisation of USD 62.5 billion. Conversely, the Nasdaq-listed Medallion Financial, a huge provider of loans to buy taxi licenses, has lost well over 50% of its stock value since December 2014.

Policy makers in many countries have been caught somewhat off guard by the rapid rise of app-based ride-hailing platforms. In many countries, regulation has been lagging and policymakers struggle in balancing the need to ensure public safety, consumer protection and tax compliance with the potential benefits: higher efficiency of transport, better service, more transparency and the simple fact that consumers like the convenience of pushing a smartphone button to order a ride.

What has not been lagging is the response of those who could possibly to lose out. Legal action by traditional taxi operators has led to some app-based services being banned, operators fined, executives taken into custody, and even violence.

Against this backdrop, a reasoned debate about principles that can serve as a basis for regulators to set frameworks is urgently needed – and this is what we have been working for at the International Transport Forum with key actors. Uber and the International Road Transport Union (IRU, globally representing taxi drivers, among others) are both members of the ITF Corporate Partnership Board (CPB),  and we brought the two together at our 2015 summit of transport ministers. For the first time ever, Uber’s chief strategist David Plouffe and Umberto di Pretto, Secretary-General of the IRU, shared a stage to discuss what the rise of the shared economy means for transport. They agreed that new regulation was needed and just disagreed about how to move forward until that happened – demonstrating that constructive dialogue is possible, even invaluable in such a process.

As a next step, as part of the Corporate Partnership Board’s programme of work, a workshop was convened. Representatives from Uber and Lyft, the taxi industry, regulators, academics and other stakeholders came to Paris in November 2015 to seek points of consensus on regulation and identify persistent points of tension that need focused attention to resolve. The report emanating from that meeting, entitled App-Based Ride and Taxi Services: Principles for Regulation, will make fascinating reading for regulators. Among other things, it offers them four pieces of concrete advice:

  • Focus policy regarding for-hire transport on the needs of consumers and society. This will enable the development of innovative services which could contribute towards public policy objectives such as equitably improving mobility, safety, consumer welfare and sustainability.
  • Keep the regulation framework as simple and uniform as possible. Avoid creating different categories for regulating new mobility services. Regulators should seek to adapt frameworks to better deliver on policy objectives in innovative ways and not simply preserve the status quo.
  • Encourage innovative and more flexible regulation of for-hire transport services. Use data and the findings from data analysis for more timely intelligence to inform the policymaking process. Today’s data accuracy and availability mean that more than ever before, policymakers have tools at hand which enable them to take a more flexible approach to regulation and through monitoring, evaluate how these regulations are working, and adapt or streamline as necessary.
  • Work more closely with operators to achieve data-led regulation.. The emergence of digital connectivity and wireless communications has opened the possibility of new types of instruments that could allow better control of the efficiency and provision of services as well as giving authorities a completely new and transparent way of pursuing policy objectives.

The emphasis on the role of data here is particularly interesting. Do app-based transport services increase congestion or reduce it? Do they provide better mobility for people without cars or access to public transport, or not?  These questions, among the most hotly debated issues around the arrival of these services, can only be settled with enough relevant data. (“In God we trust, everyone else, bring data”, former New York City mayor Michael Bloomberg often said, quoting the eminent statistician W.E. Deming).

If regulators learn to work with those who have the data, and learn how to harness the power of this data, it will be for the benefit of businesses and citizens. We have also just published another report on data-driven transport policy. But – in the immortal words of Rudyard Kipling – that’s another story!

Useful links

The reports mentioned above are part of a series of Corporate Partnership Board reports. For more information, please contact either Programme Manager sharon.masterson@itf-oecd.org or Project Manager philippe.crist@itf-oecd.org

Recent ITF reports:

The sharing economy and new models of service delivery

Ministers, the business community, civil society, labour and the Internet technical community will gather in Cancún, Mexico on 21-23 June for an OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity

This article is co-published with the OECD’s Insights Blog.

Safe and secure, from London to Lahore and everywhere in between!

Heather Allen, independent consultant on sustainable transport, climate change and gender

international-womens-day-logo

March 8th – International Women’s Day – gives us a good reason to reflect on progress on the variety of women’s issues that are hindering equality. Being safe and secure is a basic human value – yet in today’s world, personal security is still a major issue everywhere. In a woman’s world there are also more subtle links between it, public space and transport that I have been looking into more closely having just finished a review of published literature on this subject.  The report will be published soon on http://www.fiafoundation.org/connect/publications.

