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Thoughts on Transit

Ride-hailing vs. ride-sharing: The key difference and why it matters.

by Ecolane / October 18, 2018

Ride-hailing vs. Ride-sharing. What’s the difference?

Transportation Network Companies (TNCs), like Uber, Lyft, and Via, are often hailed as “the future of public transport” — providing a customized, convenient solution that claims to take cars off the road. Many describe these as ride-sharing or ride-hailing services — using the two terms interchangeably.  However, the two are different experiences. 

  • Ride-hailing is when a rider “hails” or hires a personal driver to take them exactly where they need to go. The transportation vehicle is not shared with any other riders, nor does it make several stops along a route.
  • Ride-sharing, by contrast, is synonymous with carpooling. It is literally the process in which a rider shares a vehicle with other riders.  It is not personal transportation, as the space is shared, and it will make stops to pick up other riders.

Major TNCs do offer ride-sharing services, like UberPool and Lyft Shared.  This enables multiple passengers traveling in the same direction to request a ride and share the same driver to their respective destination(s). On the surface, this appears to be environmentally sustainable.

The concern with the rise of ride-hailing:

However, the reality is that the majority of trips provided are actually ride-hailing trips. Research shows that only 35% of TNC trips are shared nationwide. Instead, they usually operate as glorified taxi services, hailing a ride from your phone rather than a street corner. This eliminates any of the professed benefits, like reducing congestion or environmental footprint (fuel and carbon output, land use, etc.). 

Research even questions if they divert passengers from automobiles. StreetsBlog writes about Bruce Schaller’s report, The New Automobility:

Travel surveys consistently reveal that only about 20 percent of TNC trips replace personal car trips. Another 20 percent replace traditional taxi services. The bulk of TNC trips — 60 percent — either replace transit, biking, and walking, or would not have been made without the availability of TNCs.

Schaller’s research means that when those 60 percent of riders switch from transit/biking/walking to TNCs, it actually intensifies congestion and environmental concerns.

Conventional DRT trips are largely ride-hailing as well. What makes TNC trips less expensive?

Demand-response transportation (DRT) modes like paratransit face unique operational challenges, often operating with fixed variables (like scheduled dialysis appointments) and serving customers who may have challenges even entering a vehicle. Amidst these challenges, DRT often operates as ride-hailing services rather than ride-sharing as well. As agencies face increasingly tight budgets and staffing levels, this makes operating DRT more challenging than ever.

To reduce cost, many agencies are reimbursing passenger trips provided by taxi companies and TNCs, as they can be up to 70% less expensive than conventional paratransit.

Passenger fares only cover about 40% of the trip cost; the remaining 60% is investor capital, making the trip artificially less expensive. These trips can be more expensive because both TNCs and DRT operate as ride-hailing. Any additional cost difference between TNCs and paratransit comes from operating smaller, less expensive vehicles, like passenger sedans and vans and many paratransit agencies are adding to their fleet, as well.

While TNCs may provide your passengers a fashionable user experience (through an app), many drivers do not have the same kind of professional training to serve elderly and disabled passengers as paratransit drivers. In this way, paratransit and TNCs can coexist and even partner because paratransit services can fill a need for some of the common customers of both.

Ecolane transforms agencies from ride-hailing to ride-sharing providers

How do we reduce costs, decrease our carbon footprint, and provide a superior customer experience for our passengers? Operate a service that is truly ride-sharing.

Most scheduling algorithms aren't sophisticated enough to perform this, especially amidst the variables that accompany service to vulnerable populations. Modernizing with a next-generation scheduling software ensures these services actually function as ride-sharing services. This is why rural systems like Perry County, PA were able to reduce fuel costs by 40%, and urban systems like Arlington, TX were able to increase their number of rides per hour by 44%.

Serving a New Generation in the 21st Century

Remarkably, a next-generation scheduling software can turn ride-hailing providers into ride-sharing providers, all while delivering a better experience for our most vulnerable passengers.

As 10,000 people turn 65 every single day in the United States, they have heightened expectations thanks to Amazon and Uber for how to receive services (through an app) and when to receive services (promptly). Ecolane offers your customers the ability to schedule rides anywhere, 24/7 through a new Mobile App.

The riding experience doesn’t just get easier for your customers; it gets prompter too. After Link Transit upgraded to a next-generation scheduling software, their on-time performance reached 96% over the last five years.

Link Transit General Manager Richard Derock smiles as he exclaims, “Most months, I get two to three times as many compliments on the service as complaints.”

About the Author

Will Herzog is a Product Research Intern at Ecolane. Will analyzes international market research, federal/state/private grant opportunities, and Ecolane’s role in advancing inclusionary, smart, connected cities for all. He has six years of experience working in local government, managing relationships with federal and international regulators for private and not-for-profit corporations, spending his free time helping young people, like himself, connect with their communities. He is a rising senior at Haverford College outside his hometown, Philadelphia.

Tags: Demand Response Software Transit Trends

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