The Financial Times’ Alphaville blog has noted that Uber London Ltd’s accounts filed at Companies House refer to discussions with HM Revenue and Customs about a potential liability for VAT at 20% on either gross bookings or the service fee that Uber charges drivers. This liability may depend on the outcome of a case that Uber is appealing to the Supreme Court to determine whether drivers are self-employed or are ‘workers’ with employment rights. The threshold for VAT liability is £81k a year, so individual drivers are unlikely to be liable. But if Uber is deemed to be an employer, the company would be liable, with potential backdating.

The VAT threshold means that there is not a level playing field for taxi type services. Self-employed drivers, such as the owner-driver of a London black cab, would be at an advantage over a ride-haling company that employed many drivers.

This piece was a guest blog in the newsletter of the Transport Knowledge Hub, a free resource aimed at providing local-decision makers with tools and information to make transport investment decisions which facilitate inclusive and sustainable economic growth.

In my new book, Driving Change: Travel in the Twenty-First Century, I assess the likely impact on travel behaviour of new transport technologies, in particular electric vehicles, digital platforms, digital navigation and autonomous vehicles.

Electric vehicles eliminate tailpipe emissions and so help improve urban air quality and mitigate global warming. Yet a change of propulsion does not change the basic characteristics of cars or buses.

Digital platforms help match supply and demand and have made possible online shopping, which has contributed to reduced numbers of shopping trips. Digital platform apps on mobile phones, exemplified by Uber, facilitate finding a ride-hailing taxi or a rental bike and are understandably very popular. They may tempt people away from buses, but they can also complement regular public transport by meeting the need for ‘last mile’ travel. When the Night Tube opened in London, the pattern of late-night Uber trips changed, from centre-to-home to suburban-station-to-home.

Digital platforms permit vehicle sharing by people travelling in the same direction. Some commentators see this as the answer to road traffic congestion, in that higher occupancy would allow travel demand to be met by fewer vehicles. However, congestion arises in locations where both population density are car ownership are high, so that there are more trips that might be made by car than the capacity of the road network permits. Some potential drivers are deterred by the prospect of unacceptable delays and make other choices – a different time, mode or destination of travel, or not to travel at all. Congestion is therefore generally self-limiting, in that if traffic builds up, delays increase and more road users are deterred. Conversely, measures to reduce traffic tend to have little impact on congestion because the initial reduction in delays then releases previously suppressed trips. So increased vehicle occupancy is unlikely to make much impact on congestion.

Digital navigation devices, such as Google Maps or Waze, offer optimum routing that takes account of congestion. They also predict journey times in advance, which is the best means we have to mitigate the impact of congestion, given that what bothers people most is the uncertainty of how long a trip will take in congested traffic.

Autonomous vehicles – driverless cars – are attracting enormous interest and investment, both by established auto industry businesses and new entrant tech companies. As yet, there is only very limited evidence of impact from pilot trials and simulation studies.

The main historic transport innovations have allowed faster travel and so a step change in access to desired destinations and services – the railway in the nineteenth century, the car in the twentieth, the modern bicycle in its heyday before the mass market car, and motorised two-wheelers today in low-income countries. Similarly, a series of electronic and digital innovations have permitted a step change in virtual access to people and services – the telegraph, telephone, radio, television, internet, broadband, smart phone, social media. All these innovations have stimulated huge investment, rewarded by the returns from increased access.

In contrast, the new transport technologies seem unlikely to lead to any significant increase in speed of travel. They will therefore not be transformational. Rather, they offer incremental improvement to the quality of journeys and possibly some cost reduction.

Public transport is benefiting from digital technologies for travel information and payment. On the railway, digitised signalling and train control permits shorter headways and hence increase capacity of existing track. For buses, the main constraint is the difficulty of creating segregated routes in dense urban spaces. Nevertheless, there are opportunities for public authorities to encourage technological innovation that aligns with their strategic objectives for movement and place making.

