Let’s Prepare for the Next Uber Revolution

Graphic credit: Morgan Stanley
Graphic credit: Morgan Stanley

by James A. Bacon

Uber and Lyft, known mainly for providing taxi-like services, may find sprawling Sun-Belt cities to be the most hospitable markets for their new car-pooling services. That’s one of the conclusions arising from a new Morgan Stanley report on the proliferation of Uber- and Lyft-style services across the United States. The logic: Sun Belt cities have low-density human settlement patterns that will not support mass transit but have congested roads that could benefit from carpooling.

I can’t find the study itself on the Web, but a number of media outlets have reported on it, including this article by Myles Udland published for Business Insider and re-published in Slate. Writes Udland:

Uber and Lyft could have the biggest impact in the South. Instead of getting in your car and driving to work, or replicating the Northeast commuting experience of driving or walking to a train and heading into the city, more sprawling metros could enact large-scale, commuter-targeted versions of what is basically Uber Pool — Uber's "carpool" option where you set a pick-up and destination and your driver is able to make pick-ups and drop-offs along the way.

In Uber own estimation

, the implications of UberPool are "profound." "On average, uberX already costs 40% less than taxi. Imagine reducing that cost by up to another 50%! In San Francisco, how about $6 to Uber from the Castro to the Financial District? Or $10 from Sunset to SOMA? At these price points, Uber really is cost-competitive with owning a car, which is a game-changer for consumers." But as Morgan Stanley observes (and Uber overlooks in its example) the metros most likely to benefit from UberPool and competing services are those that, unlike San Francisco, lack mass transit alternatives. Further, suggests Morgan Stanley, those cities would be well advised to invest in building networks of ride-sharing services rather than commuter rail. (I'm not certain what carpooling infrastructure would look like -- perhaps dedicated locations analogous to bus stops where car-pooling cars and vans can pick up and drop off passengers without disrupting traffic flow.) According to the Morgan Stanley metrics, as visually summarized in the map above, Virginia metros are not prime candidates for Uber-like carpooling. Yet I have long argued that Uber-like ride sharing services are exactly what our metros need. Outside the urban core served by METRO much of Northern Virginia could use UberPool. Richmond and Hampton Roads, with much weaker mass transit backbones, would be even more suitable. There is no one-size-fits-all transportation solution for Virginia. And, while I prefer a Smart Growth vision for future development and re-development, I acknowledge that not everyone shares my refined urban sensibilities. I also acknowledge that it takes decades and billions of dollars to transform suburban sprawl into communities that can support mass transit. In the meantime, Uber-inspired carpooling may be the most cost effective way of meeting the transportation needs of millions of suburban Virginians.


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5 responses to “Let’s Prepare for the Next Uber Revolution”

  1. Cville Resident Avatar
    Cville Resident

    I agree. It amazes me to see bus transportation in places like Lynchburg or Roanoke. Those cities have densities of 1539 per square mile and 2300 per square mile. How could those numbers possibly work when you consider how much they spend on full bus service.

  2. LarrytheG Avatar
    LarrytheG

    Someone did ask the other day how come transit systems have to provide handicap access and bus ramps and Uber does not – and the answer was “this is a different business model”.

    😉

    Uber will never compete on money with transit systems. The one in Fredericksburg is 1 dollar to go anywhere on the line… but then of course the dang thing only shows up once every 2-3 hours.

    Uber will find a niche… and expand it.

  3. John B Avatar

    It seems to me there is another aspect to this which was prompted by recent news of Walmart offering $7 to $10 for home delivery of groceries in I think Phoenix.

    We have about $40k in assets tied up in two cars. Over the life of these suppose we also spend $15k (the exact amount doesn’t matter) on gas/oil/taxes/tires/insurance/etc. over the next several years.

    Now we have a substantial paid-in asset of maybe $50K that not only is not earning anything, it is steadily depreciating in value. Ouch. (Obviously when the cars are sold we’ll get something).

    In reflecting on my car usage it normally amounts to about an hour per day (~4% utilization?). Would it make sense for me to pay Uber/Lyft $500/year for a week’s worth of grocery deliveries from Wal-Mart of Harris Teeter? I can readily obtain most everything else I need from Amazon at no delivery fee pretty quickly.

    Then, I can rent a car for trips like several friends in NYC now do – they are carless.

    Meanwhile, the Uber/Lyft cars servicing me (and others) can operate pretty much around the clock and take the place of many other vehicles which would be further cluttering up our roads.

    What am I missing? But do I have guts enough to do it? I like may others have a love/hate relationship with our Nissans.

  4. LarrytheG Avatar
    LarrytheG

    what are you missing? tax law and insurance. you gonna rent your car to strangers or young folks to deliver groceries in? I got a feeling cars used for that purpose are not going to be appealing for regular home use but maybe I’m not you!

    Remember also – you count on those cars being available ANYTIME you get a yearning to use them – that all changes when you rent them but again – I bet your insurance company has a thing or two to say about that idea.

  5. John B Avatar

    No, LtG. What I’m saying is will I actually need a car in the future? I’m not planning to compete with Avis.

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