Welcome to the final Financial Fridays session of the year! Throughout 2021, this series explored certain key financial aspects of the diverse business models in the shared mobility space; from sharing to subscription to integrated MaaS. Discussions centred around operations management, utilization, EVs, customer loyalty and retention, factoring tech costs and insurance related pointers (to name a few) while learning innovative best practices from across sectors.
In this session the panel discuss how on-demand transit/shuttles help make equitable mobility feasible.
Demand responsive transit (DRT) or microtransit or on-demand shuttles have been quite the ‘go-to’ by transportation authorities and cities especially to quickly extend transit service reach. One of the main factors for this is the business model feasibility for this mode compared to the huge investment required to extend trains and regular bus services. Moreover as the name suggests, these modes are flexible to changing demand. A win-win-win for cities-transit authorities-and most of all users? Certainly it is.
In this episode our panel of mobility experts, Carol Schweiger of Schweiger Consulting, Kristoffer Vik Hansen from Spare and Jefferson Arrivabene from Optai Mobility in Brazil ‘nerd out’ on-demand responsive transit.
Watch the micro-webinar below! Keep reading to learn more about each guest panelist and for a brief summary of our fifth #FinancialFridays discussion!
Financial Fridays: How on-demand transit help make equitable mobility feasible
Financial Fridays Session Six: The Panel
President at Schweiger Consulting LLC
Over 40 years of experience in transportation consulting, nationally and internationally recognized in the area of Intelligent Transportation Systems (ITS) and Advanced Public Transportation Systems (APTS). Carol provides detailed technical assistance, including systems engineering, to transportation agencies that are deploying ITS technologies. Has provided over 60 agencies with ITS technical assistance.
Carol’s specialties include; Technical Assistance and Training, including strategic planning for transit ITS, and development and delivery of transit ITS training; Design, development, procurement and deployment assistance of transit ITS; and Research and evaluation of transit ITS. Particular specialties in real-time transit information and systems engineering as applied to transit ITS projects.
Kristoffer Vik Hansen
Co-Founder and CEO of Spare
Spare are accelerating the shift towards efficient and autonomous mobility by enabling anyone to plan, launch, and analyze a smart transportation service in one click. Kristoffer’s expertise is in running technology-driven teams and dreaming big! His current passions include the future of mobility, automation, space tech, energy, marine tech, and blockchain tech. He is also an active investor in the cryptocurrency space.
Co-Founder of Optai
Jefferson is the Co-Founder of Optai and works as an agent for Giro. His expertise lies in commercial consulting, foreign trade, transport and logistics. His specialties include business management, customer relations, trade finance, management, market planning, marketing and sales.
Financial Fridays Session Six: How on-demand transit helps make equitable mobility feasible
What’s your favorite thing about DRTs or microtransit? Why?
The flexibility of on-demand micro transit means that people can be creative when it comes to service delivery. There’s also so much that we don’t know as it’s a such new concept, which is great, because we will likely see much more innovation in the space over the next few years.
The true demand response nature of this kind of service. In the past we have always called it ‘demand response’ transit but it has never really been demand response until now, because of the new tools that we now have at our disposal. Before, users had to book or make a reservation at least a day in advance but now we are really using the term ‘demand response’ transit correctly. Technology now also allows people to travel in a much more personalized and flexible way.
Passenger expectation changed after ride hailing arrival, demanding transit agencies and operators to adapt to the new reality where clients demand a better UI and UX on services provided. This fact alongside with the development of the technology brought new possibilities to the public transport by the introduction of new modes of transport to deal with passengers that were left aside of the traditional transport networks with buses and rail.
My favorite thing about DRT’s and microtransit is that transit agencies can now service those who were left behind in previous network planning, allowing more people to join public transport on a more customize manner to its needs.
Why should transit consider on-demand services? What’s the business case?
Brazil was always funded by ticket sales, so having subsidies was not practiced. This is now being reevaluated now. DRT’s are now the one solution but it could be a complimentary service that could help reduce operational costs. It gives the user the power to plan their journey and not to rely on a public transit network that isn’t fully inclusive, for example people with disabilities who don’t have the capacity to walk to their nearest bus stop – DRT’s reduce this walking distance. They have also have the ability to reduce waiting times in low frequency public transit areas. It also provides a better means to understand users needs concerning commuting both pendular and eventual.
