Transportation Network Companies – Even Worse than Expected

The clever title Eyes Wide Shut was wasted on a allegedly-sexual movie released in 1999. While there are plenty of mainstream events widely opening our eyes these days, this film’s expression is an understatement for events that have occurred in the United States public transportation field in the last seven or so years. I am not so sure even a dead man’s switch would open many eyes in our field. But I have been trying to do so. This installment is yet another alarm.

I mourn the days when my National Bus Trader installments were either positive (like the year-long series titled “Making More Money”(see National Bus Trader January – December, 2012), the two-part series about bio-sensitive driver assignment (see https://transalt.com/article/bio-sensitive-driver-assignment-part-i/ and https://transalt.com/article/bio-sensitive-driver-assignment-part-ii/) or a series of safety-sensitive tips about driver assignment and “bus lag” (see https://transalt.com/article/bus-lag-part-1-non-driving-off-duty-and-awake-the-whole-time-on-hos-requirements/, https://transalt.com/article/bus-lag-part-2-on-duty-driving-and-sound-asleep-the-limits-of-hos-requirements/, https://transalt.com/article/bus-lag-part-3-the-invisible-log/, https://transalt.com/article/bus-lag-part-4-the-invisible-log-redux-logs-black-boxes-and-spoliation/ and https://transalt.com/article/bus-lag-part-5-skipping-the-in-between/). Most installments since were riddled with alarming warnings, like installments about the inevitability and consequences of driverless vehicles (Autonomous and Inevitable in National Bus Trader, October, 2016 through August 2017 and Drivers v. Robots, National Bus Trader, August, 2019 through April 2020), problems with Tight Schedules (National Bus Trader, February through July, 2019) and a year-long series about Safety Compromises (National Bus Trader, September, 2017 through November, 2018).

Sandwiched in between was a six-installment warning about havoc which transit network companies (i.e., mostly Uber and Lyft) were wreaking on the public transportation industry (see https://transalt.com/article/bad-regulations-and-worse-responses-part-1-introduction/, https://transalt.com/article/bad-regulations-and-better-responses-part-2-the-rise-fall-and-transformation-of-supershuttle/, https://transalt.com/article/bad-regulations-and-better-responses-part-3-invasion-of-the-tncs/, https://transalt.com/article/bad-regulations-and-better-responses-part-4-judicial-heroism/, https://transalt.com/article/bad-regulations-and-worse-responses-part-5-executive-branch-responses/, https://transalt.com/article/bad-regulations-and-better-responses-part-6-industry-and-association-responses/ and https://transalt.com/article/bad-regulations-and-better-responses-part-7-conclusions/). But as this article will explain, things have gotten worse since these failures. Now, almost every sector in the industry is being hurt.

Ridership and Impotence
The “Bad Regulations” series noted above identified a litany of institutional and industry-wide failures to stop the incursion of TNC’s from gutting the taxicab industry. Alongside the successful decimation of that sector, and the near-collapse of tour and charter service caused by the COVID-19 (and our failures to mitigate it), few noticed that fixed route transit ridership had declined by roughly 10 percent during the two years preceding COVID-19. I addressed this decline in another National Bus Trader article published in July, 2020 titled “Transit Support in the Era of COVID-19” (see https://transalt.com/article/transit-survival-in-the-age-of-covid-19/). Professionals in the Bay Area attributed a lot of this decline to the emergence of TNCs – popular in this high-income subregion, and highly suspect as farebox revenue covered only 13 percent of the operating costs of San Francisco’s transit system, MUNI (see the troubling graphic in the April 9, 2020 issue of the NYTimes: https://www.nytimes.com/2020/04/09/upshot/transit-battered-by-coronavirus.html?action=click&module=Top%20Stories&pgtype=Homepage).

