Effingham Park Hotel - Tuesday, May 21, 2019

Congress 2019 Panel 3 – Technology made for sharing

PD C19 Panel 3 header

Panellists

Graeme Whiting - Catalina
Keith Keen – The Keen Group
Dave Goldring – Europcar/Brunel
Mike Galvin – Karhoo
Hassan Abod – Autocab
Roger Jago – CMAC
Amer Hasan – Minicabit

Chairman: Mark Bursa, Editor, Professional Driver

 

Chairman Mark Bursa opened the third and final session with the observation that app-based operators such as Uber had made control rooms in the industry largely redundant and went to highlight how so-called “soft mergers” were now allowing private hire operators to compete with the new entrants.

Keith Keen of the Keen Group was a prime mover behind the successful London soft merge. He said that his company had been looking at a “hard merger” of five or six firms but in the event decided to take the soft approach. The software went live in July 2017, initially with three firms, and there were now 74 companies participating, with a pool of 9,000 vehicles.

Keith Keen – The Keen Group

Keith Keen – The Keen Group

Keen said £3.7 million in fares has now gone through the system. Any job that a particular company cannot take on automatically goes into the pool for reallocation to another. He felt it was an arrangement that worked for everyone, whether driver, operator or customer. In principle it was nothing new, but it was a lot more efficient than handing jobs over manually.

Keen Group’s soft merger didn’t constitute a full national network but worked mainly in and around London. A typical use would be to allow a driver from out-of-town who had taken customers to the theatre in London to take jobs during the long wait to carry out the return journey. The system was capable of tracking the driver and various other parameters and the company from or to which the job was transferred can see all of the relevant information.

Overall, “it allows us to compete in a changing marketplace effectively”, Keen said. There were no service level agreements or hidden contracts involved but the operators did need to take the right cooperative approach to make it work.

A few members had been lost through, for example mergers, and controllers had initially felt that their jobs were under threat. Operators also needed to do a certain amount of groundwork to prepare customers to expect cars from other companies to turn up, but most had no objection to this. If there was a problem at all, it was with cars turning up earlier than some customers expected. Finally, the decision had been made that operators’ should honour each others’ prices so that customers didn’t get any surprises.

Hassan Abod – Autocab

Hassan Abod – Autocab

Hassan Abod of dispatch systems supplier Autocab said his company had encouraged operators to enter into soft mergers for three years and had done this in five UK cities. There were 50,000 cars available on the network in the UK.

The problems with soft mergers had been few, he said. For example, a company might occasionally take a predatory approach, but this was rare. But he also said that operators “need to do more than just soft merging to succeed”.

One important point was the need to secure younger customers as well as to serving existing ageing customers who would decline in numbers - in particular, there was a need to invest heavily in the passenger-side app in order to make it attractive. Also, cooperation wasn’t enough - operators still needed to provide a great service and ensure that they always had enough drivers. Uber had elevated customers’ expectations, and soft mergers helped existing operators to respond to this.

Dave Goldring – Europcar/Brunel

Dave Goldring – Europcar/Brunel

A delegate from the floor pointed out that a lot of chauffeur companies already cross-refer but that was mainly a relationship-based arrangement rather than something that relied on technical solutions.

David Goldring said that this question had an international dimension as well, with lots of operators wanting to hold on to their customers when they travelled abroad.

Graeme Whiting from the technology provider Catalina explained that his company’s systems were capable of interfacing with those of other suppliers such as Autocab and iCabbi. Keith Keen said that he had never had customers who said that they didn’t want a car from the pool or from another company.

Amer Hasan explained the Minicabit marketplace which allowed any operator to post its profile to secure work. The system had an average fare of £45 to £50 and involved booking in advance. It dealt with about 200 firms, some of which had dispatch systems and some which did not.

Amer Hasan – Minicabit

Amer Hasan – Minicabit

He preferred to describe the activity of Minicabit as that of an “auto-reallocation engine” rather than a soft merger arrangement. Any order a particular operator could not fulfil was transferred to an alternative. The most important factors were quality and transparency, with, for example, customers being kept informed about aspects such as the need to expect a car from a different company to turn up.

Mike Galvin explained how Karhoo as an aggregator channelled bookings from app operators to fleets. The system accepts customer’s bookings and then presents a range of taxi, private hire and other options, with a choice of speed, price, vehicle type and so on. The system also offers fleets “roaming” so that services can be offered in other countries.

Roger Jago – CMAC

Roger Jago – CMAC

Galvin felt that these arrangements were a sign of the UK industry maturing and hadn’t necessarily been driven entirely by the arrival of Uber. Roger Jago of CMAC said his company operated a different model in that they didn’t deal directly with end customers but with corporate clients that required car services to move staff, such as rail firms.

Autocab’s Hassan Abod highlighted a few related tends. His company covered 550 companies integrated with the aggregators and 60,000 cars, and had just signed companies in Dublin and London who are aggregator job-only companies who want to exploit those relationships and want access to unlimited drivers.

They only do jobs for aggregators and try to win more work from aggregators. It’s a completely new business model. He also emphasised that new methods were needed in order to tap younger customers - that meant taking bookings via new sources such as WhatsApp and Facebook Messenger. In fact, one Autocab customer was already taking 10,000 jobs per month via Facebook Messenger.

An interactive vote showed that apps such as Uber had had a positive impact on more businesses than they had affected negatively. Bursa observed that when a similar question had been asked at previous Congresses, the impact of Uber had been felt to be negative and this was the first time that sentiment had turned positive.

Mike Galvin – Karhoo

Mike Galvin – Karhoo

Mike Galvin felt Uber wasn’t so much “disruptive technology” as “disruptive money”. That money had been directed poorly with some of it being “poured down the drain”. The IPO share price was already down and there didn’t seem to be any way for Uber to make money in the long term.

Abod reckoned that there were 100 apps that were as nice as Uber’s in the App Store - the difference was that these apps weren’t supported by $80 billion of funding, which was Uber’s USP. He wondered how Uber was going to retain the customer base it had bought - nobody knew how loyal these customers were and it certainly provided an opportunity for rivals. Mike Galvin felt that “demand responsive” buses might also be an important threat to private hire in future.

Interactive Questions

Q12 Are you aware of the concept of “Soft Merges”
Yes
%
No
%
Don't know
%

The concept of soft mergers has good recognition already in the industry, with more than 8 in 10 aware of the schemes.

Q13 Would you consider sharing your customers with rival operators in order to stop them defecting to Uber?
Yes
%
No
%
Don't know
%

More than three-quarters of participants would consider sharing customers with rival operators in order to prevent them from defecting to Uber.

Q14 Have you signed up to any “soft merge” concepts?
Yes, with other operators
%
Yes, with my technology provider
%
No, but I intend to
%
No plans to do so
%

Several delegates had already entered into soft merger arrangements, either with other operators, or with a technology provider. But a third had no soft merger plans.

Q15 How has the entry to the market of ride-hailing apps such as Uber affected your business?
Negatively
%
Positively
%
Neutral
%

An interactive vote showed that apps such as Uber had affected fewer businesses negatively than positively – a reversal of previous responses to the same question.

Q16 When do you expect to see the first driverless taxi?
By 2020
%
After 2025
%
After 2030
%

The first driverless taxi is still some way off, most delegates believe. Compared to last year, more people believe we’ll not see AV taxis until 2030.

Q17 Do you intend to run autonomous vehicles as part of your fleet once the technology becomes available?
Yes
%
No
%
Don’t know
%

Autonomous vehicle technology is not gaining popularity. Fewer delegates said they planned to make use of the technology than last year, when 54% said they would run autonomous cabs.