Uber Technologies (NYSE:UBER)
Historical Stock Chart
2 Months : From Feb 2020 to Apr 2020
By Eliot Brown
Five years ago, Travis Kalanick was so confident that Uber Technologies Inc.'s rides would prompt people to leave their cars at home that he told a tech conference: "If every car in San Francisco was Ubered there would be no traffic."
Today, a mounting collection of studies shows the opposite: Far from easing traffic, Uber and its main rival Lyft Inc. are adding to congestion in numerous U.S. downtowns.
Officials in San Francisco, Chicago and New York have cited congestion as the main rationale for new fees they recently enacted on Lyft and Uber rides in each of the cities. Other regulators around the country are considering similar fees. Uber and Lyft no longer pledge ride-hailing will reduce traffic, acknowledging that they add to congestion, though they say some studies overstate their role in the problem.
The app makers initially thought their technology would create seamless trips, with four strangers forsaking their own cars for a shared ride. Cutting-edge algorithms, they believed, would steer behavior through pricing and route-matching, letting drivers spend little time between trips. Riders leaving their cars at home would then increasingly hop on buses, bikes or walk in a gridlock-easing ripple effect.
That utopia hasn't come to pass.
Most users take their own private Lyfts and Ubers, shunning pooling even though it costs them more. Rather than the apps becoming a model of algorithm-driven efficiency, drivers in major cities cruise for fares without passengers an estimated 40% of the time.
Multiple studies show that Uber and Lyft have pulled people away from buses, subways and walking, and that the apps add to the overall amount of driving in the U.S.
A study published last year by San Francisco County officials and University of Kentucky researchers in the journal Science Advances found that over 60% of the slowdown of traffic speeds in San Francisco between 2010 and 2016 was due to the introduction of the ride-hail companies.
In Chicago, the companies have been "creating exponential growth in congestion in the downtown," said Dan Lurie, policy director in the mayor's office. Last month, the city started charging a new fee on every ride-hailing trip to mitigate traffic.
The reversal of ride-hailing from would-be traffic hero to congestion villain is the sort of unintended consequence that has become a recurring feature of Silicon Valley disruption. Companies seeking rapid growth by reinventing the way we do things are delivering solutions that sometimes create their own problems.
Facebook Inc. set out to help connect people with each other, but also contributed to the spread of division and disinformation. E-cigarette company Juul Labs Inc. said it could reduce cigarette smoking, but fueled a crisis of teen vaping. Encrypted messaging apps designed to foster online privacy have become favorite communication tools of criminals.
Silicon Valley is particularly prone to focusing on positive potential effects of new technologies given a decadeslong culture of utopian ideals, said Fred Turner, a Stanford University communications professor who has written a book on the topic. Companies compete for engineers and entrepreneurs based on missions they say benefit society.
"It's very much part of the water," Mr. Turner said.
Tech companies tend to have an engineering-like, narrow focus on solving specific problems, often missing the broader picture as a result. "You're not rewarded for seeing the landscape within which your device will be deployed," he said.
Ride-hailing has dramatically changed transportation in dense cities. With a few taps on their phones, users can reliably and quickly summon a lift that is generally cheaper than a taxi. Uber and Lyft, which account for the vast majority of ride-hailing in the country, did hundreds of millions of rides in the U.S. last year.
But in hindsight, some of the pitfalls -- such as cars cruising empty between passengers -- seem obvious.
Uber and Lyft say their effect on congestion is small.
According to a study the two companies commissioned last year, they were responsible for 13% of all driving in San Francisco and significantly less in five other major cities. It estimated they accounted for 3% of driving in Chicago's Cook County. The study didn't address congestion and looked at areas bigger than just the city centers.
Researchers say the apps' impact on congestion is most significant in major, dense cities where they have large numbers of users. A study by the city of Toronto published last year found no measurable increase in travel times as a result of ride-hailing, but warned that the bigger the companies become in the city, the higher the likelihood that speeds will slow.
Uber and Lyft now emphasize the ways they steer riders toward alternatives to their ride-hail cars, such as by incorporating public-transit options into their apps. They have both launched shared scooters and bikes and have lobbied heavily for congestion pricing in cities including New York, so that all cars on the road -- not just theirs -- share the penalties for added traffic.
Uber is "determined to continue our work to improve access to shared and active transportation modes, while also doubling down in our efforts to advocate for road pricing," a spokesman said.
A Lyft spokeswoman said the company encourages shared rides, adding, "The biggest cause of congestion is people driving alone in their own cars."
While Uber and Lyft first focused on the positives that could decrease congestion, the factors that add to it are far larger, said Bruce Schaller, a transportation consultant and former New York City official who has studied the topic.
"The math is pretty simple and straightforward," Mr. Schaller said. In a paper presented last month to the Transportation Research Board, he estimated that for every mile of personal-car driving the companies remove from the road in large U.S. cities, they add 2.5 miles of driving to a ride-hailing vehicle.
In the early days, when Uber and Lyft began offering "pooled" rides in which a driver would pick up numerous people along the route of a single trip, executives were hardly subtle in their promises.
On CBS In 2015, David Plouffe, Uber's policy head at the time, was asked about a belief by New York City officials that Manhattan wouldn't be able to handle additional traffic from more Ubers. "It's complete nonsense," he said, adding Uber would reduce traffic. Mr. Plouffe didn't respond to a request for comment. Other Uber executives made similar pledges in cities around the country.