Many studies show that all over the world women use all forms of public transport[1] more than men and, more importantly, they usually rely on it more than men as they have fewer or no other mobility choices. Yet they are also more worried about using it, as their personal security is frequently compromised, and it appears that this may be getting worse rather than better!

Incidents often take place in public places, especially as women travel to and from places of education or to and from work. It comes as no surprise that it especially seems to occur on public transport, and not only in the developing world! To avoid this, women tend to use strategies that mean either they decide not to travel or they seriously change their travel habits. This impacts their access to opportunities, and ultimately their quality of life.

Harassment is a complex subject, and not made any easier by the subjective nature of how individuals interpret what might be considered harassment. In some cultures this is directed by social norms whilst in others it may be religious, faith or even income-based. We are not just talking about violence here, but rather behaviours that are unwanted, uninvited or that cause fear. Fear of it happening is as bad as what actually happens and it affects different women in different ways, making it difficult to apply scientific theory to understand why and how this happens. Collecting data on this is also made more difficult as the information can be spread across a number of security agencies, so much of the information can be considered anecdotal, unless it is obviously of a criminal nature.

It would seem to be on the increase despite the high estimated level of non-reporting of incidents that were found internationally. In New York it is estimated that 96 per cent of sexual harassment and 86 per cent of sexual assault on the subway goes unreported; in Baku, Azerbaijan, none of the 162 out of 200 women who reported having been sexually harassed on the metro reported it to the appropriate authority. In Egypt, only 2.4 per cent of the 83 per cent of Egyptian women and 7.5 per cent of the 98 per cent of foreign women living or travelling in Egypt who had experienced sexual harassment in a public place reported it.

There is little documented evidence that women have either reduced their mobility horizons or changed their travel patterns entirely because of concerns over personal security. But we do know that all forms of harassment affect women deeply and reduce their confidence, and that they implement strategies to reduce the risk of this, which ultimately impacts their ability to move freely in public places. If this is directly associated with their transport options, it is also likely to affect their decisions to take up educational opportunities, join the labour market and influences the kinds of jobs they pursue[2].

In addition, if women pass on a negative value judgement to their children, those boys and girls will grow up thinking that public transport is unsafe. It is likely that this will become ‘a belief’ as they grow into adulthood and as soon as they can, they will prefer to buy or share a car, motorbike or scooter – creating a vicious downward spiral of increased congestion even if every vehicle is cleaner than today!

So where does that lead us? Certainly farther away from where we want to be in terms of equal opportunities and sustainable development. Excluding women from being active in the labour market, for any reason should be considered to be out of order in today’s world. The McKinsey Global Institute estimates that if women in every country were to play an identical role to men in markets, as much as US$28 trillion would be added to the global economy by 2025. If this exclusion or reduced opportunity is due to transport inequalities, we can do something about it, but only if we shift it to being a development rather than a security issue.

Both aspects are interdependent – the more active women are in the labour market the more they are able to demand safe and secure transport, while the less empowered they are the more socially exclusive transport becomes. Putting them in separate carriages may be a temporary solution, but it also underpins the concept that women should be kept apart and not be given equal rights.

By addressing both ends of this equation we can create a win, win, win situation – addressing equity, economic empowerment and improving quality of life. But we need to make sure that people do not think that harassment is unavoidable or acceptable, or that they will not be caught. Let’s start today in respect of women everywhere!

Useful links

This article is based on work supported by the FIA Foundation. I would like to express my thanks to the FIA Foundation for its foresight and vision in supporting this research. The full report and executive summary can be downloaded here.

You are invited to attend a free FIA Foundation webinar on 21 March 14:00 -17:00 GMT. Details are available from Caroline Flynn (c.flynn@fiafoundation.org).

At the upcoming International Transport Forum’s 2016 Summit, 18-20 May 2016 in Leipzig, Germany, there will be a debate on “Women in transport: Mind the (gender) gap”.

[1]Public transport for the purposes of this study includes all types of public transport services (formal and informal) and includes minibus services, shared taxis etc

[2] http://www.empowerwomen.org/en/circles/freedom-of-movement-and-womens-economic-empowerment/womens-mobility-in-public-places#sthash.hxTe17sT.dpuf

This post is jointly published with OECD Insights.

