Wry & Dry

What happens when Uber enters?

W&D always thought that über was a German word meaning, variously 'above, over or foremost' (as in W&D, W&D über alles).  But then W&D's children started using it to describe an alternative to driving home.

And so, W&D has now become a massive fan of Uber, both locally and overseas.  Cheaper than taxis and with much better side-benefits (they turn up; you rate the driver; no cash is required; there is a follow-up email with map of route taken, driver name and rego; etc) only in London is a taxi preferable[3].

So, W&D cannot see what all the fuss is about.  Competition is a fine thing.  But what happens to the traditional taxi industry?  Will it die?

Well, the city of Portland, Oregon, in the US has worked with Uber and the local taxi industry to analyse the affect Uber (and Lyft, a similar service) has.  The trial period was May-15 through Aug-15.

UberAs you can see, the taxi's initially took a hit, with the number of rides falling about 18%, then flat-lining.  But the interesting fact is that the total number of rides increased by 60% (and then flattened out).  So Uber (and Lyft) took some market share from traditional taxis, but also increased the size of the market.

Why?  W&D failed Microeconomics 231 too often to remember.  But it does seem as though more people are using Uber/ Lyft than their own cars, especially at weekends.

So, taxi-use fell 18%.  Not the apocalyptic end-of-the-world-as-we-know-it.  And W&D muses that with some smart thinking the taxi industry could regain that loss.  

And some fun-facts.  

Firstly, whereas Portland's taxi drivers earn, on average, just US$6.22 hour, Uber drivers earned more than US$16 per hour (because of lower costs, greater percentage of the fare and greater market) [4].

Secondly, more generally, Uber drivers are significantly better educated than taxi-drivers and have a much higher level of education [5].

In W&D's view, the success of innovation is in the lexicon.  W&D knew that Google had become a household word when it also became a verb, hence 'to Google'.

And so with Uber.  My children ask, 'Dad, did you Uber home?'  Or perhaps W&D should have asked them the difference between a noun and a verb.  

-       Anthony Starkins

[1]  In short: Shell; BP; Standard Oil of New Jersey (became Exxon); Standard Oil of California (became Chevron); Standard Oil of New York (became Mobil, which was taken over by Exxon); Gulf and Texaco.  The cartel was founded at a very secret meeting held in a Scottish castle in 1928 between just three men, the CEOs of the first three companies listed.  The world was thirsty for oil, especially with the rise of the automobile.  The three companies agreed to share the world's oil.  The idea was that production zones; transport costs; sales prices - everything would be agreed and shared.      

[2]  See www.globaldemographics.com

[3]  It's an admittedly small sample size: Melbourne, Sydney, Brisbane, San Francisco, Seattle, New York, London, Amsterdam, Zurich.  Although there will always be hiccups: in New York I asked the Uber-driver to take me to Newark.  His response, "what is the address?"  Newark is New York's second international airport, after JFK.

[4]  Some care needs to be taken with income data.  For example, taxi drivers don't, generally, own the taxi whereas Uber drivers do.  So the latter has the costs of ownership.

[5]  There is a great deal more on this; W&D urges readers to go here  and then here.   And for some academic stuff, head here.