The Transport Sector is Ripe for the Gig Economy

Sep 27, 2018 · 3 min read

The shift to the “gig economy” has been underway for a while. In Canada, up to 30% of the workforce is represented by freelancers, contractors and consultants. And the transformation from regular 9-to-5 work to work-on-demand isn’t slowing down. Most companies have stated an intention to move towards (I love this euphemism) a “more agile workforce.” Businesses have an appetite for a labour pool that can shrink or expand on demand — this is one of the holy grails for any company that faces seasonality or peaks and troughs in its sales.

Few sectors are as well-suited as transport for the kind of labour-on-demand the gig economy could provide. Ride-hailing à la Uber and Lyft addresses the needs of a consumer base that wants convenience and selection. Special events in cities create surge periods of demand when it’s nigh impossible to find a taxi; ride-hailing services fill that demand, and compete with taxi services by providing a varied product and occasionally better pricing.

We can flip the scenario around as well. A bike messenger company will have a need for extra messengers around lunchtime and at the end of the day. Imagine an app that sends out asks for deliveries to bike messengers. The messengers accept (or perhaps compete with bids for) the delivery jobs on a case-by-case basis. The company doesn’t have to plan for a workforce that will be often be either under- or overutilized, and it has far more flexibility in accepting delivery work from customers. This all translates into lower expenses and higher revenues, a simple calculus that results in higher profits.

If one were to expand these scenarios to encompass the greater transport ecosystem, an interesting process takes shape. While the hub-and-spoke logistics model is nothing new, the labour that populates it in a gig economy represents independent contractors who compete with one another for delivery jobs at each level — and that is new. At a major hub, a truck operator bids for payloads to fill his container. He brings his container to a depot at a small city, where the payload is broken up and is bid on by cube van drivers. The cube van drivers each deliver their packages to even smaller depots, where couriers in electric hatchbacks or on e-bikes make deliveries door-to-door. At every stage the labour is provided by someone who chooses their gigs for the day. Everyone gets paid and everyone is motivated to perform.

Thinking a little further, blockchain can enhance this ecosystem by securing payments with smart contracts and recording deliveries transparently. The administration of invoicing and collecting fees becomes a thing of the past, as everything is handled via cryptocurrency transactions. The gig worker can focus on getting the payload to its destination, rather than bookkeeping.

While gig labour fits remarkably well in the transport sector, there is some talk that the gig economy doesn’t offer the financial rewards needed to sustain a living. This is true on the face of it, but an important factor to consider is that the platforms that are enabling this kind of work (such as Uber) continue to grow and continue to find profits, in part by foisting the costs of fuel, vehicle insurance, wear and tear, and travel to and from pickup points onto the drivers themselves. One wonders how well transport-related gigs might pay if the centralized platforms are removed from the equation and the full value of each ride were paid to the driver directly. It’s certain that there are some workers out there who are willing to find out, if given the opportunity.

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