 

 

 

 

 

 

A number of new transport technologies have entered the market recently or are under development. Innovators have high hopes of benefits to users and returns to investors. In my new book, Driving Change: Travel in the Twenty-First Century, I assess the likely consequences for travel behaviour of four technologies that are making an impact on road transport: electric vehicles, digital platforms, digital navigation, and autonomous vehicles.

The impetus to introduce electric propulsion for road vehicles is to eliminate carbon emissions, which requires the electricity supply system to be decarbonised in parallel. Electric propulsion also eliminates noxious tailpipe emissions and so improves urban air quality. The sustainability of road transport has long been a concern, initially because of reliance on non-renewable oil, and more recently on account of oil’s contribution to global warming. Electrification goes a long way to mitigating this concern. Yet electric propulsion in place of the internal combustion engine does not significantly alter the behaviour of the car and driver.

Digital platforms in the transport sector make possible ride-hailing taxis such as Uber, dockless bicycles and a variety of innovative modes of demand-responsive travel. Platforms are more efficient in matching demand to supply than traditional means, hence their popularity. As well as matching user to vehicle, they enable sharing by users travelling in the same direction, the immediate benefit being lower fares.

Some observers see vehicle sharing as an important means to reduce road traffic congestion, allowing travel demand to be met with fewer vehicles of higher occupancy. This would indeed be the case if trip numbers, origins and destination were fixed. However, congestion arises in places where both population density and car ownership are high, such that the capacity of the road network is insufficient to accommodate all the trips that might be made. Some potential road users are deterred by the prospect of unacceptable time delays and so make other choices – of time of travel, mode or destination when there are options, or not to travel at all. Introduction of vehicle sharing would initially lessen traffic, but the resulting reduced delays would attract onto the network previously deterred drivers, so restoring congestion to what it had been. So sharing is not the solution to the problem of congestion.

Digital navigation devices are now generally familiar, based on GPS location, digital maps and route guidance algorithms that take account of congestion. They enhance the quality of the journey for individuals and have the potential to improve the efficiency of operation of the road network through collaboration between private sector providers of routing information and public road authorities. But the main benefit lies in the estimation of journey duration at the outset of a trip, given that the principal problem of congestion perceived by road users is the uncertainty of arrival time.

The development of driverless vehicles is attracting enormous effort, both by established car manufacturers and by the tech sector. Timing and extent of deployment of fully autonomous vehicles remain unclear, as is the likely impact on the road network. At present evidence is limited to small scale trials and modelling simulations, for which the extensive range of possible performance parameters and policies means that any conclusions are at best quite tentative.

Looking back at the main transport innovations of the modern era, we see that they involved a step increase in speed of travel, which allowed individuals to gain access to a wider range of destinations, services, opportunities and choices: the railway in the nineteenth century; the car in the twentieth; the bicycle in its heyday before the car became generally affordable; and motorised two-wheelers today in many low income countries. Step increases in virtual access to people and services have been made possible by electronic and digital innovations: the telegraph, telephone, radio, television, internet, broadband, smartphones, social media. All these innovative technologies have led to huge investments, justified by the returns from access benefits to users.

In contrast, the new transport innovations seem unlikely to increase significantly the speed of travel. They will therefore not be transformative as regards our travel behaviour, although they will transform the manufacturing process and the nature of the auto industry. The car of the future will be electrically propelled, will have extensive digital functionality, and will have autonomous options, yet is unlikely to progress faster through traffic than the car of today.

The new transport technologies are improving the quality of the car journey incrementally, expediting routing, providing assurance about time of arrival, relieving the driver of some tasks, and lessening urban air pollution. Users will take up these technology options if they perceive them to offer value for money. The auto industry will need to bear down on costs to sell such innovations, as it has always done.

Beyond the personal car, digital platforms facilitate the availability of a wider range of shared use vehicles and individual conveyances. These may complement regular public transport services and may contribute to reduced individual car ownership in cities by offering convenient alternatives. Driverless taxis may allow travel at lower cost than conventional taxis, which would increase demand. However, autonomous vehicles in themselves cannot be expected to reduce urban traffic congestion.

