There is huge hype around Uber. The company operates across the globe, and in hundreds of North American cities. It’s a ride-sharing business, using an app to connect travelers with Uber drivers. Uber sells itself as a disruptive company, shaking up the transportation business. People are excited by Uber, and expect it to reshape how people travel. Some argue that Uber will make transit obsolete. Many expect ride-sharing to make car ownership obsolete.
Shockingly, this Luddite is skeptical about Uber. I have never used Uber, but folks who have generally like the service. It sounds easy and affordable. Still, there are some big problems with Uber.
Consider cost: although usually cheaper than a cab, Uber’s still more expensive than a bus. Cost matters for lots of people riding the bus. There is a social need to provide inexpensive, reliable travel for people with limited means. For some, the cost of a monthly bus pass is a stretch, even though they rely on the bus to reach school, childcare, work or appointments. People who rely on the bus can’t always (or ever) afford an Uber.
But the bus is subsidized, you might argue. It’s unfair that subsided transit monopolies compete against private businesses! But Uber rides are subsidized, possibly in an attempt to undercut competition. Despite low pay for Uber drivers, Uber fares don’t cover the cost of most rides. Uber is currently losing billions even as revenues grow. Perhaps the company can be profitable long term, but raising fares will drive some customers away. Perhaps Uber will never be profitable. Uber may be betting on automated vehicles to cut out driver costs and become profitable. No one knows when automation will arrive, but can Uber keep up the huge losses until automated vehicles are on the road? Time will tell. Perhaps Uber will fail, but other companies will find a profitable model.
While Uber is bleeding cash, it’s also helping to clog city streets. Studies have shown that Uber is contributing to traffic congestion. People are sometimes choosing Uber instead of walking, cycling and transit. More cars on the road means more congestion. Fewer transit riders means less revenue for transit agencies, putting pressure on transit budgets.
At some point, Uber will probably come to Halifax. When it does, lots of people will probably be excited. The appeal of Uber is clear: it’s easy and often cheaper than a cab. But the convenience comes at a cost. Uber drivers are responsible for maintaining and insuring their cars, but make low wages. That’s a lot of risk for few rewards. Fares don’t cover the cost of most rides, inflating demand. Uber trips result in extra car trips and congestion.
Uber: low wages; higher fares than transit; more congestion; less walking, cycling and transit; billions in losses. What’s the hype all about?