My new book published on 1 September is one in a series of short books on policy and economics topics described as ‘essays on big ideas by leading writers’. My contribution is a critique of the inconsistencies of transport policy in recent decades, which I attribute to the shortcomings of conventional transport economic appraisal in identifying the benefits that arise from investment. A column in The Spectator magazine of 26 September described my book as ‘excellent throughout’. My book, Travel Fast or Smart?, is available both in print and as an ebook from Amazon Books.
I attended a meeting about Urban Mobility last week, hosted by Uber at its Amsterdam office. Uber wishes to be seen not just as a buccaneering start-up, disrupting taxi businesses around the world, but as having a significant role to play in the urban travel ecosystem.
Uber has developed an advanced model of Demand Responsive Transport, historically seen mainly as a means to meet the mobility needs of people with disabilities who are not able to drive or use public transport, often known as Dial-a-Ride. Uber is exceptionally dynamic, matching supply and demand by means of ‘surge pricing’ whereby prices rise at times of high demand (expressed as a multiplier of the basic price, eg 1.5 times). This serves both to deter demand and attract more drivers to the area.
The Uber smartphone app functions in many major cities and beyond, which makes it well suited for travellers. The app incorporates feedback from both users and drivers, which helps to improve behaviour and performance. Drivers are monitored and receive feedback on their performance.
Uber collects data on every trip. This allowed the impact of the opening of the London Night Tube to be seen: fewer trips in the early hours from Central London to the suburbs, more trips from suburban stations for the last mile or two to home. Here Uber meets a need not met by black cabs, more conveniently than local minicab firms. More generally, Uber is seeking opportunities to supply mobility to those without a car in circumstances where public transport provides limited or no service.
A significant development is UberPOOL, which allows users to opt for sharing the journey with others going in the same direction, for a lower fare. This has been well accepted in San Francisco, where 40% of trips are in this mode. Sharing increases vehicle occupancy and hence improves the efficiency of the road system, but will work only where a high level of Uber use allows matches to be made.
As regards its business model, Uber sees itself as an intermediary linking customers to taxi drivers, earning a fee for this service, but not itself providing transport services. The drivers are therefore not seen as employees or workers, subject to constraints on working hours or minimum pay. However, the status of Uber drivers in London has been the subject of a recent Employment Tribunal judgement (a useful source of information; a short summary is available). The Tribunal judged that Uber runs a transportation business for which the drivers provide skilled labour. The drivers are not employees but are ‘workers’ with a variety of legal rights, including to receive the minimum wage and holiday pay. Uber plans to appeal.
Assessment
Uber is making a significant contribution to meeting needs for urban mobility, in part by competing in the taxi market with a superior service, and in part by meeting demand not served by other transport modes. UberPOOL has potential to improve road system efficiency.
The transport sector has traditionally been a source of relatively stable and fairly remunerated employment, mainly for men who could be the main provider for families. Contributory factors include the strength of trade unions, the vulnerability of services to interruption in the event of labour disputes, and the inability to outsource to overseas labour. However, this is changing, as exemplified by Uber, in parallel with wider developments in the economy that are resulting in the growth of self-employment, temporary employment and zero hours contracts, which tend to reduce both earnings and job security and contribute to growing inequalities in society. We are beginning to see political recognition of these developments.
The question is whether the Uber business model can remain competitive if it has to pay its drivers more. It is interesting that the business model of a competitor start-up in New York City is based on doing just that.