Recently, we began sharing blogs and professional opinion pieces written by influential persons in the public transport sector on key topics. The following editorial has been written by UITP Secretary General Mohamed Mezghani.
What Uber IPO inspires in me…
Uber’s listing was the ninth-largest US IPO* of all time and the biggest on a US exchange since Alibaba Group Holding’s $25 billion global record holder in 2014, according to data compiled by Bloomberg. It was certainly the most anticipated and closely-watched in the tech world since Facebook hit the market in 2012.
Actually, Uber signed a premiere. It's the first time that a group, of which urban transport is the core business, reaches that level of market capitalisation. Maybe what was the most surprising is that they provide mobility services without owning a single car. Uber might not have invented ride-hailing but it was the first to bring it to a global level, thus becoming the leader it its field. It even lead to the birth of a new term, 'uberisation', which has become a generic noun referring to 'the utilisation of computing platforms, such as mobile applications, in order to facilitate peer-to-peer transactions between clients and providers of a service, often bypassing the role of centrally planned corporations. The model has different operating costs compared to a traditional business**' .
It's the first time that a group, of which urban transport is the core business, reaches that level of market capitalisation
Uber is a game changer in a sector that has usually been very slow to change: urban transport, or even more so mass public transport and the taxi business. Its growth has completely changed the sector and paved the way to the emergence of many new players providing ride-hailing, dockless sharing of bikes and scooters and on-demand transport. Some of them are still start-ups who succeeded in raising millions of dollars, while gaining shares in the mobility market. These are often backed by global IT, media, banks, venture capital funds, and industrial groups, including the automotive industry. Others have disappeared as rapidly as they emerged, overwhelmed by debts and the aggressive competition. Indeed, all of these new mobility service providers are heavily subsidised by their shareholders, who, despite not having found yet the right model to ensure profitability, bet on a profitable future and the consolidation of a market which they aim to lead.
Uber is a game changer in a sector that has usually been very slow to change
Uber and consorts, might not have always used the right approach to enter the different markets, but their success has shown that urban mobility has a high value that everyone wants to capture... In this slow-changing sector relying mainly on public funding, these new mobility players have come with a new approach, mixing the agility and daring of start-ups with the risk appetite of entrepreneurs.
Whether we like their approach or not, we have to admit that these digital platforms pushed the boundaries and provoked a radical paradigm shift in the urban transport business. This shift is an opportunity to rethink urban mobility services by focusing on people's expectations, by adapting the supply to better answer the demand, by developing tailor made services while preserving mass public transport as the backbone in our cities.
Many major public transport operators are now partnering with start-ups to increase their level of flexibility, while also launching new flexible on-demand services. People's behaviour is also changing their mobility experience by combining new services with mass public transport.
For leaders in our sectors and local decision makers, this is the only way to reduce car traffic and its nuisances, and move from an approach of moving vehicles to moving people.
these digital platforms pushed the boundaries and provoked a radical paradigm shift in the urban transport business
This being said, we are still in a rapidly changing context. These new mobility service providers pursue a clear objective: developing their business to generate profit and reward their shareholders. It’s a legitimate objective considering where they come from. The main challenge is to make it comply with the social objective of public transport, its public service dimension and its social rules. It’s also about preserving the rights of workers. So whilst the vision is there, the devil is in these very important details of a market which is not yet mature. This maturity will only be reached once we succeed to conciliate the business approach with the social objectives while answering the expectations of the travellers.
I look forward to the debates we'll have at UITP Global Public Transport Summit involving Uber, other new mobility service providers and leading public transport agencies. Don't miss this opportunity. See you in Stockholm from 9-12 June 2019.
*Initial Public Offering
**Source : Wikipedia
Check out Mohamed's blog on our LinkedIn page, alongside other expert opinions on key topics affecting our sector!