Altogether, the new transport technologies seem likely to have less impact on travel behaviour than many suppose.

 

This blog appeared in the Transport Times issue of 11 September 2019.

 

 

 

 

 

 

 

A noteworthy report from bank BNP Paribas, summarised in the Financial Times, compares the energy return on a $100bn outlay on oil and renewables where the energy is being used specifically to power electric vehicles. The  analysis indicates that new wind and solar-energy projects in tandem with battery EVs will produce 6x-7x more useful energy at the wheels than will oil at $60/bbl for gasoline-powered cars and vans, and 3x-4x more than will oil at $60/bbl for those running on diesel. The conclusion is that oil cannot compete with renewables when viewed over the investment cycle unless oil prices are below $20/bbl, which would make oil investment unattractive. This is before taking credit for eliminating tailpipe emissions of carbon and noxious pollutants.

The report’s conclusion is striking – the death toll for petrol. With 36% of demand for crude oil today accounted for by cars/vans and other vehicle categories susceptible to electrification, the oil industry has never before in its history faced the kind of threat that renewable electricity in tandem with EVs poses to its business model: a competing energy source that (i) has a short-run marginal cost of zero, (ii) is much cleaner environmentally, (iii) is much easier to transport, and (iv) could readily replace up to 40% of global oil demand if it had the necessary scale. The conclusion is that the economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors.

In the short run, however, the huge existing investment in oil supply makes this source competitive with renewables/EVs that require substantial infrastructure investment to bring forward new supply.

London has had a road user charge since 2003 – a charge for entering a central zone during working hours, known as the ‘congestion charge’. This has proved workable, publicly acceptable and generates useful revenue, although the impact on congestion was fairly short term, as I explained previously. However, the fixed daily charge for entry means that the cost to drivers is unrelated to distance travelled or to traffic levels.The congestion charge is now supplemented by a charge on older polluting vehicles, which will be extended beyond the present central zone to cover much of London in 2021.

A study of more sophisticated alternatives has recently been published by the Centre for London. The proposal is to charge per mile in areas of high demand and poor air quality. Rates would vary by vehicle class and emissions, local levels of congestion and air pollution, and the availability of public transport. The charging system would be linked to individuals, not to the vehicle as at present, and would be based on a smartphone app that offered journey options alternative to the private car. An attractive feature is a refund if a trip takes significantly longer than estimated.

Modelling of the impact of the proposed charging scheme was undertaken although not published. There is some ambiguity in the reported findings (p61 of the published report). On the one hand it is stated that ‘for the average driver making a 10 km journey, we expect this [the charge] to amount to in the region of £1.50 – the cost of a cup of coffee or a bus ticket – although journeys in the most congested and central parts of the city, using the most polluting vehicles, would be charged much more.’ But is it also stated that ‘Charging drivers on the most congested roads the equivalent of a cup of coffee or a bus ticket could reduce emissions and air pollution by up the a fifth.’ So not clear whether the charge on the most congested roads is about £1.50 or much more.

The problem with road user charging in a city like London, with many relatively high income and business drivers, is that a charge of £1.50 for a 10 km trip is likely to be far too little to have a significant impact on congestion. Charges that would make a useful impact would be tricky politically. A proposal to introduce a whole new technology for charging would prompt anxieties about higher charges.

In my view, the best approach would be to increase the present charge of £11.50 per day to something like £15, and then to offer a discount to say £10 if paid via a smartphone app. Once such a new payment method is established, there would be scope for varying the charge to reflect congestion levels (which should be acceptable if the charge were always less that the standard daily charge). This approach would be similar to the introduction of Oyster and contactless card payments in London, with daily caps on charges.