Decarbonising Transport

by José Viegas, ITF Secretary-General

Humans don’t enjoy being stuck somewhere. We like to move, go places. In fact, man values this mobility so much that he created extraordinary tools to get from A to B, starting with the wheel and not ending with the airplane.

We value our freedom of movement because it generates such incredible value for us. Imagine for a moment that all the means of transport you’re using have disappeared. Not that easy to get to work. No fresh groceries in the supermarket. You’ll need to walk to the doctor despite the sore knee.

Conjecture? For you. But for millions, lack of access to transport – and therefore to the things that transport provides access to – is a reality. There are still children that don’t go to school because they can’t get to school. It’s the same for health services and jobs.  And it’s true for the larger economy as well – well-connected countries tend to thrive; those that do not struggle to bring their goods to world (or indeed national) markets.

The freedom to hop in a car

We won’t be easily persuaded to give up the freedom to hop in a car or on a plane. On the contrary, billions of people in the emerging economies are discovering the advantages – and joys – of modern-day mobility. If anything, global demand for transport will grow.

In itself that is not a bad thing – but only if we manage to, among other improvements, decarbonise transport.  Today, our mobility is almost completely driven by fossil fuels. Even the electricity for electric cars or for trains often comes from coal or oil-powered plants. Compared with other sectors, transport emissions make up almost a quarter of all CO2 emissions from fuel combustion (pdf) – by 2035 it could reach 40%, which would make transport the world’s largest emitter.

The link between mobility and harmful CO2 emissions must be broken if we want to continue to remain as mobile as we are. If governments were forced to limit mobility in order to save the planet, the economic, political and human costs could be huge.

Back to the future

The better way is to provide carbon-free transport. In around 1900, the majority of cars in New York City were electric – let’s go back to the future. Improved or new technology alone will not solve the problem. To decarbonise transport over the next 35 years or so, all the levers we have at our disposal need to be aligned towards this goal, many of which are outside the transport sector: digital connectivity and 3D printing may make some passenger and freight transport superfluous in the future, and urban land use policies can be improved to reduce the need for urban motorised travel.

The International Transport Forum is launching a major initiative to help achieve this alignment. Anchored in the ITF’s Corporate Partnership Board (CPB), our Decarbonising Transport project will provide decision makers with an effective tool to develop a road map towards decarbonisation, and then help to navigate it. It will allow governments and enterprises to test and gauge the impact of individual actions in a highly complex and interdependent reality.

Quantitative and inclusive

There are three core elements on which the Decarbonising Transport project builds: First: COP21. The Paris agreement of December 2015 doesn’t actually mention transport. But it creates a framework in which countries will review their emissions reduction targets in five-year cycles, starting in 2020. Others, like the transport sector could follow this lead, creating synchronicity with countries.

Second: the data. The Decarbonising Transport project will evolve around in-depth quantitative analysis. Our ambition is to federate existing data and knowledge on transport to create the most comprehensive model of global transport activity to date.  ITF has strong in-house modelling, and we are already reaching out to potential partners to link up existing models and leverage their collective power to become more than the sum of the parts. Decision makers will be able to use the simulations to calibrate their emissions reduction actions.

The third characteristic of the Decarbonising Transport project is that it will be inclusive. The modelling will serve dialogue and mutual learning among a broad set of partners who are joining forces to design the roadmap towards carbon-neutral transport. Governments, corporations, universities, multilateral institutions, foundations, NGOs will all have their place and contribute knowledge, data or money. 19 major international companies are already involved through the CPB.

Getting ready for 2020

The Decarbonising Transport project will be officially inaugurated on 19 May, at the ITF’s 2016 Summit in Germany. We plan to present intermediate results a year later. And by May 2019, we want the modelling to be robust enough to provide effective support to the 2020 reviews of COP emissions reduction commitments.

This is an open project, and very much a work in progress. All who have an interest in helping to make our mobility, and therefore our way of life, sustainable are invited to become part of the effort. Join me on Periscope (Twitter’s live stream app) for a Q&A session on Decarbonising Transport on Wednesday, 2 March at 15:00 Central European Time (CET) if you want to know more.

 

The Sharing Economy: How shared self-driving cars could change city traffic

by Sharon Masterson, International Transport Forum Corporate Partnership Board

Click to download the report
Click to download

In 2011, TIME Magazine named collaborative consumption (or the sharing economy as it is often called) as one of the top 10 ideas that will change the world.

