The sharing economy, the access economy, the on-demand economy – terms used interchangeably, though not always fully understood. They are used to define the recent socio-economic shift that reinvented how and what we consume. Although each of the terms is nuanced in its precise meaning, they all describe a world in which consumer demand, rather than any other driver, determines the delivery of services. In this same world usage trumps possession and access rather than ownership and consumers’ immediate needs can be satisfied with the tap of an app, encapsulating the very change in human nature – from the culture of ‘me’ to the culture of ‘we.’
The numbers speak for themselves. The on-demand economy currently attracts more than 22.4 million consumers annually and transportation is its second biggest category. Thanks to start-ups like Lyft and Uber, it claims more than 7.3 million monthly consumers and $5.6 billion in annual spending. This is for good reasons. Nowhere is the idea of collaborative consumption as transformative as it is in the transportation industry, where the on-demand model can be best illustrated by the emerging concept of ‘Mobility as a Service’ (MaaS). MaaS can be summarized as a move away from a world dominated by a need to own a primary mode of transport (such as a car) towards a model where travelling happens through a combination of public/private and shared transportation modes. While the on-demand economy and collaborative consumption facilitated the origin of MaaS, the concept itself came about from a very real need for more intelligent transportation solutions.
Against the backdrop of the on-demand economy, three powerful trends are changing the face of transportation forever: new attitudes towards car ownership, the growth of alternative transportation services and an explosion of big data and real-time technologies.
The issue of ownership
Up until recently, the only viable alternative to public transport was to invest in one’s own primary transport mode – i.e. buy a car. For many, a symbol of status, car ownership was a trend that took off worldwide from 1960s onwards. Currently, the United States has the largest fleet of vehicles in the world – in 2010 it stood at 239.8 million. In 2011, China alone manufactured over 18 million cars. In San Marino, Italy, there are now more cars than there are people. The average car maintenance cost, including repair, insurance, fuel and taxes will continue to rise about 2% every year. Yet, statistics show an average utilisation of cars in certain countries is only 5%, despite the fact that they cost an average household 17% of their income, calling into question the economic benefit of owning a vehicle, at least in large cities.
From a city’s transportation services perspective, urban driving is socially exclusionary and undesirable – leading to congestion, pollution and road accidents. Car-free zones, pedestrianised streets and no parking spaces near new developments in congested areas are just a few examples of initiatives aimed at reducing the number of cars on the streets. Other measures include congestion charges, which are common in most European capitals, and infrastructure initiatives that support public commuting, such as park and ride. Those efforts are starting to pay off – in London, they have led to a 30% reduction in motor traffic over the past decade, bringing it down to a mere 15% of all city traffic. Furthermore, the impending arrival of automation and the rise of autonomous vehicles will further question the need for private car ownership in the future. There is already compelling evidence, which suggests that Millennials and Generation Z are shunning car ownership – at least in its traditional sense. In the last ten years, the number of people under 35 with a driver’s license has decreased by 6%. Whether that is down to purely practical reasons, such as cost, or a change in mindset driven by the on-demand economy, those generations are more likely to travel by other means of transportation instead. We are firmly moving towards a future where commuters would no longer have to rely on their own means of transportation for effective and efficient mobility.
Instead of tying up large amounts of money in a car that sits idle for 23 hours a day, commuters would have the option to subscribe to a service that gives them far greater levels of flexibility. According to The Economist, car sharing will reduce car ownership at an estimated rate of one shared vehicle replacing 15 owned vehicles. But rather than eliminating car ownership altogether, MaaS would offer those users who prefer not to own a car an option to increase their mobility through better access to other transit means.
The issue of integration
Currently, where multimodal transportation does exist, it often requires riders to book and pay separately for each leg of the journey, making the systems troublesome and frustrating to use. In many urban areas, alternative travel options, such as those offered by car renting companies like ZipCar, or ride sharing services like Uber, Lyft or Carma Carpool, exist almost entirely independently of more ‘conventional’, city-run transport services. In some places, rather than being seen as alternative or complementary transportation options, those on-demand transport solutions are seen as direct and often unwelcome competition by transit agencies. The arrival of Uber serves as the best example, even though it is still involved in over 173 lawsuits. One of the reasons why Uber caused such a strong reaction from the transport industry is the fact that it fully embodies the on-demand economy. Human beings are increasingly naturally ‘wired’ to share – be it through using a social lending platform, posting photos to Facebook and Instagram, or, in fact, sharing a ride through Uber Pool. On top of that, most ride-sharing apps offer intuitive, immediate and technologically advanced service, something that many traditional transport agencies are slow to embrace. Recently, both UberX and Lyft have been integrated as an option in trip planning results on Google Maps, further indicating that the artificial wall between traditional and alternative transportation services is finally starting to come down.
