Uber, COVID And The Future Of Public-Private Partnerships

Over the last few weeks, we saw several interesting announcements related to the gig economy and the future of transportation.

First, from Dallas: "Uber Receives Three-Year Contract to Supplement DART Microtransit Service," and similar arrangements emerged in Miami-Dade County:

"Their continued partnership also reflects a trend of transit agencies turning to rideshare services to fill transportation gaps. Although Uber (UBER) has seen a major loss in demand due to the COVID-19 pandemic, places such as Miami-Dade County have turned to Uber and Lyft's services to subsidize rides along its bus routes that have been suspended at night."

Of course, this is part of a broader trend: "Some U.S. city transit agencies turn to Uber as ridership drops during coronavirus crisis."

"An Uber spokesman said the latter initiative was not a major revenue stream compared to Uber's pre-coronavirus business, according to Reuters, but that it underscores the company's hopes to further expand into the public transportation sector."

So, if Uber does not see this as a significant revenue stream, why does the firm do that?

Revenues are meager for Uber these days (91% fewer rides), so it's clear that any way to keep drivers occupied, while not losing money is a good idea. But I think this goes deeper. As part of its S-1 filing, Uber identifies a "massive market opportunity" in the estimated 4.4 trillion miles traveled by people on public transit in 175 countries in 2017.

Is Uber using these private-public partnerships to get deeper into this "massive market opportunity"?

This is an excellent example of one of the gig economy's main benefits: the ability to match supply and demand in almost every possible time scale. But it also potentially exposes the main issue. These are market solutions, which may be different than the ones that benefit society. Everything can be subsidized, but it is easier to reverse these decisions than the long-term investment in infrastructure, making them much more dependent on the political climate of the moment. In that sense, it is essential to note that Uber has a dark past when it comes to these private-public partnerships.

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Harry Goldstein 11 months ago Member's comment

Good article, looking forward to your next one.