 

Smart Motorways, a flagship programme of Highways England, aims to relieve congestion by converting the hard shoulder into a running lane and by varying the speed limit to smooth traffic flow. To assess performance in practice, Highways England has been monitoring closely the section of the M25 between Junctions 23 and 27 since the widened road opened in 2014. Three annual reports have been published, detailing traffic flows, journey times and safety, and comparing outcomes ‘before’ construction and ‘after’ scheme opening. Traffic growth of 16% was observed at Year 3 compared with before opening, far higher than regional motorway growth over the same period, with increases in weekend traffic of up to 23%.

Such traffic growth seems a noteworthy example of induced traffic, the traffic that arises as a result of increased capacity and which tends to restore congestion to what it had been previously. I therefore made a Freedom of Information request to see the traffic forecasts and economic appraisal that were the basis of the investment decision.

The traffic forecasting report was based on a variable-demand multi-modal model for the M25 area, employing the SATURN suite of programmes, updated to take account of the most recent national datasets for trip ends and similar. Traffic forecasts were made for the assumed 2015 scheme opening year, the 2030 design year and the 2040 horizon year, for the morning and evening peak flows and the interpeak period, comparing the ‘do-minimum’ case, without the investment, and the ‘do-something’ case with it.

The time slices used for the forecast and the outturn monitoring are regrettably different, which limits comparisons at particular times of day. Comparisons may, however, be made of average daily traffic flows (ADT). For the section J23-24 clockwise, for instance, the forecast ADT increase, comparing the scheme with do minimum, was 13% in 2015 and 16% in 2030. The outturn monitoring found an increase of 13% at Year 3 after opening compared with before, in good agreement with forecast.

The economic appraisal report employs the DfT’s TUBA software to derive estimates of monetarised travel time savings and vehicle operating costs (VOC) from the traffic forecasts, comparing do-something and do-minimum cases. The main economic benefit is travel time savings to business users, worth £475m, because the scheme was expected to allow travel at higher average speeds than the do-minimum case. Time savings to non-business travellers (commuters and others) were very largely offset by increased VOC, given the assumed diversion from local roads onto the motorway generating longer trips. As an example of the origin of the time savings, the speed on J23-24 clockwise for the AM peak in 2015 was forecast to be 86 km/hr with the scheme, versus 76 km/hr without. The overall benefit to cost ratio (BCR) was 2.3, later adjusted upwards to 2.9.

However, this forecast increase in speed failed to materialise. There has been effectively no change on average for all days and time slices between before opening and Year 3 for the clockwise travel. For anticlockwise, an average saving of 15 seconds (1.4 per cent) was found for a journey of 16.6 min before the improvement. Time savings of 6% and 9% respectively were seen at Year 1 after opening, but were lost by Year 2.

Generally, traffic flowed at the free flow rate except during the PM peak when it was slower. Surprisingly, the extra lane did not permit a faster flow at this PM peak, even though the increase in capacity of 33% was greater than the increase in traffic volume. Possibly the use of variable speed limits to smooth the flow was at the cost of journey time savings.

The stated conclusion of the Year 3 monitoring report is that ‘increases in capacity have been achieved, moving more goods, people and services, while maintaining journey time at pre-scheme levels and slightly improving reliability.’ Yet this conclusion undermines the economic case for the scheme, based on forecast time savings. This in turn raises questions about both the validity of the modelling and of the orthodox approach to appraisal.

We know from the National Travel Survey that average travel time has remained essentially unchanged for at least the past 45 years. This implies that any travel time savings must be short run. In the long run, people take advantage of transport investments that permit faster travel to gain access to more distant destinations, services, opportunities and choices, within the limited time they allow themselves for travel. This change in travel patterns would first be seen in optional trips, consistent with the big increase in weekend traffic in the M25 example, and subsequently over the years as people move home and change jobs. The consequential additional traffic – induced traffic – adds to congestion and negates the time savings that are conventionally supposed to be the main economic benefit.

