Ride hailing service Uber has continued on its tremendous growth trajectory in 2015, with the service now available in around 300 cities throughout 60 countries. That geographic spread easily eclipses any competitors in the space, which are more likely to be localized services, although it is likely that Uber’s success helps many competitors by increasing demand for ride hailing services overall.
But its enormous success has also made Uber an enormous target. Stories of Uber’s battles with city officials, taxi and livery companies, and regulators pop up daily in the news. It’s not surprising, given that ride hailing is so disruptive to the existing order of livery services and the long-established relationship these services have had with regulators. The biggest battle for ride hailing is over whether these companies must comply with regulations governing taxi services in each of the cities where they operate. Stories of regulators clashing with Uber are well-known, especially in cases where the company was banned outright. However, the impact that ride hailing has on traffic congestion and on the use of other mobility modes is a critical area of concern for cities. For example, New York City Mayor Bill de Blasio recently accused Uber of exacerbating congestion in Manhattan, based on an analysis showing that traffic speeds had decreased between 2010 and 2014.
Right now, it seems unlikely that the ride hailing genie can be put back in the bottle. Too many people have come to rely on the service, and it’s not just the expected demographic of those 30 or younger. What seems more likely is not that Uber or other ride hailing services will disappear, but that it will face ever increasing costs doing business. This is especially true for Uber. Having so many geographic markets means grappling with different regulations in each one, as well as dealing with different business cultures. In Germany, for example, the company launched a new service with drivers who have commercial driver’s licenses after Germany banned Uber for using private, non-licensed drivers. In Philadelphia, the city’s parking authority imposed a $300,000 fine on Uber for operating illegally in the city, although the state’s public utility commission had earlier indicated the company was operating legally. These kinds of costs will only increase in cities where Uber already operates and as the company continues to expand.
More Data, Please
Another likely outcome will be a demand for more analysis of ride hailing’s impacts on vehicle miles traveled, on congestion, and on the use of alternative modes of transportation. For example, an analysis of New York City traffic speed data came to the conclusion that ride hailing apps were not correlated with lower traffic speeds. Ride hailing companies will be increasingly pressed to supply data to help generate high-quality, objective analysis. This analysis is crucial to understand how ride hailing apps fit in to the new urban mobility landscape, and whether they support policymakers’ goals to reduce congestion.