The pre-COVID tanking of transit ridership began to cause concern: Kansas City was the first urban transit service to eliminate fares altogether, as the eight percent of its operating costs which farebox revenue covered cost roughly as much to collect than the revenue it brought in. Followed shortly by partial free-fare measures in Portland and Las Vegas, these trends should be of great concern: In an era dominated by a rigidity of conversation never before seen in the United States, where there is a minority of support for concerns like measures to decelerate climate change and a refusal to tax zillionaires, one wonders how long the general public will tolerate supporting free fixed route transit service.

This concern is not confined to merely the transit sector. For starters, complementary paratransit service (operating at a fraction of the efficiency of fixed route transit) consumes an increasing percentage of almost every transit agency’s budget. (And as the ADA limits paratransit fares to one-half of fixed route bus fares, when fixed route transit fares disappear, far-more-costly paratransit service will also vanish – although paratransit fares cover even less of its per-trip costs even now.) School bus community officials – whose services receive no Federal subsidies, and where driver shortages have been rampant for four decades – are similarly fearful of its survival. The non-emergency medical transportation (NEMT) sector steals and wastes hundreds of billions of dollars a year (see https://transalt.com/article/defending-contractors-part-3-the-whistleblowers-song/ in National Bus Trader, June, 2021). So the fact that much of the motorcoach sector provides commuter express service to transit agencies, and this sector is beginning to provide other fixed route services to these agencies under contract. should be a serious concern to this sector as well. Yet, as in recent years, nothing significant, if even noticeable, has been done to address these trends. But omens are beginning to emerge suggesting that things are getting worse and worse.

Eyes Wide Shut
While most public transportation professionals have long ago acknowledged – and tacitly accepted – the demise of the taxi industry from the increasing dominance of Uber, Lyft and few stragglers (like Juno and Sidecar) that these two oligopolies have yet to squash or acquire, few have noticed the impact of TNCs on other modes. This apathy or ignorance was shaken recently by an article in Forbes magazine (September 30, 2021) titled, “That Uber or Lyft Trip May be Worse for the Planet Than Driving Yourself.”

This article began with the notion that these TNC’s “charged into cities” with the promise that, “by reducing personal car trips, ride-hailing businesses could both ease traffic and bolster the use of public transit.” Used to unlimited lies as we have become over the past several years, such nonsense hardly seems worthy of notice, much less concern.

In sharp contrast to the claims of TNCs, a study recently released by Pittsburgh’s Carnegie Mellon University noted that the replacement of personal car trips by TNCs increased the costs of each trip by roughly 35 cents. Much of this is because one’s use of his or her own vehicle does not involve any deadheading. (I suspect the price of parking one’s personal vehicle was overlooked in this study.) The study noted that [even with their extraordinary fleet density or “coverage”], TNC’s still spend about 40 percent of their mileage deadheading – a figure better than taxis in most service areas before TNCs came along to increase taxicab deadhead time and/or mileage to what I now estimate to be about 60 to 70 percent (from an information survey of scores of taxi drivers).

For our industry, that finding was not the worse. Far more troubling was the study’s finding that, “the costs to society tripled when the shift was from public transportation to a ride-hailing vehicle.” Expanding these findings to broader issues, the study’s author, Jeremy J. Michalek found that even if ride-hailing vehicles deployed 100-percent zero emissions vehicles, the external costs of ride-hailing dropped by only 16 to 17 percent – an asterisk alongside the otherwise tripling of costs. The study added that even this fully-electrified fleet, “would not be enough to make up for the congestion and deaths created by the added TNC miles.” The study added that, while these detriments would be mildly mitigated if rides were pooled (which would negate the comparative benefits of mode-splitting from a personal vehicle to a TNC), these negative impacts would be yet another asterisk compared to the costs of passengers formerly traveling by fixed route transit.