There are a large range of businesses cases for DRT’s and they are very geographically focused. Anything from being an introductory transit option for smaller cities. It can be a large investment to move all the way to fixed route, so it’s a greater starting point for many cities. Another use case is ‘first and last’ mile – taking people to and from train stations for examples. There is a major use case for para-transit, especially in the US and Canada. Then there are specialized options like specialized scooter transportation, employee transportation and university transportation. One emerging business case is a premium transit service. As the world moves towards reducing private car ownership, many companies are now including high-end vehicles within their fleets – similar to how an airline has economy and business class for example.
What are some of the operational challenges for on-demand services?
In traditional para-transit services, one of the biggest challenges has always been the cost. For many years we have always talked about the productivity, how many people per hour are you carrying? And if it’s low then then it’s not a profiable operation. But now we have the opportunity to do things much more efficiently and some of the new business use cases are doing this, such as employee on-demand services. Instead of offering their employees a company car, by offering on-demand services to their employees, not only do companies reduce their costs but they are also reducing the number of privately owned vehicles.
On-demand transit also enables us to serve people in rural areas, that, for example, operator on off-peak hours for shift work. However, there is a question of the sustainability of these services, especially if they are not carrying as many people as we would like on a trip – how do we address this?
Some other on-demand operationals challenges are:
- Market education for both transit agencies and operators
- The cost of the technology, especially in small cities or rural areas where, arguably, the need is greatest.
- Subsidy calculation in Brazil. The Transit business model has been dependent on tariff (fares) and needs to figure out how DRT will be outsourced & subsidized without the traditional fixed tariffs projections.
- Planning and service level fine tuning. Implementing a service but also evaluating its progress using data and customer outreach.
- Tariff integration across the modes of transport. Since DRT forms part of transit, can fares be considered across public transit and 3rd party DRT contract services?
- Overcome long term contract limitations and include current operators. DRT services aren’t equipped to commit to the typical long term contracts that transit services operate with. There are DRT operators in some Brazilian cities but integrating them with existing services becomes a bigger challenge than starting a new service – which is less efficient for the system as a whole.
What’s the potential for growth? And what’s next for this shared mobility mode?
In the past transit agencies have been always been considered as an ‘extra’ service when it came to transportation but we are now seeing an aggressive transition where they are calling themselves ‘mobility providers.’ In the Nordics some of the transit agencies are running their own car and bike share services as well. I feel that we are going to see a continuation of that around the world and that transit agencies are going to continue to explore new ways of including more people in their services. One example of this, is the transit agency in Oslo, who have been great a getting people to not use their own vehicle anymore. They have an excellent fixed route service where people can catch a bus anywhere within 3-5 minutes which has been great for onboarding new customers. One thing they struggled with was when people start to have families and the private car returns once more. So they have been creating school bus services and services that can even take kids to soccer practice and things like that.
Corporate shuttles and DRTs in small cities are two areas that have big potential in Latam. We will start to see low demand and low density areas replacing their fixed route services with more on-demand services. The Latam market represents a huge potential for DRT’s and microtransit across the board but it still needs to address issues related to operation and technology cost subsidy. Another opportunity arising for DRTs and microtransit is the fact that ride hailing started to face questions regarding labor law and liabilities and driver’s operating costs are forcing much of its work force out of the network.
Better integrating all the services that an agency provides. As providers and operators we are used to addressing each services individually, but I think we need to get to the point where it doesn’t matter to the public what you call it. That they can avail themselves of whatever services works best for them. I think Mobility-on-demand has a significant role to play in this and public transit services see themselves as the primary providers of mobility but if people don’t have the services they need, this won’t be true.
We also need to make sure that with new technology innovation, that we aren’t leaving anyone behind, for example people who don’t have access to the technology or people who don’t feel comfortable with it. We have to make sure that we can still provide mobility-on-demand services, but equally to everyone with or without access to technology.
Carol: This kind of service provides the opportunity for public transit to be much more flexible and be able to meet the needs of more people rather than less people.
Kristoffer: If we want to be serious about moving from personally owned vehicles, we have to remember that it’s not everywhere that fixed route is going to work. On-demand services allows transit agencies across the world to be creative and data-driven when delivering equitable and inclusive services.
Jefferson: In Brazil, on-demand can bring more opportunities to the transit systems to think about the quality of the services that they are providing and evaluating what is best for the passenger. The passenger is then brought to the core of the discussion and on-demand will help do this.