Mobility Pac-Man — Rules are changing
Waka, waka, waka, waka. Remember that noise from your early days? The sound it made, when you were in control of Pac-Man and you were eating these little dots along the way, while being chased by the four ghosts? For leveling up, you had to collect all of them. Dong-Di-Dong, next level. The highest possible score is 3.333.360. Take that x3000 and you will have the investment of the German government into public transport in 2019: +10 billion euros.
If you take a look at the mobility landscape globally and the ubiquity of new mobility services, double or even triple growth digits, insane amounts of venture capital invested, mergers and tons of acquisitions, can you hear it? Still very quiet, but it’s there. Waka, waka, waka, waka.
Public transport is, and will always be, the backbone of inner-city mobility and this doesn’t seem to change. Numbers show, that the utilization is at its all-time high and that, even very slowly, more people tend to use public transport instead of their privately owned vehicles. But while you, as the public transport company in the role of Pac-Man are collecting the little dots (travelers) along your fixed route through the city, you are hunted by ghosts, by far more than only four. They want your customers. Waka, waka, waka, waka. Dong-Di-Dong. They want to use your infrastructure. They want to take control of you.
The world is changing at a faster pace than ever. With the increasing demand and hunger for new mobility concepts, mobility solution providers are under pressure. They have to satisfy the demand for services that are convenient, fast and affordable. Innovation in technologies as the IoT, AI, and breakthroughs in telecommunication has led to the successful introduction and rapid penetration of new mobility solutions and services.
Meanwhile, traditional mobility ecosystems struggle to fulfill the needs of their customers, are too slow to adopt trends and to be first movers in innovation. The emergence of new concepts, such as Mobility-as-a-Service (MaaS), have forced them to reorganize interactions between them, riders and the so-called new mobility providers.
Mobility back in the days
The transportation sector, in general, is not known for its dynamics and disruptive innovations. From a historical perspective, three systemic changes have been witnessed so far: The expansion of the rail network in the mid-19th century, its electrification at the turn of the century, and the expansion of the car in the early 20th century. Since the turn of the millennium, the next wave of innovation is emerging, characterized by the fact that information and communication technologies are fundamentally changing lifestyles, choice of transportation and the way we move from A to B. Analogous to the industrial revolution, which is driven by connectivity, new ways of communication and automation technology, we speak of Mobility 4.0 — fully connected, efficient, sustainable and intelligent.
Roles are changing
For several years there has been a peaceful co-existence between the old incumbents as public transport operators and private car ownership. Firstly automotive OEM giants joining the market, starting with operating car-sharing. These companies have established themselves on the streets of the metropolises worldwide for several years now, and have built up ecosystems that include on-demand offers, other modes of transport as well as passenger experience services. Over time new players were tapping into the market, offering bike (then e-bike), scooter, moped, ride-sharing concepts. In the beginning, still peaceful. Concepts needed (and some still need) to be proven.
Tech companies are now entering the market
Fueled by skyrocketing sums of venture capital and the support, especially fincancially, of the global tech elite, new concepts were pushed into global markets, focusing on growth — no matter what. Consolidation was coming. Acquisitions have happened, a lot of money has been burned (and still is) and companies merged to build a few (big) winners.
These winners, enabled by digitalization and endless money, are entering the market intending to gain critical positions in extended and reshaped mobility ecosystems or might shape them by themselves.
The traditional division of roles in the mobility sector is being challenged today and will change dramatically in the future. It has already. Existing players are desperately looking for ways to broaden their roles by developing add-on services to their core mobility offerings to escape the “commodity trap”. The peaceful coexistence is wavering. A fundamental change is taking place. New winners = Ghosts. Hunting for you. Waka, waka, waka, waka.
Disruption is on its way — What are the drivers?
Mobility demand is booming
Connectivity / Digitalization: The digitization, the deep penetration of smartphones and fully connected networks, lowers entry barriers and paves the way for new players with seemingly unlimited resources, which attack the market from a different angles.
But what are new players doing differently in comparison to old incumbents? They focus on the customer. Providers of public transport have overslept innovation for years, to offer new services, to reinvent themselves and that, as a consequence, has left significant gaps in the transport network. These gaps have fueled a growing army of small-scale private companies, each offering a specific function: parking, carpooling, peer-to-peer car clubs, ride-hailing, or on-demand bus rides. Typically, each operator requires its own app, with a separate interface and payment mechanism, and each service maintains its own customer relationships.
Digitization constitutes a major opportunity to reinvent mobility systems and make them ready for concepts like “Mobility-as-a-Service”. Digitalization is one of the main drivers upgrading the mobility system to an entirely new level — mobility will become a truly connected system.
Urbanization: The mobility landscape is reshaping completely, and urban mobility poses a massive challenge to public authorities as well as huge opportunities. The demand for mobility in urbanized areas will double until 2050. In addition the daily number of individual journeys has grown massively and putting increased pressure on existing urban mobility systems today — and even more tomorrow. As an effect of fast-growing e-commerce, there is significant growth expected in the field of goods mobility.
Sharing Economy: The traditional model of car ownership is in decline, making way for a new sharing culture. The car as a status symbol is vanishing. The current generation of 18–25-year-old customers is increasingly willing to share, and rather focused on usage than ownership, as long as the offering matches with their individual needs. Not owning your assets is the new way to go in the digital economy. Platforms are popping up, showing incredible growth, demonstrating their power to disrupt old industries and redefine rules — best practices: Uber, Airbnb, Amazon, booking.com.