Also failing to address these problems has been the mainstream media – a source of information which has increasingly been discredited in general. A recent NYTimes article about the demise of the City’s taxi industry (see https://www.nytimes.com/2021/11/03/nyregion/nyc-taxi-drivers-hunger-strike.html?referringSource=articleShare) cited months of protests by hoards of taxi drivers (including a 15-day hunger strike) and covered all types of mediocre remedies – like government (translation: “taxpayer”) subsidies to help drivers amortize the debts they incurred from the collapse in the value of taxi medallions (worth $1.1M per vehicle in 2014, and a tiny fraction of this sum today), and $30,000 cash payments to drivers who cannot even make the payments on their reduced, subsidized loans.

The article largely blamed this carnage on a group of “industry leaders” (i.e., banks and other “lenders”) for inflating the price of medallions – although how this magic trick was accomplished was not described. Instead, the article noted that, “Industry leaders have long denied wrongdoing, blaming the crisis on ride-hailing companies like Uber and Lyft.”

Not surprisingly, this article failed to note that the now-estimated 60,000 Ubers operating in the City paid no medallion fees whatsoever. Similarly, it failed to cite the fact that the remaining taxi drivers are experiencing what I estimate to be roughly 70 percent deadhead time and mileage. In the City’s taxi industry heyday — despite grossly-incompetent regulation and management by the City’s Taxi & Limousine Commission — deadhead time and mileage was closer to 30 percent for those drivers who knew what they were doing (and who didn’t experience 50 percent deadhead by “playing the airports”). Naturally, this article (like most others) failed to even footnote the devastation that TNC’s wreaked on the City’s fixed route transit system. Understandably, it failed to cite the obvious, genuine remedy to these problems: Prohibiting the operation of this completely unmanaged mode within the City’s boundaries altogether. One suspects that, at this point, such a remedy would have deep political consequences for those elected officials supporting it. Readers could not be expected to read between the lines to note that the TNCs effectively transferred their medallion obligations to the taxpayers now forced to subsidize the industries that the TNCs victimized – including the City’s multibillion dollar transit industry.

Research and Residue
Academicians have interesting notions about what to spend taxpayers’ dollars on. The Forbes article mentioned some “interest” in measures to increase the pooling of rides, and to identify the true costs of travel, by mode, and charge each mode accordingly for them. The implementation of congestion pricing measures was among such measures – a strategy that has failed, politically, in almost every city in the country. The failure of such an approach to gain traction actually began in the mid-1970s, when not a single U.S. city would undertake a demonstration project to try this approach when offered $1M to do so by the Urban Mass Transportation Administration (the predecessor organization of the Federal Transit Administration).

If one needs a more salient example of the haplessness of U.S. transportation policy, one need only consider the fact that motorcoaches pay tolls at bridges and tunnels – when a single, fully-occupied motorcoach displaces roughly 40 personal cars. So expecting any meaningful solutions to this problem is hopelessly naive.

This is largely because the sole answer to the problem – not merely the best – is to ban the TNCs altogether. As my previous series of articles for National Bus Trader cited above (“Bad Regulations and Worse Responses”) noted, we failed miserably and universally to effect that solution. So most harrowing about the Forbes articles is that our society has fully accepted, if not embraced, this intrusion, despite the costs that TNCs have exacted on our industry and our society at large. And they have only badly crippled the taxicab, transit and motorcoach sectors. Wait until these modes approach collapse.

The fragmentation of sectors within the U.S. public transportation industry is problematic in many ways. But it was less problematic when each mode gradually refined its respective role in the system, and modes adapted to working with one another. This is true even while the transit industry’s hapless nonsense about “seamless transportation” was employed to squander vast sums of money on needless technology, and to hide behind that sector’s failures to capture and sustain ridership, among other failures. Now, other parties “thinking about it” are doing worse. Individually and collectively, they are doing nothing.

Dealing with COVID, Amtrak, declining transit ridership (without both downsides and opportunities for private contractors) and legal assaults (see https://transalt.com/article/defending-contractors-part-6-contracting-fixed-route-transit/), the motorcoach industry is reeling. If no one noticed, sitting on the couch is not a solution. But those Uber commercials on TV sure are cute.


Publications: National Bus Trader.