If we are to make transport investments that are good value for money, we need to pay attention to the real-world consequences, and not be misled by the outputs of models that generate the notional time savings to which transport economists are so attached. We need to constrain models to hold average travel time constant in the long run, consistent with the findings of the National Travel Survey. To calibrate models, we need data on origins, destinations and purposes of trips, and how these change when a road is widened. And we need to work out how to value access benefits to users.

 

This blog is based on an article published in Local Transport Today 24 May 2019

 

 

 

 

I recently participated in a conference on the Future of the Car, organised by the Financial Times, which prompted the following thoughts.

The car industry is in a state of flux as it engages with four new transport technologies. Electric vehicles will eliminate both carbon and noxious tailpipe emissions, and go a long way to achieving sustainable surface transport. Autonomous vehicles are expected to work wonders, but timing and impact in big cities is quite unclear. Digital navigation, now in general use, can optimise routing through congested traffic and provide estimated journey times, so reducing the uncertainty that is the most bothering aspect of congestion. Digital platforms, exemplified by Uber, more efficiently match demand to supply, and also facilitate sharing of journeys.

Vehicle sharing is seen by many as the answer to road traffic congestion. Certainly, if the numbers of trips were fixed, increased vehicle occupancy would mean fewer vehicles and less traffic. But trip numbers are not fixed. Congestion arises in areas of high population density and high car ownership. The capacity of the road network is insufficient to accommodate all the car trips that might be made. Some are supressed by the prospect of unacceptable time delays as car owners made other choices – of mode or time of travel, of destination where there are options (as for shopping), or not to travel at all (ordering goods online, for instance, or working at home). Interventions intended to reduce congestion, such as vehicle sharing, initially free up road space and reduce delays, but this attracts previously suppressed trips, restoring congestion to what it had been. This is also the basis for the maxim that you can’t build your way out of congestion, which we know from experience to be generally true.

The most important transport innovations of the past had a crucial characteristic. They achieved a step-change in the speed of travel, allowing us increased access to desired destinations, opportunities and choices, as we saw with the railways, the car, commercial aircraft, the bicycle in its heyday, and motorised two-wheelers today in low income countries. Step-changes in virtual access to services and people have been achieved by a succession of electronic innovations – the telegraph, telephone, radio, television, internet, broadband, mobile phone, social media. All these innovations have been transformative and have rewarded the huge investments that made them possible.

In contrast, the new transport innovations do not permit a step-change in the speed of travel. They will not increase our access and will not be transformative. The car of the future will be electrically propelled, will have extensive digital functionality as well as self-driving options. But the car of the future will not progress faster through urban traffic than the car of today.

What the new technologies offer are incremental improvements to the quality of the journey. Users will take up such options if they are perceived to offer value for money. The auto industry will need to drive down the costs of the innovative features, which of course is what the industry has always strived to do. The future of the car, and of the industry, will be more like the past than many seem to suppose.

A version of this blog appeared in the FT’s Alphaville blog.

 

 

I blogged recently about the review of the law governing autonomous vehicles (AVs) that is being carried out by the British Law Commission. One aspect not considered in the consultation document is the implications for vehicle connectivity. I have submitted a response to the consultation to make the following points.

Adaptive Cruise Control, available in some current production vehicles, adjusts the gap to the vehicle in front using sensor data to vary speed. Connected (or Cooperative) Adaptive Cruise Control (CACC), an emerging technology, takes data from vehicles further ahead using vehicle-to-vehicle (V2V) communications, which allows shorter headways and attenuates traffic disturbance to achieve smoother flow. The shorter the headway, the less scope for driver control. In the limit, CACC allows platooning of vehicles on inter-urban roads – ‘road trains’ involving vehicles in close proximity with a lead driver in control. The postulated benefits of platooning include better fuel economy and decreased emissions resulting from lower aerodynamic drag, improved traffic flow and capacity, and lower labour costs. A number of truck manufacturers have initiated trials and more are planned. The 2016 European Truck Platooning Challenge involved six manufacturers sending platoons from starting points in five different countries to end at Rotterdam, gaining valuable practical experience.

