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"When you drive out ridesharing, you drive out innovation."

By Kristine St-Laurent

This blog post was written by BCBC staff member, Kristine St-Laurent, for the NEXT Leaders Council, a platform for emerging business leaders from across BC’s economy. For more information, please visit www.nextleaders.ca.

Recently, BCBC’s NEXT Leaders came together to discuss ridesharing and the future of transportation.  As a follow-up to the meeting, we surveyed members of the group.

First, we asked the NEXT Leaders what they think the role of ridesharing should be in British Columbia.

 

An overwhelming majority said that they would like to see ridesharing services brought to the province.

We then asked NEXT Leaders to tell us what they think is the main barrier to entry for ridesharing companies. Their responses fell into four categories.

 

Afterwards, the NEXT Leaders held a roundtable discussion to explore why policymakers should make ridesharing a priority.  

Below are their top reasons:

Why Do NEXT Leaders Want Ridesharing?

Monopolies Hinder Innovation

Ridesharing is a case study in market efficiency and innovation. Technology helps solve a challenging utilization issue by matching drivers and passengers at the moment of demand through an online platform. The system performs at an optimal level by closely aligning the incentives of driver (the producer) and passenger (the consumer). On the opposite side of the spectrum – like the present ride hailing situation in BC – is a pure or quasi-monopoly system, in which one or two suppliers are the sole providers of a good or service.  In comparison to a competitive market model, monopolies and quasi-monopolies restrict trade, charge higher prices and produce lower quantities.  Firms operating in non-competitive markets also lose much of the incentive to innovate or provide “new and improved” offerings.

Naturally, the conversation turned from ridesharing to a broader but related challenge facing BC: innovation.  As one of our NEXT leaders observed, “We [BC] want to be considered ‘innovative’, but we don’t even have the framework to support entrepreneurial spirit and innovation. Ridesharing – or lack thereof – is but one example.” In the words of another, “For a city [Vancouver] and province that likes to believe it is innovative, we are…behind the curve in terms of adapting new policy and incentives that encourage business investment and attract talent.”

 “Ridesharing forms the base of the future of transportation.
The city [and province] is falling behind and missing out on the data ridesharing can offer.” – NEXT Leader

 

Double Affordability

This has two aspects:

1.  Passengers
The average car is stationary 95-96% of the time. That’s a fairly consistent finding around the world. A car is typically parked at home about 80% of the time, parked elsewhere approximately 16% of the time, and on the move just 4% of the time. In addition to this, cars normally operate at less than full capacity by only transporting one or two people. There is also the cost of lost time in traffic that could be spent on work or leisure activities. As living expenses rise (think mortgages, rents, credit card or other household debt, car insurance, parking fees, etc.), owning a car might not be possible for many British Columbians.  A combination of public transportation, car sharing and ridesharing may enable some British Columbians to free up time spent stuck in traffic or looking for a parking space; some people may even give up owning a vehicle if ride-sharing services are widely available.

“Basic transport needs are not being met in a jurisdiction
that already struggles with the cost of living and working.” - NEXT Leader

2.  Drivers
The majority of drivers employed by ridesharing companies use driver income to supplement other sources.  Driving jobs are typically part-time, secondary sources of income and drivers are permitted to set their own schedules according to their needs. According to 2017 national U.S. statistics collected by Lyft, a leading ridesharing company:

    • 50% of driver earnings help to cover primary living costs: food, housing, clothing, medical care, and other basic household expenses
    • 93% of their drivers drive fewer than 20 hours per week
    • 23% of drivers are over age 50
    • 99% schedule driving around other jobs, classes, childcare and other activities
    • 65% financially support family members
    • 91% of drivers who support family would have difficulty without Lyft earnings  

“It’s time to walk the talk when it comes to innovation.
The benefits include increased mobility and reduced costs in an otherwise highly expensive city/province,
as well as complementary sources of income to afford a costly living environment.” – NEXT Leader

 “On top of its convenience, ridesharing services are a great addition to car sharing services
and give people confidence to give up their cars. I believe it’s also very important
in demonstrating that we are a progressive city/province.” – NEXT Leader

 

Travel Independence and Increased Mobility

Demographic trends show that BC’s population is growing, greying, and increasingly centred in urban areas. BC is set to jump from its current 4.8 million residents to 5.4 million in the next ten years.  An aging and more urban population with growing affordability challenges may see more people coming to rely on public transit. This amplifies the need for accessible transportation options appropriate to all ages, abilities and consumer tastes.

