Shared Mobility

Is Uber Pro-Emerging Markets?

Just because something’s popular doesn’t mean its benefits are equally distributed across the world

Shared transport is not a new phenomenon. It’s the reason we have buses, trams, and trains. However, private-shared-transport has emerged in the last few years, with digital matching firms like Uber, Lyft, Zipcar, and GrabCar encouraging people to share their private cars for public transportation. The emergence of private shared transport has the desirable effect of distributing the associated costs of transportation (think fuel, time, traffic congestion, and environmental effects). And, as it turns out, people like sharing. To date, Uber has eight million users, and is available in 60 countries and 300 cities worldwide. The latest round of funding has valued the company at a staggering $23.4 billion. These statistics reflect the growing trend of shared transport that is evident not only in developed countries like the US, but also in emerging economies where the GDP per capita is below $12,000 (for context, the GDP per capita in the States is currently over $100,000, according to the World Bank).

However, just because a service is popular doesn’t mean its benefits are equally distributed across all sections of society, or indeed, across the world. Cities in China, India, Chile, and South Africa still rely on two- and three-wheelers, including bicycles, scooters, mopeds, motorcycles, jitneys, and rickshaws, all of which are not included in the transport-sharing world afforded by digital technology. Uber, Lyft, and Zipcar match clients to car owners, but car ownership is only prevalent to middle-income populations with an average annual income of $5,000 – $15,000. By extension, then, those able to access the services offered by Uber – clients and drivers alike – are those who already possess the financial capacity for it. The losers in this game are the two- and three-wheeled owners, the pullers of rickshaws and factory-workers who get around on bicycles.
 
rickshaw
 
The costs are not just economic. When middle-income client meets a middle-income driver, they exchange smiles and “hellos,” chat about the weather, the road, the politics. Maybe they get on, maybe they don’t – it doesn’t matter. What matters is that in the time that it takes to get from one place to another, an interaction has taken place. It is a social exchange that, by default, excludes those who can afford neither a car nor an Uber ride. The lower-income population will ride their bicycles, inhale the exhaust from Uber-matched cars, and arrive at their destination no richer in social connection than when they first departed. It’s the way the world has always worked; it’s the way Uber and other vehicle-sharing platforms operate, too.

It’s not my intention to discount the benefits of such digital matching companies (my friends have nothing but good things to say about Uber). But it’s worth examining the less conspicuous effects of such innovations, particularly as companies like Uber gain sufficient popularity to command a global monopoly of the shared transport market. India’s Uber, for instance, has expanded to cover the transportation needs of 27 cities, and China’s Uber market share has exceeded that of the US since 2015. If these regions continue growing at such an exponential rate, what will happen to the sections of society who don’t – or cannot – participate?

That’s not to say, of course, that shared transport companies haven’t attempted to tap into the two- and three-wheeling markets. Grab, the ride-hailing platform most popular in Southeast Asia introduced GrabBike in 2015, and early last year Uber chose to execute its pilot motorcycle-sharing program in Bangkok. But both of these initiatives, which could’ve heralded a progressive narrative for two- and three-wheelers all over the world, were cut short by Thailand’s Land Transportation Franchising and Regulatory Board in 2016. It remains to be seen whether two-wheelers will make a comeback, but until then, we’ll have to deal with the ever-widening gap between the middle-class and the working poor, the car owners and the bike-riders, in emerging market economies.

At the end of the day, it’s worth asking how this technology could be used to include poorer populations and cities – if only so that someday when we learn how to make flying cars, there aren’t still people pulling rickshaws for a living.
 

by Michelle Leong
 


Please note that this article expresses the opinions of the author and does not reflect the views of Move Forward

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1 Comment

  • Rustam Aliyev
    19. February 2017 at 18:42

    Very nice article! I definitely agree that most of Uber drivers already own cars and thus are within a certain income range. However, I have seen several additional cases:
    1. Car can be inherited from a family member, and if the person that inherited after that has an opportunity to find another source of income like Uber, I think it can be a positive outcome.
    2. I have travelled to some European countries and found the following: a private investor buys bunch of cars, e.g. 20 Toyota Prius cars. Then he hires 20 drivers, pays him fixed salary no maater what distance the driver is going for. So there are extra 20 jobs, maybe in expense of other jobs that belong to Taxi drivers, but still.
    3. There another option which is used by Taxi drivers: you rent a car on daily basis, you have a target for the day which after deducting the rental fee will be your income. In case of Uber this model will bring lower margins, but once collect good rating, you might be popular enough to meet your income goal.
    All these points are in favor of Uber which also has some evil features like stealing revenue and jobs from Taxi companies, public transport, etc. However, what Uber also introduces is additional service “points”, as each driver is now motivated not by just money but also the rating user will give him. Sometime I like people trying to talk to me, asking how was my day. Traditional taxi drivers do that very rarely these days, so probably after Uber they will become more professional and service oriented that before.

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