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Transportation is a building block of strong, integrated communities. With a global vision and deep local knowledge, our experts play a key role in the strategic planning and design of sustainable transit systems across Canada.

 
 

The Rise of Uber: Blurring the lines of the sharing economy

December 03, 2015
 

Uber is a technology company that develops and operates the Uber ridesharing app. It first came into service in Canada in 2012 and is now actively transporting people in Toronto, Ottawa, and Montreal. Started in San Francisco as a hobby project to make public transportation faster and easier for friends, today, the company operates in 61 countries and 355 cities.

 

Uber’s success is hugely aligned with its ability to cater to the habits of Millennials regarding public transportation. As discussed in a previous post, Millennials are ‘digital natives’, born between 1983 and 2000, who want to stay connected and use technology to create a sense of community. Most millennials live closer to public transit for convenience and don’t own a car because of high levels of student debt, unemployment and the choice to spend their money elsewhere. But all in all, Millennials can be described as being much more environmentally conscious than previous generations.

With the tagline of ‘where lifestyle meets logistics’, Uber has positioned itself as a Millennial-friendly entity that aims to create solutions to issues that matter to the common urbanite.

 

Appealing to the ‘digital native’ community

Uber markets its app as an easy, personalized experience whereby a few clicks on an app gets you a car that you can track right up until it reaches you. Easy, seamless and consumer-driven are all adjectives that appeal to the Millennial-psyche. They’re also ideas that are the foundation of Uber’s brand. Much of Uber’s success comes from its roots as a business that is run by the people who use it. A Forbes article stresses that, whether true or perceived, Millennials “are invested in companies that stand for more than their bottom line and invite everyone to the party.”

When Millennials feel like they are part of the brand, there is a sense of ‘democratization of fairness’, a feeling on which Uber has built its success. Despite the surges in prices at certain peak times which may be interpreted as going against the idea of ‘democratization of fairness’, app features such as ratings for both driver and rider strongly support it.  

 

Proximity

Most Uber users would probably think of the company as a cheaper alternative to a taxi, but not necessarily as a Transportation Network Company (TNC) or an ‘alternative transportation’. Uber is however designated as a TNC, a new term that has emerged to describe companies that use apps to connect drivers to potential riders. Uber positions itself as a solution to the ‘first-mile, last-mile’ problem that often plagues transit agencies–that is, how an individual gets from their point of origin to a transit station, and also how an individual gets from a transit station to his or her final destination. This is an issue for Millennials who don’t own a car and are not close enough to a major transit hub.

By positioning itself as a TNC, Uber differentiates the brand from taxis that are also used for first and last-mile trips, but do not specifically advertise for doing so. Earlier this year, Uber reported that one in four Uber trips were within half a mile of a Metro Portland transit station, which may be interpreted as a solution for the ‘last-mile’ issue. Unfortunately, additional data regarding the trips is unclear and/or unavailable due to privacy issues.

 

Forward, environmentally?

An assumption about the popularity of Uber among Millennials is about reducing carbon footprint. We already know that many Millennials do not own cars, and therefore must be taking public transportation, walking, biking, etc., to get to their destination. If such is the case, taking an Uber doesn’t benefit the environment compared to taking public transit. As a NextCity article on alternative transportation states, “…for TNCs to be environmentally friendly, they have to occupy a sweet spot of reducing personal vehicle use without reducing transit ridership.”

Hence, possible environmental benefits only apply to UberPOOL, which allows for rides to be shared with other people while splitting the cost. In this way, although Uber cannot be synonymous with bus service, a vehicle can pick up and drop off multiple people who are travelling along the same route. As such, if an individual decides to take an Uber instead of their own car or a taxi, then there really is no positive impact on the environment.

 

What does Uber’s position as a leading TNC mean for public transit?

In the US, where Uber is tightly woven into urban settings, a few partnerships suggest that the company is making some strides towards working with local public transit agencies. One example occurred on St. Patrick’s Day in Dallas, where DART encouraged people to get to their events via public transit, and then to get home using Uber. The agency felt that Uber gave them a ‘coolness factor’ that tied them to the Uber brand. The agency wanted people to use DART and Uber, not instead of.

Many agencies in the US allow people to link to Uber through their app and create a partnership where they encourage the use of Uber for first-mile trips using a discount for new riders. However, Uber isn’t integrated into the app – it’s more like an advertisement. And, the discount offered for first-mile riders is less than that usually offered by Uber on other rides for first-time users. It’s difficult to predict the effects of TNCs on public transit without data, and ridesharing companies have been keeping it to themselves or not tracking it at all.

There are, however, ways for public transit to learn from Uber’s success. Apps like TransLoc are on a mission to help transit agencies identify where riders are travelling so that cities can begin to tailor services to those needs by improving routes. Eventually, the app hopes this will help agencies offer on-demand service by allowing users to request a bus using the app and then crowdsourcing a route to pick up several riders. Cities like Helsinki are already experimenting with similar systems.

Recently, WSP | Parsons Brinckerhoff was awarded a contract to help Metrolinx, a Government of Ontario agency that manages and integrates public transportation in the Greater Toronto and Hamilton area, to prepare a research paper identifying emergent trends and technologies in transportation. These will be categorized into short-, medium-, and long-term horizons, including gaining an appreciation of potential benefits and impacts in terms of magnitude/importance and uncertainty/likelihood. Research like this can prepare large public transit organizations for the impacts that technology like TNCs can bring, and how to use them to their advantage.

There are other opportunities for TNC and public transit partnerships, such as the possibility of using TNCs where transit agencies make uses of taxis (eg: guaranteed ride home, paratransit and dial-a-ride services). However, in order for this to happen, Uber would have to provide specialized training to drivers and have accessible vehicles available, which is currently not the case due to a lack of incentive in this market.

 

Conclusion: Convenience and Consciousness

In conclusion, it’s clear that ease of use, convenience and social consciousness are important to Millennials, and TNCs like Uber appeal to these senses. But it’s also important to remember that marketing is not necessarily a truth – it’s made up of idealizations of truth that you can choose to believe or disregard. Uber finds success in the cities that need it. Even in the midst of agencies with proper licencing and regulations continuing to fight Uber, there’s much to be learned from the success of the app. Portland is a good example of a city that has initiated a data sharing requirement for a pilot project to test regulations that would make TNCs legal, but that would also help them better understand the sharing economy. The future of technology use is bright, and the ability to adapt to growing trends is a must for all transit agencies. Technology has the power to benefit cities, but it can’t do so without mutually beneficial collaboration and data sharing between existing and emerging companies and agencies.

By Ivana Velickovic


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