Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Wednesday, March 07, 2018

The false promise of ride hailing as a pro-city transportation mode

Reprinted from Monday with new date because of the addition of the experience with parking in San Diego.  I meant to write about it, but I forgot.  It's very interesting.

Except for one thing, measurable impact on demand for parking as reported by Ace Parking of San Diego, there really isn't anything new here, as I have written many times about these issues already.  But it's nice to sum it up.  The SD item is the new #1, and the other points have been renumbered.

1.  The San Diego Union-Tribune reports ("Ace Parking says Uber, Lyft have cut parking business up to 50% in some venues") on analysis by Ace Parking, the major private parking firm operating in San Diego, a company that is also active in other markets including DC, of the impact of ride hailing services on their parking business.  From the article:
In a September email buried deep in an environmental report, Ace Parking CEO John Baumgardner laid out the ugly truth facing the parking business. At San Diego hotels serviced by Ace Parking, overnight parking has declined 5 percent to 10 percent. At restaurant valet stands, business is down 25 percent.

And, most dramatically, nightclub valets are seeing a 50 percent drop off.

Homegrown Ace Parking — one of the largest parking companies in North America and also a fixture in San Diego’s political and business scene — is feeling the impact from Uber and Lyft, the wildly popular ride-sharing services that allow people to leave their cars at home.

For consumers, the bright side may be lower parking prices. In downtown San Diego, city planners are looking at the decline as they update parking guidelines — which could lead to changes in how much future parking is built.

Will parking companies go away? “Is this an existential threat to my business model? Or, is there a way to pivot and continue to provide a necessary service?” said Keith Jones, the third-generation managing partner of the Ace Parking empire, in a recent interview.

Jones likes to talk about “journey management.”

“Ace is hyper-focused on integrating new technology within our parking operations so we help consumers and cars,” he said. “We are pushing the parking and transportation industry to be connected in a way that makes parking smart.”
I like the point about shifting to "journey management."

2.  Most people driving ride hailing vehicles make less than minimum wage according to an MIT study ("MIT study reveals sad reality for majority of Uber, Lyft drivers: Median income far below minimum wage," WCVB-TV). From the article:
Drivers make a median hourly profit of $3.37 before taxes, the study found.

The report said that drivers incur a median cost of $0.30 per mile and that nearly a third of drivers incur expenses exceeding their revenue. At tax time, the standard mileage deduction could mean that there is untaxed revenue in the billions of dollars for these drivers.
-- The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes, MIT Center for Energy and Environmental Policy Research

NOTE THAT UBER DISPUTED THIS STUDY AND THE RESEARCHER RE-RAN THE NUMBERS. NOW HE SAYS THE FIGURE IS $8.55 HOUR WHILE UBER'S NUMBER IS $13.05.  See "Uber drivers per hour profit revised in disputed MIT study," San Jose Mercury News.

This shouldn't be a surprise.  Taxi driving is mostly resorted to by people with limited options.  Having to pay a good chunk of your earnings off the top to the software firms that run the service reduces margins.

Interesting, GM's Maven car sharing program is offering a high cost e-vehicle rental for people offering ride hailing services ("Maven Gig, GM’s car-sharing service for Uber and Lyft drivers, comes to Austin: Just in time for SXSW," GM Verge blog), after Uber made the decision to get out of the rental business because it was a money loser. From the article:
Someone who’s interested in driving for any of these on-demand services, but doesn’t own a vehicle, can rent an electric Chevy Bolt through Maven Gig starting at $229-a-week. The weekly price includes insurance, maintenance, and electric vehicle charging. There is no membership fee.

Maven first launched its gig worker product in 2016 in San Diego and San Francisco. Since then, it has been introduced in Los Angeles, Boston, Phoenix, Washington, DC, Baltimore, and Detroit. Maven says its customers have logged 170 million miles driving for various on-demand apps.

What’s different here is how closely Maven says it will be working with the city of Austin to ensure there’s an adequate electric car-charging infrastructure in place for drivers to use this service.
3.  Ride hailing reduces the use of transit. ("Ride-hailing is pulling people off public transit and clogging up roads," Technology Review). From the article:
A study by the Boston-based Metropolitan Area Planning Council found 42 percent of trips taken via ride-hailing services in Boston would have been completed on public transit had the option not been available. Another 12 percent of people would have walked or biked. Plus, most people use ride-hailers end-to-end, rather than mixing the service with other modes of transport.
4.  Ride hailing use is induced by venture capital subsidies which makes the cost of a ride less than actual cost ("You're not paying enough for Uber," Boston Globe). From the article:
A new study of 944 Boston-area passengers by the Metropolitan Area Planning Council shows that ride-hailing apps are adding to vehicular traffic; people are using them for lots of trips that they otherwise would have made by transit or bike.

