Ubernomics: How ridesharing can impact the German economy (part I)
It hasn’t always been a smooth ride for ridesharing platforms in Germany.
Current transportation regulations, which were conceived before today’s technology, make it difficult for ridesharing platforms like uberPOP to offer safe, affordable transportation options for consumers in cities like Berlin, Hamburg, or Düsseldorf. We took the initiative to dig a little deeper into the issues at hand. After all, there are important matters at stake: these restrictions affect opportunities for entrepreneurs looking to enter the personal transportation sector; for consumers seeking affordable, convenient ways to move around town; and ultimately, for the German economy as a whole.
We teamed up with some of Germany’s most prolific economic minds to investigate exactly what impact ridesharing platforms can have on the German economy. To work with us on this study, we partnered with the respected economist Prof Dr Justus Haucap, Director of the Düsseldorfer Institut für Wettbewerbsökonomie (DICE) and former Chairman of the German Monopolies Commission, and DIW Econ, the consulting arm of the German Institute of Economic Research (DIW).
Together, we analysed ridesharing using our more advanced markets like Chicago, Paris, Amsterdam and Stockholm as a proxy. We were able to draw some parallels with the German market and make informed projections of how increased transport efficiency can impact Germany’s future in similar ways to those other markets.
The study yielded so many interesting findings, they couldn’t fit in one blog post. We’ll cover the study in two parts; today’s post will discuss how consumer trends and improved utilisation develop in advanced markets where platforms like uberPOP are able to operate normally.
Lesson #1: People want affordable, efficient, safe rides around town
No matter the city, the demand for low-cost, efficient, safe rides is high and continuously increasing. This chart shows the growth of ridesharing trips in Chicago, Paris, Stockholm and Amsterdam from the date of each city’s ridesharing launch. As you can see, the number of trips is increasing steadily in all cities.
Lesson #2: More trips mean shorter waiting times
Digging further, we also saw that as people take more trips, the estimated time of arrival (ETA) becomes shorter.
This has benefits for both riders and drivers. It means that riders can expect to be picked up even faster after requesting their ride. The average ETA for uberPOP in Paris, for example, is less than five minutes.
Lower ETAs are also a strong indicator that drivers are traveling ever-shorter distances to pick up their customers, which means decreased use of gas, fewer unnecessary emissions, and more time for drivers spent earning money on active trips with clients.
Here’s a chart showing the decrease of ETAs in each of the four cities for the weeks immediately following their launches.
Lesson #3: uberPOP has higher utilisation rates than traditional industries
What do a higher frequency of trips and shorter ETAs indicate? We see this as proof of improved utilisation, which means that drivers on the Uber platform are spending a larger proportion of their time actively transporting customers as opposed to sitting around idle or unoccupied while en route to pick up a passenger.
The chart below shows utilisation gains for Uber’s ridesharing platform in the four advanced markets. The more advanced in the group, Chicago and Paris, have utilisation by time exceeding 55% and steadily continuing to increase. Newer markets are also on-pace to achieve similar results.
With over half of uberPOP’s driver-partners’ time being spent transporting customers to their destination, as opposed to driving en-route to pick someone or waiting empty for a request, significant efficiency is being gained when compared to the current transportation sector in Germany. For example, the 2013 Hamburger Taxipanel listed the average taxi utilisation by time in Hamburg at less than 30%.
“Additional competition through a liberalisation of the taxi market would offer consumers with more choice, higher quality, and more innovation – all for a lower price.” – Dr Ferdinand Pavel, Manager of DIW Econ.
Stay tuned for Part II tomorrow! Here’s a teaser: Germans would have enough savings to buy a whole lot more or ditch their cars.
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