How Portland, Oregon could benefit from Uber
Why does a progressive city turn a blind eye to the economic benefits of transportation change?
Many readers will no doubt know that Uber is a car transportation resource, aka a ride-sharing service. It operates in all the West coast major cities except Portland. Unfortunately the City of Portland’s Private-For-Hire Transportation Board of Review will not allow Uber to operate in the city, as it refuses to change the city’s transportation rules. For a city that is so progressive in regard to public transportation and its support of initiatives that make life better for its citizens, the board’s action makes no sense. For the record: There are only 460 licensed taxis serving a city of more than a half-million residents.
I believe the board should allow Uber to operate its business in Portland. Here’s why:
I recently took a cab from my home to Portland International Airport for a business trip to my company’s Culver City headquarters. The distance from my home to the airport is 16 miles and the cost was $57.85, or $3.61 a mile. A cab from LAX to Culver City — 8 miles — was $27.45 or $3.43 a mile. So the cab fares are comparable. That is, until you factor in Uber: Culver City to LAX via a different route was 12 miles and I paid $20.32 or $1.67 a mile. See image below. You’ll note that there was a discount too but I used the actual fare, not the discount fare, to get to the $1.67 per mile.
The AAA estimates that it costs almost $9000 per year just to own a car. In the case of someone like me who tends to make quite a few long-distance trips, my household has two cars. It is not an efficient solution as that second car often gets driven only to be parked up all day at a workplace. (Portland has great public transportation by the way, but our public transport schedules and my malleable schedules don’t always align making it inconvenient to use when leaving home most of the time.)
I decided to check out the Uber calculation model for trips I might make in Portland. I based my average Portland trip cost on the Culver City fee rounded up to $1.70. (Yes it’s an overly simple math equation I know, but please bear with me.)
As I work from home, a typical ride downtown for me to take meetings is a 10 mile round trip. Uber cost: $17.00. To do that five days a week: $85.00. Average 20 days a month: $340.00. Annual cost: Roughly $3500 taking into account that I don’t go downtown every day of the week in any given month. (It’s worth noting that I can also factor in carpooling for my downtown trips too. Once downtown I could use public transit to get around.) Given the AAA estimate, that would leave me with $5500 to use for other trips such as to the doctor, to the grocery store and out to dinner at night. The dinner comes with an added bonus of not worrying about that bottle of wine with the meal. To put it another way, $17.00 divided into $9000 equals almost 530 trips per year, and not all the trips would be downtown or cost $17.00; lets say my average is $10 per trip, I might then get access to 900 trips per year. Also, added bonus: no parking or speeding tickets!
My second car costs me $340.00 per month for the lease, or $4080 per year. It’s a small and economical vehicle, yet it requires 14 gallons per fill up, and gas prices today are $4.20 for a gallon of regular. That’s roughly $58.80 per fill up and let’s say I fill it up 1.5 times a month, that’s $88.00 per month, or $1056 per year. Insurance is $228.00 per month for an annual total of $2736. Maintenance is cheap, just oil and filter changes at $90.00 twice a year, so $180.00. Parking downtown currently costs me $1.60 per hour and on my last tax return I claimed a business write-off of 12 hours parking per week, or 624 annual hours resulting in a cost of $998.00. Brakes and tire replacement are an unknown at this point. The estimated total then is $9050.40.
Coincidentally, that figure aligns with the AAA’s estimate. Yes my driving habits are not atypical, but you get the idea.
If I were to use Uber for all my trips I could do without a second car.
The benefits of Uber:
Pick-up times. The average time is less than 5 minutes. You can track your car’s progress so you know exactly when it will arrive. Having confidence about a regular taxi’s arrival time is almost impossible. And remember, there are only 460 licensed taxis serving Portland, a city of more than a half-million residents.
Coverage density. As Uber evolves in a city, the geographic area they serve grows and grows. Uber initially worked well primarily within the San Francisco city limits. It now has high liquidity from South San Jose to Napa.
Payment. With Uber you never need cash to affect a transaction. The service relies solely on payment enabled through a smartphone application. This makes it much easier to use on the spur of the moment. You step into the car and on reaching your destination, you step out. Your receipt is emailed to you. You don’t have to tip the driver.
Civility. The dual-rating system in Uber (customers rate drivers and drivers rate customers) leads to a much more civil rider/driver experience.
Trust and safety. Most Uber riders believe they are safer in an Uber than in a traditional taxi. This sentiment is easy to understand. Because there is a record of every ride, every rider, and every driver, you end up with a system that is much more accountable than the prior taxi market (it also makes it super easy to recover lost items). The rating system also ensures that poor drivers are removed from the system. (My daughters tell me they feel safer taking Uber rides than they do when taking regular cab rides.)
NB: The benefits outlined above are an edited version from an interesting article by Bill Gurley, General Partner at Benchmark Capital, an investment company that has invested in Uber.
Now let me address some other benefits to not having a second car beyond the personal economics — If others were to decide that not having a second car makes perfect sense, there would be less traffic on the roads, leading to less congestion, less pollution and more road safety. Less gasoline use leads to less demand for oil. Less driving to work means less parking garages. Less cars means Portland’s terribly congested street parking issues may be lessened.
One way to sum this all up is to say that Uber creates happy drivers and in return creates happy customers.
Uber sounds like a perfect fit for Portland.