Much of the past impetus for the development of connected vehicles came from research funding provided by the US Department of Transportation. The main motive was to improve safety through vehicles exchanging data about speed and location, and vehicles acquiring data from roadside infrastructure about road conditions. There are two competing telecoms technologies under consideration: short-range WiFi for V2V being developed by the car manufacturers for platooning; and a system based on the next generation 5G mobile phone technology, to be installed in both vehicles and infrastructure, and able to signal at longer range.

Unlike truck drivers, the generality of drivers of AVs would be able to choose the gap to the vehicle in front. It is not clear why, without an incentive, they would choose a gap smaller than that with which they are comfortable, which may not be very different from current headways. Accordingly, to increase road capacity by reducing headway there would need to be some incentive that would impact on individual drivers. This might be a road user charging regime that charged on the basis of the length of carriageway effectively occupied.  Another kind of incentive to reduce headway would be dedicated lanes that are less congested and faster flowing than other lanes, analogous to High Occupancy Vehicle lanes on US highways. Acceptable incentives would be needed if manufacturers were to go beyond equipping vehicles with the existing Adaptive Cruise Control. If manufacturers are to be held be responsible for the safe functioning of AVs, adding V2V or vehicle-to-infrastructure connectivity (V2I) to reduce headway would exacerbate this responsibility by introducing functionality that depends on that of other manufacturers and suppliers, and that increases the risk of security breaches.

More generally, connected vehicles operating at short headways would require reconsideration of the safety regime concerned with the crashworthiness of individual vehicles. A system of connected vehicles would require consideration of fault modes at system level, for instance the consequences of faults in individual vehicles in a platoon or faults in connectivity, including faults from hostile interventions. It would not be surprising if there were trade-offs between headway and safety that limited possible increases in effective road capacity.

The current industry-wide technological thrust is directed towards vehicle autonomy, not connectedness. The logic is that the general application of V2V connectivity would need to follow on from the successful adoption of vehicle autonomy – because the benefits of such connectivity largely depend on response times of connected vehicles that are faster than achievable by human drivers. There would then be a question of whether access to certain classes of roads should be limited to vehicles equipped with V2V technology. However, the efficiency gains from such dedicated infrastructure use would depend on widespread adoption of V2V communications, for which, as noted, there may be a lack of incentive for vehicle manufacturers to develop.

Although the potential of connectedness is unclear at present, it would be sensible for a new legal regime to allow for this possibility. On the railway, statutory regulations place a duty on infrastructure managers and operators to develop safety management systems, as well as a duty on operators to work together to ensure safety. However, the railway is a closed system that can be used only by authorised operators, whereas roads are generally open to all qualified users.

One approach would be to regard V2V and V2I connectivity as simply extensions of visual detection of other vehicles and roadside signs and signals. From this perspective, the legal framework for AVs may not need to be modified to deal with connected vehicles. On the other hand, it is arguable that the absence of some kind of system-level safety requirement would be incompatible with public expectations in the event of a crash involving numbers of connected AVs.

The advent of autonomous vehicles (AVs) will require reform of the road traffic legislation and the law dealing with the safety of road vehicles. The Law Commission, the body responsible for reviewing law in Britain, was asked by the government to review the legal framework for AVs. It has published a 230-page consultation, a very impressive analysis of the technological possibilities and their implications – a good example of what you can get when industrious lawyers get to work on a meaty topic. The summary is a handy introduction to the issues.

One innovative concept tentatively suggested is that of the ‘user-in-charge’, to cover situations where a human may be called on to take charge of an AV in certain circumstances. The user-in-charge would be a person who is qualified and fit to drive, unless the vehicle is specifically authorised as able to operate without one. So any vehicle at Level 4 and below would need such a person to be available, who would not be the driver when the automated system is functioning. For example, a driver might take the car to the motorway, and then engage automated mode, during which time they could undertake some other activity. They would need to be available, as user-in-charge, to take over if automation were to be no longer possible in the event of some malfunction, as well as to drive off the motorway.