As communities change, so too must transit. Ridesharing provides an additional platform to facilitate mobility, especially for groups that might be underserved by transit.  In the U.S., medical service providers are partnering with ridesharing companies to ensure that patients are able to get to their appointments. Using a service called “concierge” or “booking for a friend”, someone can book a ride for someone else – such as for an aging parent, a minor or someone living with a disability. As an added measure of accountability, users and third parties can track rides in real time and ensure rides are taking place as scheduled.

According to Lyft’s latest annual report, elderly users and people living with disabilities indicated that they felt a new sense of freedom with ridesharing, reporting that they have come to use ridesharing for “doctor appointments, errands, and visits to friends without having to rely on family or caregivers for transportation.”

Some other mobility statistics taken from the report:

  • 12% of passengers using Lyft are over age 50
  • 30% of senior users do not own a personal vehicle
  • 7% of passengers using Lyft are living with a disability

 

First KM, Last KM, and Rural Areas

Public transportation and ridesharing are complementary services in urban communities. In these areas, ridesharing is most often used for “first kilometer, last kilometer” trips – i.e. to and from public transit routes to the destination.  Nationally, half of Lyft users in the U.S. reported using their car less last year because of ridesharing services, and nearly a quarter reported using public transit more because they could connect it to Lyft.  In rural areas or smaller communities with more limited transportation offerings, ridesharing services would help to boost secondary sources of income and complement current ride hailing services (if any).

 “Ridesharing is well overdue.
We talk about innovation and engaging growth in the community but mobility is limited.” -NEXT Leader

 

It’s a Public Safety Issue

An analysis of ridesharing’s effects on public safety shows that overly burdensome ridesharing regulations or restrictions can harm public safety.  For example, a 2016 study found that when a ridesharing service enters a city, DUI rates decreased between 15% to 62%, depending on the jurisdiction. On the flipside, the same report showed that in the weeks after ridesharing companies Uber and Lyft stopped providing services in Austin, Texas, in May 2016, due to municipal restrictions, DUI arrest rates spiked 7.5%.  

The latest police-reported crime statistics recorded 11,451 actual instances of impaired driving in British Columbia in 2016. Reported instances of impaired driving occurred at a rate of 241 people per 100,000 residents.  Notably, cities and towns with less available transit options had higher rates of impaired driving – and the number of recorded incidents does not necessarily equate to the actual incidence of impaired driving. Of BC’s towns and cities, two major tourism destinations had among the highest rate of impaired drivers per 100,000 people in 2016: Tofino had the highest number (1,798 people impaired per every 100,000), followed by Whistler (1,118). Other high-rate towns include Fort St. John (980), Quesnel (497) and Victoria (314). Coming in just under the provincial average were the cities of Surrey (239) and Abbotsford (235), while Vancouver had a rate of 123.

Even more concerning are ICBC statistics on distracted driving (most often cell phone use), which indicate more fatalities are linked to driver distraction rather than impairment throughout the province.

“We have a lack of safe and convenient transportation issues. We believe that BC is progressive and great,
and the absence of tech services like this points to otherwise.” – NEXT Leader

 

Closing Thoughts From NEXT Leaders

NEXT Leaders told us that ridesharing services should be a topline agenda item for BC and municipal policymakers.  At the end of the day, ride-sharing and public transit reform is not about protecting a ridesharing company or any specific business model.  Ridesharing is about spurring innovation and fostering a competitive environment where businesses are incentivized to be modern, resourceful, responsive and relevant.  Ridesharing is just one part of a broader conversation about the role of innovation and related policy to keep up with the pace of change.  The group concluded that when the province keeps out new business models like ridesharing, it essentially says “no” to innovation and signals that capital and world-class talent should perhaps look elsewhere.  

 The Business Council of BC is committed to supporting innovation throughout the province.  For more information on our collaborative efforts with the BC business community to bring ridesharing to BC, please see https://ridesharingnow.com/.