The MaaS model puts integration at the heart of transportation. The needs of the individual are at the core of the solution, which means that rather than paying a number of separate providers, users could purchase mobility services from a single source, regardless of the chosen means of travel. For commuters it would mean the ability to easily compare and contrast the information and fare rates from public transport services with those offered by alternative ride-sharing options. It would mean the ability to plan a multimodal journey, without having to book and pay for each leg of the trip separately. It would mean increased flexibility and improved travel experience. For the transport service providers, integrating all transport services into a single platform would help address the issues of overcrowding and congestion, optimise capacity for all transport modes, help solve the first/last mile problem and provide the level of service expected from increasingly tech-savvy consumers. So rather than competing, we need to increasingly look into ways of integrating all possible transportation modes, be it public, private or shared into one single account, finally giving commuters the freedom to travel the way they desire.
The issue of insight
Integrating different transportation modes brings with it one more important benefit. Because many current options are so siloed, cities see commuters’ daily movement as a series of separate trips, rather than a complete journey. This means they cannot benefit from the enormous amounts of travel data that is being generated on a daily basis. With MaaS in place, where commuters would use a single account for all travel transactions and information – be it public transport, cycling or Uber, cities would gain unprecedented insight into how people commute and what can be done to improve their experience.
Such a holistic view of our movements would bring multiple benefits to commuters and transportation providers alike. For the former, it would enable dynamic pricing – since the system would have access to all modes of transportation and not just public transport, pricing could be, at varying degrees, influenced on the basis of supply and demand. For the latter, a full insight into our travel data would help reroute demand to assist those portions of the transportation network, which are struggling the most. Another benefit would come from personalised travel information and recommendations. Having insight into our daily commutes and analysing each traveller’s unique set of decision factors when considering a trip, cities would have the ability to advise when a preferred route is unavailable and offer informed alternatives. It is often the case that efficient non-obvious routes and mode combinations are intuitively known and regularly used by commuters but are not identified by existing mobility planning services, who instead provide suboptimal mobility guidance. Since the very nature of MaaS means that these options would be identified due to better service integration, the quality of route-finding services would greatly improve.
Finally, cities would be able to encourage greater social responsibility, extending the benefits from the individual to the community as a whole. In a scenario where the commuter willingly gives up some information, the city or the responsible body would be able to, for example, get in touch with habitual urban drivers and encourage them to take on a more socially responsible travel behaviour – by pooling with other commuters travelling in the same direction or swapping the car for a train once a week, and offer a reward in return. For the city it would mean multiple benefits: decreased pollution, less congestion, reduced economic loss as people get to work on time and even more consumer trust. For consumers the benefits would be equally significant. It would give them satisfaction in the form of social good, it would get them to their destination in their preferred way and it would reward them for the most socially responsible choices, all while ensuring sustainability and a high standard of living.
Collaboration is key
It is clear cities today are in desperate need of better and more intelligent transport solutions. Pressures on public transportation infrastructures and rising consumer expectations, together with changing models of car ownership, the explosion of alternative transportation services and a rise of big data, all underline the growing travel conundrum, to which MaaS is the most logical and cost-effective answer. MaaS taps perfectly into the on-demand economy and enables collaborative consumption by allowing commuters to pay for all the benefits of a product, without actually having to own it. In the near future, MaaS will completely redefine consumer ideas about what constitutes an efficient and satisfying demand-based public transportation system.
However, it is also a system whose benefits are not yet fully understood and which may be difficult to implement in cities where multiple modes of travel already co-exist and compete for commuters’ attention. As such, in order for MaaS to change the way transportation is managed in urban environment, operators, city planners, local authorities and technology companies must collaborate effectively. Only through smart partnerships can MaaS become reality and provide a travel experience that will not only meet the current needs of commuters, but also the future needs of our cities.