Mr. Kalanick, Uber's co-founder, gave a TED talk in 2016 extolling a future in which Uber reduced congestion and pollution. Mr. Kalanick declined to comment through a spokeswoman.
Meanwhile, in downtown San Francisco, the evening rush hour is dominated by a slow-moving sea of cars sprinkled with Lyft and Uber logos in their windshields.
Amit Adhikari, who has driven for Uber in the Bay Area for the past two years, said some days it can take 30 minutes to go the three-quarters of a mile from the financial district to the main interstate highway, and he can get stuck without a passenger on a gridlocked street.
"You get pretty stressed out," he said. "You're making nothing just sitting in traffic."
Traffic speeds in San Francisco's downtown core fell 21% to 13.7 miles an hour in 2016, from 17.4 miles an hour in 2010. Without the addition of Lyft and Uber, traffic speeds would only have fallen 6.7% to 16.2 miles an hour, according to Joe Castiglione, a San Francisco County official who was a co-author of the Science Advances study as well as a related analysis.
The Science Advances study, among the most robust research to date that looks specifically at congestion and ride-hailing, used data on San Francisco traffic speeds as well as data scraped from Uber and Lyft apps in 2016 and made estimates about how other changes -- like the nearly 100,000 jobs the city added -- affected traffic.
Uber and Lyft have said the study has flaws, saying it didn't account for other factors like the growth of e-commerce deliveries.
The main factor that could decrease congestion -- passengers sharing rides -- hasn't taken off. Researchers and analysts estimate roughly 20% to 30% of rides in major metro areas are pooled. Recently the ride-hailing companies have increased prices for their shared rides, which, Uber Chief Executive Dara Khosrowshahi has said, tend to cost the companies more money than one-party rides. Both companies say they are committed to shared rides.
The biggest factor by far is the large amount of time Uber and Lyft drivers spend without any passengers, hunting for fares. A December report by the California Air Resources Board found ride-hailing cars are driving with no passengers 39% of the time; New York City estimates such cruising at 41%.
Riders also take car trips that wouldn't have happened before Uber and Lyft.
Mr. Schaller said in his paper that surveys in numerous cities found roughly 60% of riders in Ubers and Lyfts would have walked, biked, taken public transit or stayed home if a ride-hail car hadn't been available.
Mass-transit use has declined overall in the past decade, even as employment has grown. In the 12 months through September, transit ridership in U.S. and Canada was down 7.7% from a 2014 peak, according to the American Public Transportation Association.
Researchers say some of that is likely due to declines in gas prices as well as cheap auto loans. Car-ownership rates are up and the percent of carless American households, at 8.8% in 2017, has stayed virtually flat since ride-hailing began, according to U.S. Census Bureau estimates.
More people are also working from home, not commuting at all.
Lyft said it estimates nearly 500,000 people in the U.S. have given up their personal cars because of ride-hailing.
Many policy makers and researchers say Uber and Lyft have contributed to the drop in mass-transit ridership.
A paper from University of Kentucky civil-engineering professors presented last year at the Transportation Research Board estimates that after Lyft and Uber enter a city, bus ridership will decrease by 1.7% a year and subway ridership by 1.3% a year, based on data from 22 U.S. cities.
However, the research on ride-hailing's effect on mass-transit ridership isn't unanimous and Uber and Lyft have pointed to other studies showing how ride-hailing complements transit, as riders use it to get to a train or bus. A 2018 paper in the Journal of Urban Economics by a trio of economists found Uber increases ridership by 5% after two years of being introduced in a city.
Lyft for years advertised in subways and on bus shelters around the country. One New York City subway ad campaign described Lyft as "the most affordable ride in town." Uber's prospectus ahead of its 2019 initial public offering mentioned it competes with public transit for some rides.
In Chicago, city officials blame Uber and Lyft for part of the Chicago Transit Authority's ridership decline in recent years; trips in the city's central Loop fell 5% from 2015 to 2018.
Data the ride-hailing companies provided to the city show that 77% of trips in downtown are requested by one party, the rest being shared rides. Ride-hailing trips starting or ending in the downtown totaled over 158 million miles in 2018, up 309% from 2015, the city found.
In New York, weekday, daytime traffic speeds in Manhattan below Central Park fell 11% between 2014 and 2019 to 7.1 miles an hour, a slowdown transportation officials blame in part on the growth of ride-hailing. The city estimates ride-hailing cars and other for-hire-vehicles -- excluding taxis -- make up nearly 30% of all traffic south of 60th Street.
On a recent Saturday, Cara Burke was hurrying to make a dinner reservation from her East Village apartment and opted for an Uber over the subway or walking in the hope of getting there in 10 minutes. Instead, the ride lasted 25 minutes as the car sat stuck in traffic.
"I could've just gotten there for free or for $2.75 in the same amount of time," Ms. Burke says. Her Uber driver was just as frustrated, telling her he should have stayed in Brooklyn instead of coming to Manhattan.
Francesca Fontana contributed to this article.
Write to Eliot Brown at firstname.lastname@example.org
(END) Dow Jones Newswires
February 15, 2020 00:14 ET (05:14 GMT)
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