It is the end of the year and fortune tellers have their high season. I am one of them. And here is my outlook into the future of Mobility-as-a-Service. I am curious how far off it will be looking back in ten years time.
Smart Mobility is the Next Big Thing. New players are popping up and get nurtured with crazy amounts of venture capital by desperate investors. Established players realize that they might not be best equipped to cope with the change and switch to panic mode. Which players will survive and who will own the customer in future? Who will win, who will lose? Here’s the answer from my crystal ball 😉
The landscape is highly fragmented and not in sync. Customers have to chose between a multitude of mobility service providers barely covering all legs of a trip with not proper handover – and therefore frequently fall back to the most predictable one: their own car. Not the best choice from an ecological nor from an economical perspective and leading to collapsing cities.
The future will be bright!
The promise of MaaS is to offer a well-orchestrated set of mobility options out of one hand tailored to the customer’s needs. Simple. Seamless. If this holds true, then there will be only the need for one point of contacts to the customer: the MaaS provider. Actually my crystal ball tells me that there will be two different types of MaaS providers serving two distinct use cases. They will “own” the customer:
Municipalities and their Public Transport – for commute and short distance day-to-day mobility
Municipalities need an efficient traffic system with all mobility service providers being well orchestrated. An optimal system will never consist of the optimum of all of its sub-components. So there is a risk that powerful service providers will try to achieve their own optimum to the disadvantage o f the city. Given this conflicting of interests municipalities might be the only ones who can enforce an overall optimum for a city from a systems perspective. And there are already good examples where municipalities use their power to establish MaaS systems, e.g. Transport for London (TfL) and the Singapore Land Transport Authority (LTA) to name just a few. Given political will and power, public transport authorities of multiplicities will naturally become the preferred point of contact for day-to-day mobility and commute.
Online Travel Agencies (OTA) – for planned long distance travel
OTAs serve a very different use case: long distance trips often planned days ahead. Municipalities will only touch the “first or last mile” but by nature cannot cover the entire customer journey starting and ending in different cities. The big question is who these OTAs will be in future. Will it be the likes of Booking.com for leisure travel or Travel Management Companies (TMC) like Carlson Wagonlit Travel for business travel? Or will new players like Google Flights or WeChat take over?
Beneath these two MaaS provider types the customer’s own vehicles will of course still play a vital role in their mobility options, especially for commercial use – but with improving MaaS alternatives, it will become less attractive to use the own car.
But what about the other players in the transport industry? Even they are likely to loose direct customer contact, most of them will play an important role – even the role might change to a “backend provider”:
- Airlines, train and bus companies – they might be least affected as they usually already depend a lot on indirect booking channels.
- Taxis will be driver-less autonomous cars offered by large fleet operators using their economies of scale. Small, family-owned taxi companies as they exist today will disappear – with all the negative effects on the labor market.
- Parking and service providers: Their main customers in future will be the fleet operators, which will likely impact their margin as they then have to deal with very powerful purchasers.
- Bike and scooter sharing companies are the new kids on the block. We can already see a trend of integrating them into car sharing schemes. They will likely be swallowed by the big fleet operators and become part of a multi-modal fleet.
- Autonomous car sharing will likely be offered by large autonomous vehicle fleet operators. Vehicle manufacturers are unlikely to become fleet operators as neither fleet operations nor customer service is one of their core competencies. It is more likely that established car rental companies or the likes of Uber, Car2Go, Didi Chuxing or Waymo will take this position.
What about the suppliers?
Even less parking space on streets will be needed and software services will become more important, there will still be a need for almost all supply.
- Manufacturers of airplanes, trains, cars, bikes and scooters will still be needed even their customers might change at least for car OEMs: in future it will be large fleet operators instead of private customers via car dealers. The quantity of cars sold might not even decrease given that car-driven mobility will become cheaper and therefore more miles will be traveled by car – an undesired rebound effect from an environmental perspective.
- Drivers as “workforce suppliers” will face the biggest change: they will extinct.
Extinction of Mobility Species
There will also be losers. Here are the most prominent ones:
- Drivers: This is a no-brainer: if cars and trucks can drive on their own, why do you need a driver? You simply don’t. Sorry my dear driver but you’re out. This will probably be the biggest change from a labor market perspective as it will affect millions of low-income, low-education people who will struggle to find alternative jobs. If my crystal ball is right, this change will lead to violent “machine breaker” like uproar all over the world. At the end economies will win and drivers disappear with few exceptions: autonomous cars can already master highways in western countries but it might take decades until they are able to cope with chaotic traffic in southeast Asia, rural dirt roads or tiny roads from medieval times in Mediterranean cities. There will also always be some need for assistance beyond just driving, e.g. for the elderly or people with special needs or chauffeured services covering advanced information, convenience or safety aspects. But these will be niches for a minority who develops beyond just being a driver.
Update on 2019-01-04: Just one day after I argued that there might be violent machine breaker actions, the New York times published this article: Wielding Rocks and Knives, Arizonans Attack Self-Driving Cars. I just hope that my positive predictions will also hold true.
- Car Dealers: In a world of autonomous vehicles, cars will be permanently on the road and not useless waiting for their owners in a car park 95% of the day. The maintenance of such a moving stock can only be performed cost-effectively by large autonomous vehicle fleet operators. So private car ownership will become a rare exception and likely limited to commercial vehicles. But if there is no private car ownership anymore, there is no need for someone selling these cars to private owners. Sorry dear car dealer – but you’re out as well. If you want to stay in business you could either specialize on commercial vehicles or offer fleet operations services to the fleet owners.
- Travel Agencies: Well, that’s no news. Classic travel agencies serving private customers with comparable standard vacation offers are doomed already. Their undertakers are the Online Travel Agencies (OTAs) like Expedia or Booking.com today. And these OTAs will extend their offers for the first and last mile to many MaaS options as well. The only right to exist for travel agencies is based on specialized travel needs beyond standard offers which require expertise and human engagement. There might also be a future demand in the business travel domain for Travel Management Companies (TMC) – although: if I look at the poor offers I received from these companies, combined with high costs, I doubt that humans do a better job than algorithms. So I bet they won’t survive in their current state and expect a high grade of automation in this field coming soon as well.
- Ride Hailing and Car Rental Companies: You might ask why my crystal ball says that they will be losers as well? Well that’s not precisely what it says. It rather says they will change: if cars will drive autonomously, there will be no much difference between a ride hailing and a car rental company. Both offer cars which take you from A to B autonomously and take care for the rest. Both will try to become autonomous vehicle fleet operators and the question is just which of them is better prepared to do the job. And this where the crystal ball got blurry …
Update on Dec 31, 2018
I missed out one player type: “Fleet Management Service”, as Avis Budget Group offers it for shared shuttle service ViaVan or LiveCycle offered it to the (busted) bike sharing service oBike. Players of this kind offer maintenance, cleaning, charging, fueling and reallocation services for fleet operators. This is especially interesting for areas where fleets are still too small to justify own staff or growth happens too fast. Thanks to Anthony Barba @aBarba for this hint via This Week in Mobility.