This isn’t just happening because Uber and Lyft offer efficient service. It’s because the fares that customers pay don’t come close to covering the ride-hailing companies’ costs — much less the external costs to society of drawing more passenger cars into an already congested road network. ... In 2015, according to one transportation consultant, Uber passengers were paying only 41 percent of the cost of each ride.
5.  Ride hailing is a form of "inducing demand" and therefore increases congestion ("Studies are increasingly clear: Uber, Lyft congest cities," Associated Press).

6.  Chicago has instituted a fee per trip on ride hailing, which they use to fund sustainable mobility improvements ("Emanuel says Uber, Lyft fee hikes will pay for better transit cameras," Chicago Tribune; "Emanuel claims ride-hailing industry costing Chicago taxpayers $40 million per year," Chicago Sun-Times).

This seems like a reasonable mitigation measure.

7.  Transit consultant Jarrett Walker argues that there is less than meets the eye with microtransit ("Microtarnsit: What I think we know," Human Transit blog). The key point is the cost of labor to run a vehicle, and the ratio of passengers to drivers. The fewer the passengers, the more costly the service. He makes the point as I have that microtransit isn't new, in terms of either being an on demand service or contracting it out, and having an app doesn't make scalar changes to the mode.

David Aragon, an operation manager and one of the drivers for Free Ride Everywhere Downtown (FRED) waits at a local apartment building for his next pick up in the downtown area. (Nelvin C. Cepeda / San Diego Union-Tribune).

... speaking of San Diego, I do think there is a place for microtransit along the lines of the FRED e-shuttle operating in the Downtown ("Revisiting stories: FRED Downtown shuttle in San Diego," 2017) and supporting "park once, visit many places" consumption within the district.

8.  Meanwhile Uber takes aim at medical transportation ("Uber, Lyft try solving one of medicine's biggest problems: getting people to medical appointments," Chicago Tribune).

Again, not much new, and typical of firms aiming to make a good deal of money from government contracting (like Electronic Data Systems, the firm founded by H. Ross Perot, which had preponderate amount of business from state governments for IT systems).

Labels: , , , , , , , ,


At 10:28 AM, Anonymous charlie said...

1. You might not see it, but downtown and in the L'Enfant city the streets are a nightmare. I've never seen such bad conditions as a pedestrian or driver in 20 years. OK the peak bike messenger time was pretty bad too but cars are worse. Ubers/rideshare do not follow anything resembling traffic laws. there are reasons we limit the number of taxis on the road.

2. Uber financials:

3. I agree it doesn't scale -- well it does for example in London or Manhattan or Hong Kong or Singapore -- but moving to a future where 90% of vehicles on the road are ride sharing is a very bleak future.

At 1:57 PM, Blogger Richard Layman said...

wrt #1, you're right, I don't see it in action, because I tend to not be in the core during the hours where that kind of traffic peaks, especially on weekends, especially at night.

I mostly am in the core during the day, when this type of traffic is comparatively minimal, although I do see it in various places across the city, but not in the places where it conglomerates.

... you have mentioned this from time to time, e.g., on U Street on a Friday or Saturday night.

At a talk the Post sponsored a couple months ago, there was talk about how DC responded to data sharing from ride hailing so as to create "ride hailing" stops on CT Ave.

The point is to have an integrated network of such... but the real point is that as long as rides are subsidized people will prefer personal transportation options over mass transit.

FRED type shuttles etc. would probably be a lot better for intra-district transportation on a weekend evening in places where there is likely a lot of that kind of travel.

(This is where I'd differ from Jarrett Walker. Yes, microtransit doesn't scale, but no, there are places where microtransit, as part of a tight web of sustainable mobility infrastructure, can make sense. E.g., my outline of integrating parking services using Silver Spring as an example, with such shuttles as an element.)

At 2:37 PM, Anonymous Anonymous said...

RE: subsidized

Very hard to tell b/c they don’t release detailed figures and also they use a lot of stuff to screw the accounting

For instance UberPool is 100% booked as revenue, UberX only maybe 15%, but then the $1 fee gets booked at 100%.

Likewise there are contanst promotions.

But I’d say their prices aren’t being marked down much. Maybe 10-15%. They are pushing uberPool rates down artiflally to get that 100% booking.

The real issue is there is an unlimited pool of people willing to do this at 3-4/hour; not sure how long that will last.

At 4:39 PM, Blogger Richard Layman said...

there are always people desperate enough to drive a taxi at least for a little while.

You have to do it independent contractor wise to be able to do it somewhat financially successfully. Paying $15 to $20 straight up per hour + paying the cost of the vehicle and expenses, then it doesn't make financial sense. You need that arms length separation.

At 5:34 PM, Anonymous Anonymous said...

Make Transit Usable Again!
(especially outside of daytime business hours)

At 10:37 AM, Blogger Richard Layman said...

Study in Australia argues that Uber pays significantly less than minimum wage (which is high there), and is the only way that the service can succeed economically.

At 8:32 AM, Blogger Richard Layman said...

will ride hailing reduce the real estate value of proximity to transit?


Post a Comment

<< Home