Uber for commuters? Employers catch onto on-demand rides
The tech-enabled ridesharing rush has hit the commuter pool. What are the implications for employers?
In New York, it takes commuters an average of 40 minutes to get to work each day. In Chicago, it's just shy of 34 minutes, and in both Philadelphia and San Francisco it's about 32 minutes, according to a 2015 University of Michigan review of federal data.
More than three quarters of commuters in the largest U.S. cities still rely on cars for their daily voyage to work, accounting for upwards of 3 billion gallons of fuel burned sitting in traffic and lost productivity costs in the range of $160 billion per year, a different analysis by the Texas A&M Transportation Institute found last year.
As a result, some notoriously traffic-plagued cities, like Los Angeles, are reinvesting in public transit overhauls to account for the problem — which is only projected to get worse with the trend toward urbanization. More generous employer telecommuting policies, better bike lanes, dynamic road pricing and employer-subsidized private shuttles are a few other approaches gaining traction in the quest to ease the daily crush of rush hour traffic.
But there is another promising alternative to lone drivers schlepping it to the office that is only starting to accelerate: tailoring on-demand shared ride services to the unique pressures of getting to and from work.
If employers buy in, the market could provide another example of so-called sharing economy companies inspiring new business-to-business offerings. And while emerging commuter-centric transportation services vary, it's a niche that could pit incumbent automakers against car- and ridesharing providers such as Uber, as well as more niche companies targeting the corporate market.
Enter Ride, a commuter-focused ridesharing company that aims to adapt on-demand rides and carpools for co-workers heading to the same office. The service works through a mobile app that pairs workers going to the same place, divvying up the costs of commuting by car and completing the payment online.
Ride CEO Ann Fandozi, who previously worked in the automotive industry at both Ford and Chrysler, said the sheer size and predictable nature of the commuter market make it ideal for more targeted ridesharing offerings.
“The math of ridesharing is actually very complicated," Fandozzi said. “With paid driver models — be it Lyft, be it Uber, be it a taxi — It’s a very different supply and demand equation, because these people are waiting for customers to come in. When you’re going to work, nobody is waiting."
The rise of ridesharing
In the short recent history of the ridesharing industry, tech providers have focused on city dwellers — and for good economic reason.
It makes financial sense to pursue scale in dense, urban areas where people are hitching a ride short-to-medium distances, creating a steady churn of passengers for drivers and maximizing usage of cars in the system.
While peer-to-peer transportation providers like Uber and Lyft certainly serve consumers going to work, their business models fundamentally revolve around drivers being paid to take passengers from Point A to Point B. That can be cost effective for relatively short trips, but the tab can climb quickly when branching out into longer trips to suburban office parks.
As ridesharing companies continuing to slash prices in an effort to grow their user bases, they are also beefing up services designed to bridge the "last mile" between transit stations and commercial hubs, as well as adding ways for customers to link corporate expense accounts. Whether they introduce other offerings designed to appeal to commuters traveling longer distances remains to be seen.
In the meantime, automakers are also circling the space.
Companies are dealing with issues of parking and congestion and inefficiency related to mobility. That is a very big opportunity.
Mercedes-Benz parent company Daimler has experimented with dynamic commuter shuttles operated in partnership with a Southern California housing developer. General Motors, which has been on a tech investment streak around the launch of spinoff mobility company Maven, has piloted commuter ride shares in electric vehicles with Google.
"Companies are dealing with issues of parking and congestion and inefficiency related to mobility," GM Executive Director of Urban Mobility Peter Kosak told me in a recent interview. "That is a very big opportunity."
Part of the sales pitch is the potential to free up space and save on infrastructure costs at corporate campuses.
"That kind of service turns a big, fixed investment like a parking garage into an operating cost that you can scale," Kosak said.
Ridesharing as job perk?
In job markets with cutthroat competition for talent, transportation perks are already often a recruiting and retention benefit. And while most ridesharing companies tend to deal directly with consumers, some have also experimented with getting employers on board.
Ride doesn't charge companies for involvement in the program (and doesn't disclose the companies it works with, though Atlanta is the most recent expansion market). Instead, the company asks employers for preferred parking and help with internal marketing, then makes money by taking a transaction fee on all rides arranged on the platform.
“We go to work inside the four walls of a company," Fandozzi said. "The technology will match people anywhere. It's just the math becomes much easier if we know you’re going to work here."
Corporate carpools are also a natural extension for the company, which is actually a spinoff from an existing vanpooling business called vRide. The original company was founded during the oil embargo crisis of the 1970s and arranged carpools offline before being sold in recent years to private equity giant TPG Capital.
“We were one step away from an abacus. Literally manually, almost like an atlas and people and clipboards is where we were three and a half years ago," Fandozzi said. “It’s a testament to those people that genuinely want to rideshare. They would go through all this trouble."
Fandozzi, an engineer by training, was hired three years ago to update the offering and soon hired Uber founder and former CTO Oscar Salazar to help.
The company still operates vRide in addition to the co-worker carpooling system for Ride (though vRide's website also appears to bill the vanpools as the premium service noting that, "Commuting in a vRide van isn't like riding in your coworker's car").
As all transportation companies rolling out offerings in new cities know, how likely commuters are to use any tech service, be it Ride, Uber or Lyft, depends largely on their current transportation options. Cities with a diversity well-established public transit options, like New York City, probably aren't ideal starting points.
Still, cities like Atlanta, where Ride is in the midst of its newest launch, reinforce the market's overall growth prospects for Fandozzi.
“Atlanta is a congested mess," she said. "The infrastructure just wasn’t developed for the level of population."