The sharing economy is already disrupting the taxi industry. Soon, writes Brian Lee Crowley in the Globe and Mail, it will alter everything you know about getting around.
By Brian Lee Crowley, June 12, 2015
So-called “sharing economy” services like Uber and Lyft are just giving us a foretaste of how disruptive technologies will transform the way we get around. Moreover contrary to what you might have heard, that transformation won’t stop with the destruction of the old-style taxi industry. Uber may be worth US$40-billion. That means the market sees Uber and its competitors as achieving far more than this.
To understand where urban mobility is going, consider these facts. According to environmental economist Ross McKitrick (writing for my institute), “In 2005, 74 % of Canadian adults reported going everywhere by car, up from 68 % in 1992. In 2012, 82 % of Canadians commuted to work by car, 12 % took public transit, and 6 % walked or cycled. Trips between cities are also mainly by car.” In other words, despite lots of spending on public transit, people travel predominantly by private car and that won’t change anytime soon. The share of those travelling exclusively by car is rising, not falling.
Why? Speed, convenience and cost. The average commute takes twice as long by transit as by car, and while cars go everywhere, buses and trains don’t. Transit ridership isn’t much affected by price. Lowering fares does not attract much new ridership, just as rising gasoline prices have a rather minimal effect on the amount people drive.
Finally, the average car is parked 23 hours out of 24.
What does all this add up to? A huge unused capacity to move people around by the means they prefer without it requiring much expenditure of scarce tax dollars on infrastructure, buses, trains and the like.
That spare capacity, however, could not be used effectively until technology emerged that allowed precise real-time matching of travel needs and cars. That’s what the sharing economy is all about: permitting those who have available capacity to share it instantaneously with those who need it. Cars are just one example, you can now share your house, your driveway, your meals, your office space and more with people who want to use the part you don’t need. The internet and smartphones have revolutionized sharing because before the costs of finding the person who had just what you needed just when you needed it were prohibitive. Now those costs are almost zero.
In that world, who needs to own a car? Before if you wanted just a piece of the transport services a car offered, your choices were taxis and car rentals. Soon you’ll be able to buy car-time carefully calibrated to match not only your location and destination, but even the kind of car you want. You might want a cheap beater to get to work, but a van to move furniture and a Beemer to go on a date.
Cars in the past could sit idle for 23 hours a day because the costs of finding others willing and able to pay to share its transport capacity were prohibitive. We are very close to being able to increase the number of people moved without increasing our investment in rolling stock or infrastructure. Opportunities will soon open up for providers of fleets of cars offering different quality and price tailored to individual budgets.
And since people are willing to pay for “car-time” but are highly resistant to paying for “road-time” (i.e. tolls), the revolutionary changes about to be unleashed may allow us to get the next best thing to variable tolls, which encourage people to travel off-peak. Car-time can be priced according to the time of travel, thereby helping to smooth the peaks and valleys of traffic density.
This is only the first wave of change that is coming as the sharing economy meets urban transport. The second wave will be unleashed when the driverless car moves from experimental vehicle to urban fixture with computers managing the overall traffic flow more efficiently than individual drivers can.
When you need a car it will come to you, on command. No car need ever sit idle in a driveway or garage; it can be working every hour of the day. Brian Flemming, who chaired a 2001 federal transport policy inquiry now says, “so fast are these new technologies coming at us that no new subway, superhighway or LRT should be built without doing an ‘automated vehicle impact study’ to ensure that projects that are supposed to last for decades are not overbuilt.”
So take a bus or hail a cab while you still can. To your grandchildren it will be like tales of rotary telephones and vinyl records: quaint echoes of a long-ago age.
Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.