financial fridays – session one: Supply and demand in Shared Mobility Operations

What factors matter the most in operations? Is there a most difficult one to tackle?

“In the world of bike share the three most important factors are asset maintenance and repair, bicycle rebalancing and customer service. The most important is asset maintenance and repair of both bikes and stations, safety checks and cleaning the assets. It directly correlates with ridership gains and also accounts for at least 25% of total operating costs. The key to doing it well is having good data that allows you to predict patterns for damages.” – Andrew Rosskamm

ELECTRICFEEL

“Data is key. When having conversations with operators you find it can be different from city to city and depends on the stage of each project. When you launch in a competitive market, you will prioritize availability. This can come at a high cost. You need to take into account whether you want to be lean or aggressive. Battery swapping is also a massive factor to consider. ElectricFeel have a lot of clients that don’t have charging stations so instead they have teams riding around and swapping out batteries. This is great if launching in a city that does not have the infrastructure, but it also means an additional labour cost.” – Moritz Meenen

In shared mobility, operations not only affect every critical piece in the financial model but also are the first to get impacted by financial decisions. Take rebalancing for instance. Not every operator, but most of them face issues with rebalancing. The time of year(or day of the week and/or time) dictates the need to track, manage and analyze data. For example with the Toronto bikeshare program (pre-Covid) they found rebalancing overnight was the only productive way to do it as rush-hour-commuter traffic slowed things down during the day. This has flipped since the lockdown but made sense to take decisions based on data therefore, invest in it. 

Operations also get impacted by city regulations. Cities have different approaches to EV charging infrastructure availability and deployment strategies. Understand their needs and targets especially when they are unsure of who should invest. This poses a question of how partnership costs (public or private charging) would look like and if a large EV car sharing fleet can be supported well considering their  timely charging needs. In the broader view, cities are aggressively shutting (or have planned to shut) out gasoline vehicles. For micromobility (scooters and mopeds), this is already a norm today. City regulations also are driven by space (land-use). In Europe, local municipalities have stricter terms for parking, choice of fuel for vehicles permitted in city-centers. In the US, competition weighs heavier than local regulations in many cases and data sharing is a ‘fee’ that needs to be looked at too. 

Most of all, utilization is the key for a successful business model. That way the focus is on that balance between supply and demand. Private companies (operators) are mainly driven by targeting maximum profitability while public shared mobility (e.g. community bikeshare, coop carshare) players think more in terms of financial stability alongside reliability, equity and supporting public transit. Utilization cannot be dealt at from a straight-line approach. Depending on the business model, mode choice and target user/city it does have a favorable range within which it balances between making enough vehicles available for users while having a healthy, consistent turnaround.

SHIFT TRANSIT

For a shared mobility system, utilization is critical but at least in the bike share world it’s seldom sufficient and typically you need some type of public funding or sponsorship to close the funding gap. In the scooter and car share world, utilization is the key for driving profitability over the long term.

GREEN MOBILITY

Back when starting, GreenMobility hoped for very high numbers (for utilization), but have come to realise that it may not happen for quite some time, especially when people have set travel behaviors and habits. They beginning to see an increase as people change their habits. In Copenhagen GreenMobility are showing profitability which is one of the first EV car share services to do so. It has also taken them a few years to do this and other cities will get there eventually, but right now, it’s about continuing to drive all the smaller operational elements on a daily basis.

ELECTRICFEEL

The challenge is that there are so many problems to solve (utilization) and some of them are complex mathematical ones. Everyone must push the limits when it comes to logistics and squeeze out just what exactly is possible with technology and data, but you also need to keep in mind the people doing the work in the field. You also need to look at the big seismic shifts in the market and keep an eye on new innovation and designs that cost a fraction of the prices of previous models/assets. Also look out for potential business partners with big companies that are looking to make a change right now. By looking outside the box you can make cost effective changes without having to make key metric changes within your business.