Four years on, this prediction seems to be holding true. The number of companies operating in the sharing economy is rising rapidly in the transport sector alone, and includes household names such as Uber, BlaBlaCar, Lyft, Zipcar, etc. The public seems to be embracing this phenomenon as we witness users flocking to join these platforms across the globe.

Given that a typical car lies idle some 23 hours a day, car owners are investing in something that they barely use, so this untapped potential is at the heart of the sharing economy in personal transportation. With automated, self-driving cars only around the corner (and some precursor components already in the market in the form of adaptive cruise control, lane assist and self-parking), we decided to look at how combining the shared economy aspect (shared vehicles) with developing technology (automated vehicles) can be applied today, by asking “What if all conventional cars in a city were replaced by a fleet of shared self-driving vehicles”?

The results of this exercise were very interesting.

We carried out a simulation on a representation of the street network of the city of Lisbon, using origin and destination data derived from a fine-grained database of trips on the basis of a detailed travel survey. Trips were allocated to different modes: walking, shared self-driving vehicles or high-capacity public transport. We set a constraint that all trips should take at most 5 minutes longer than today’s car trips take for all scenarios, and assumed all trips are done by shared vehicles and none by buses or private cars. We also modelled a scenario which included high-capacity public transport (Metro in the case of Lisbon).

We modelled two different car-sharing concepts, “TaxiBots”, a term we coined for self-driving vehicles shared simultaneously by several passengers (i.e. ride sharing), and “AutoVots”, cars which pick-up and drop-off single passengers sequentially (car sharing).

For the different scenarios we measured the number of cars, kilometres travelled, impacts on congestion and impacts on parking space.

The results indicate that shared self-driving fleets can deliver the same mobility as today with significantly fewer cars. In a city serviced by ride-sharing TaxiBots and a good underground system, 90% of cars could be removed from the city.

Even in the scenario that least reduces the number of cars (AutoVots without underground), nearly half of all cars could be removed without impacting the level of service. Note: TaxiBots replace more cars than AutoVots since the latter require more vehicles and much more re-positioning travel to deliver the same level of service.

Even at peak hours, only about one third (35%) of today’s cars would be on the roads (TaxiBots with underground), without reducing overall mobility.

No matter what the scenario, on-street parking spots could be totally removed with a fleet of shared self-driving cars, allowing in a medium-sized European city such as Lisbon, reallocating 1.5 million square metres to other public uses. This equates to almost 20% of the surface of kerb-to-kerb street area (or 210 football pitches!)

These findings suggest that shared self-driving fleets could significantly reduce congestion. In terms of environmental impact, only 2% more vehicles would be needed for a fleet of cleaner, electric, shared self-driving vehicles, to compensate for reduced range and battery charging time.

So what are the policy insights from this study?

  • The impact of self-driving shared fleets is significant but is sensitive to policy choices and deployment scenarios. Transport policies can influence the type and size of the fleet, the mix between traditional public transport and shared vehicles and, ultimately, the amount of car travel, congestion and emissions in the city. For small and medium-sized cities it is conceivable that a shared fleet of self-driving vehicles could completely obviate the need for traditional public transport.
  • Actively managing freed capacity and space is still necessary to lock in benefits. Shared vehicle fleets free up a significant amount of space in the city. However prior experience indicates that this space must be pro-actively managed in order to lock in benefits. Management strategies could include restricting access to this space by allocating it to bicycle tracks or enlarging sidewalks, or also to commercial or recreational uses, as well as to delivery bays. For example, freed-up space in off-street parking could be used for logistics distribution centres.
  • Road safety will likely improve; environmental benefits will depend on vehicle technology. Despite increases in overall levels of car travel, the deployment of large-scale self-driving vehicle fleets will likely reduce crashes and crash severity. At the same time, environmental impacts are still tied to per-kilometre emissions and thus will be dependent on the penetration of more fuel efficient and less polluting technologies.
  • Public transport, taxi operations and urban transport governance will have to adapt. The deployment of self-driving and shared fleets in an urban context will directly compete with the way in which taxi and public transport services are currently organised. These fleets might effectively become a new form of low capacity/high quality public transport. Labour issues will be significant but there is no reason why public transport operators or taxi companies could not take an active role in delivering these services.

Useful links

As well as this study, the ITF Corporate Partnership Board has released additional studies looking at Autonomous Driving: Regulatory Issues and Mobility Data: Changes and Opportunities

This article first appeared in the OECD Insights blog