Individualization: Customers’ expectations for fast, reliable, convenient and individualized mobility solutions are always one step ahead of services offered to them.
- Consumers expect offerings to be personalized and development of more tailored push offers
- Expectations towards seamless journeys and intermodal integration
- Collaborative practices to be more commonly used (Sharing)
Sustainability: Sustainability is the topic in global politics, which is more and more focusing on moving towards a more conscious and sustainable society. Mobility behaviour is changing and you can not only see that in the growth of sales of EV (really sustainable?), people show awareness and act sensible when it comes to protecting and saving our planet. Usage of public transport is growing, especially when the combination with bikes and other last mile vehicles is easy and straight-forward.
Described drivers and changes enable intermodal mobility services in a scope which makes it available for the broader public. Due to availability and access to information and connected services, certain use cases will be transformed into businesses. You might have heard about intermodal routing, multimodal and integrated mobility platforms etc.
Intermodality — This is just the beginning
Intermodality is a form of multimodality. Multimodal travel behaviour refers to the use of different modes of transport within a fixed period of time (e.g. one week), e.g. one trip by bike, one by car, and the next by foot. In contrast,
“intermodal travel behaviour is understood as the movement of people involving more than one mode of transportation during a single, seamless journey.” (see DLR, 2017)
MaaS — The new “from A to B”
Mobility-as-a-Service was born in Finland and was developed by Sampo Hietanen, Mr MaaS. He defines the concept as a Service which brings every kind of transport together into a single intuitive mobile app. The Chalmers University of Technology defines MaaS as
“Multimodal and sustainable mobility services addressing customers’ transport needs by integrating planning and payment on a one-stop-shop principle”.
MaaS combines components as: shared mobility, multimodal travel information and booking/ticketing. MaaS-platform operators offer access to a landscape of different (mostly private) transportation modes via one mobility platform — the one-stop-shop for transportation as it’s often called. In a wider view MaaS describes a shift away from personally owned modes of transportation and towards mobility solutions that are consumed as a service especially addressing private car owners — not own, use.
The backbone to any MaaS offering, are its largest players, the public transportation providers. Pressure and the aim to “broaden their role in transportation” has driven many transportation agencies to introduce new modes of travel, such as bike-sharing, to join up with complementary modes, such as car-sharing or to build public-private partnerships with rockstars in dedicated areas such as ride-hailing. In the next episode, we’ll discuss, what happened here so far, what we learned and what’s best for public authorities.
But why MaaS?
The concept of MaaS is in the early stages of deployment and is growing insanely fast. The main driving factor is the increased complexity around us. With a growing number of new services, journey planning apps, ticketing and payment options, simplicity is required and most likely the key to success.
As well as bringing consumers more easily from A to B, MaaS can also provide information back to the cities to help them plan future transportation advances and improvements and could also contribute to the city’s economy and generate new revenue streams.
An important factor in making MaaS a success case will be getting all the players to the table and give them reasons to work together — not against each other. Private sector participants might join the movement, with dollar signs in their eyes, in search of profits, while government agencies could get in as the neutral core which influences mobility on behalf of its political agenda e.g. reduced congestion, higher productivity, better air quality, fewer traffic accidents etc.. Mobility providers and cities will gain these benefits only if they collaborate.
32.6 % CAGR
Do you think this could be a gamechanger? Well, according to Reuters, the global MaaS Market was valued at $24.1 billion in 2018 and is expected to grow to $230.4 billion by the end of 2025. Gamechanger enough?
What is holding back change?
Mobility visions and policies do not cover requirements.
Cities and public transport authorities do not yet have clear visions of what their mobility systems should look like in the future and lack applicable strategies to get there. Moreover, there is a lack of integration between transport modes, across different urban policies and across regions, leading to sub-optimal outcome in terms of performance and utilization of assets.
Not capable of foreseeing upcoming trends, too static to react properly.
Urban mobility often operates in an environment that are too fragmented and rigid towards innovation. Mobility systems still do not respond to evolving customer needs, can not foresee upcoming trends and are technically not able to combine single steps of the mobility value chain into integrated systems. And, despite evolution over recent years, mobility systems still often do not sufficiently bring together key players to work jointly to develop innovative mobility solutions.
The mobility systems of tomorrow encourage using more sustainable modes of transport. Setting incentives to better influence behaviours.
In order to address future mobility challenges, cities and mobility solutions providers must first adopt more comprehensive management of mobility supply and move towards an innovate mobility management approach in order to better influence behaviours under, on and above our street. The mobility systems of tomorrow should be intermodal, personalized, convenient and connected, and encourage the usage of more sustainable modes of transport while integrating new mobility solutions and in future, autonomous vehicles.
These evolutions trigger a number of opportunities, but also present key challenges for mobility solution providers — especially for traditional public-transport operators that need to bridge the gap between this new array of demands and the services they currently offer.
Please, public transport, be brave! Otherwise: Waka, waka, waka, waka.
How to solve this, dear public transport?
Build something in-house and try to compete? Are you nuts? Acquire one of them? Well… got some pocket money or is Masa your best friend? Join forces, build strong relationships and combine the best from both worlds: Speed and hunger vs. experience and longterm thinking? Glad you ask.
We’ll dive deeper here in the next episodes, where we are going to elaborate on Cha-Cha-Cha — The dance for supremacy in urban transport and The holy grail — The Winner won’t take it all.
