The sharing economy: Ridesharing and public transportation

The sharing economy: Ridesharing and public transportation

Phuah Eng Chye (28 October 2017)

Cities are increasingly incorporating technological advances into their vision of mobility. A National League of Cities’ report suggests cities are aiming to build “more dynamic transportation systems where people shift seamlessly between multiple modes depending on their needs. The ultimate goal of cities must be to combine different transit modes into a coherent whole, so that moving from place to place is easy, equitable and enjoyable.”

In tandem with this, several cities are exploring collaborative partnerships with ridesharing platforms. Joseph Kane, Adie Tomer and Robert Puentes note that in some instances, the interest in collaboration is motivated by “tight budgets and enormous debt burdens, leading to service cuts and increased fares…while others are experiencing lower demand, and many new riders still live too far from high-frequency service or struggle to access jobs and other services via transit.”[1]

Joseph Kane, Adie Tomer and Robert Puentes suggest “the tantalizing prospect, then, is to consider ride-hailing services as a new outlet for cost savings and improved access.” This includes contracting out services to ridesharing companies given their ability to minimize costs and efficiently deploy drivers to customers through their software platforms. In addition, ridesharing companies “can probably update technologies faster than traditional public transit agencies. Riders could also benefit, free from worrying about the need to schedule days in advance.” “These kinds of savings would have an enormous impact on overall transit performance, whether increasing vehicle frequency, adding new routes, or simply reducing the aggregate subsidy to run individual agencies.”

But there are thorny challenges ahead in shaping a collaborative partnership between the ridesharing platforms and transit agencies. Henry Grabar expresses caution in regarding “ride-hailing services as an acceptable substitute for public transit”. He thinks this pose risks that “cities across the country are making important decisions about transportation that treat 10-year-old companies as fixed variables for the decades to come.”

He was concerned ridesharing would be used to justify against public investment in transit, in particular “old tech like buses & rail…Obviously, taxis will never be able to substitute for the people-moving power of high-capacity subways and bus corridors” as well as to justify service cuts. He notes “at the moment Uber and Lyft are subsidizing U.S. ridership…When prices come back up, Americans will find that cuts to transit service and reluctance to invest in expansion have left us in bad shape.”

There is also concern that ridesharing itself has a direct adverse impact on public transit. Highlighting recent research[2], Regina R. Clewlow notes that while ridesharing is complementary with commuter rail use, “the net effect across the entire population is an overall reduction in public transit use[3] and a shift towards lower occupancy vehicles (i.e. more cars).” Hence, ridesharing lures passengers away from some transit modes (e.g. buses) and adds to traffic congestion.

Henry Grabar also notes “the savings are in part derived from trading public-sector employees like bus operators for low-wage stringers like Uber drivers.” In this regard, Joseph Kane, Adie Tomer, and Robert Puentes notes “organized labor may oppose the transition from unionized staff to independent contractors, and disability advocates contend that companies like Uber are already in violation of federal laws mandating equal access” while coordination and governance challenges may arise when multiple transit agencies must separately contract with a single ridesharing company.

Henry Grabar also expressed concern about the practice of cash-strapped transit agencies discontinuing routes and providing subsidies for ridesharing. I believe public subsidies for ridesharing is a policy mistake. The subsidy is a politically expedient decision aimed at neutralising public opposition to route closure and justifies the subsidy on the basis of net savings. But it sets a bad precedent as subsidies are difficult to withdraw and tends to grow over time.

Kyle Shelton suggests that the participation of ridesharing in public transit could create “a two-tiered transit system in which how riders travel depends on the technology they own”. Public transit agencies also need to be cautious about entering into agreements with private-sector competitors since ridesharing companies are “free to pursue routes and partnerships that make money and abandon those that do not. Public agencies must ensure that they – and their riders – are not left immobile if ride-share companies pull out.”

Nonetheless, greater collaboration will be necessary as “emerging mobility services like bikeshare, carshare, on-demand transit, and transportation network companies provide more transportation options for customers to choose how to get where they want to go.”[4]

Shin-pei Tsay, Zak Accuardi, Bruce Schaller and Kirk Hovenkotter point out that it is possible to achieve “greater transportation efficiency by creating opportunities for more flexible planning by public agencies.” They recommend agencies to “proactively start to break down barriers to collaboration with emerging mobility providers – barriers like restrictive procurement processes, work rules, or agency traditions – by creating clear pathways to working together.”

This includes being open to new ways of providing useful transit, promoting the sharing of transit data on a real-time basis and working towards open data and technology standards to “enable more rapid innovation toward streamlined customer trip-planning and payment systems”. Shin-pei Tsay, Zak Accuardi, Bruce Schaller and Kirk Hovenkotter note that the “integrated fare payment system implementation is a valuable leverage point” and that collaboration can also extend to the public sector using its “valuable assets, like parking spaces and street right-of-way…to negotiate for contracted services, access to data, or equitable geographic coverage.”

Overall, many cities are reviewing how to integrate ridesharing into their vision for public transportation. The major challenge is the need to overhaul the regulatory framework for the taxi industry in relation to industry disruption and the cities’ vision of their future transportation system.


Henry Grabar (December 2016) “Here’s why using Uber to fill public transportation gaps is a bad idea”. Slate.

Joseph Kane, Adie Tomer, and Robert Puentes (March 8, 2016) “How Lyft and Uber can improve transit agency budgets”. Brookings.

Kyle Shelton (23 September 2016) “Here’s what it takes to incentivize ride-share companies to get along with public transportation”. The Conversation.

Nicole DuPuis, Cooper Martin, Brooks Rainwater (2015) “City of the future: Technology & mobility”. The National League of Cities (NLC).

Regina R. Clewlow (11 October 2017) “New research on how ride-hailing impacts travel behavior.”

Shin-pei Tsay, Zak Accuardi, Bruce Schaller, Kirk Hovenkotter (8 September 2016) “Private mobility, public interest: How public agencies can work with emerging mobility providers” TransitCenter.

[1] Joseph Kane, Adie Tomer and Robert Puentes

[2] Regina R. Clewlow, Gouri S. Mishra (2017) “Disruptive transportation: The adoption, utilization, and impacts of ride-hailing in the United States.” Institute of Transportation Studies, University of California, Davis, Research. Report UCD-ITS-RR-17-07.

[3] Regina R. Clewlow and Gouri S. Mishra’s study found many travellers were substituting ride-hailing in place of public transit, biking, and walking trips, or would not have made the trips at all. This suggests ride-hailing is likely adding to rather than reducing traffic congestion.

[4] Shin-pei Tsay, Zak Accuardi, Bruce Schaller and Kirk Hovenkotter

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