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The Effects of COVID-19 on the Ride-hailing and Micro-mobility Industries

Prepared by: The Scooter Commuters 

Logan Billin, Brandon Chambers, Adam Dinkins. Bryson Passey, Israel Rivera

Introduction

COVID-19 has been the great agent of change across the globe in 2020.  All of us have needed to adapt and change to fit into a rapidly changing world.  On a personal level that might mean working from home and dealing with a lack of social interaction to protect ourselves and our families.  However, the effects of COVID go much deeper than just simple adjustments in our personal lives.  It has far reaching consequences into every structure of our society. Huge, interconnected worlds of trade and transit are now shaping themselves to a world molded by a global pandemic.  Besides the loss of life, COVID’s effect on the transportation systems of the world is possibly one of its most impactful and long-lasting consequences.  COVID has had a notable effect on new modes of transportation, such as ride-hailing and micro-mobility.  Because they are new and expanding sections of the market, a study of COVID’s effect on ride-hailing and micro-mobility is necessary to help form a clearer picture of how our other transportation systems will change in response to COVID.

Ride-hailing and micro-mobility are on the frontier of transportation advancement, with both rising in the last two decades to take over large portions of the personal transportation market.  They harness new technological advances to create more efficient and connected transportation systems.  By analyzing ride-hailing and micro-mobility before COVID and the resulting changes to each market, predictions can be made as to the future of these modes of personal transportation that affect us all as users of the transportation network.

Ride-hailing

Before COVID-19

To understand the effects of the COVID-19 pandemic on ride-hailing and predict where it may go in the future, we must understand what the state of the industry was before the pandemic.  Ride-hailing is still a new mode of transportation, though it has already become a frequently used mode.  It is comparable to traditional taxicab services.  The main difference is that riders hail drivers online rather than from the street.  The concept has been around since the late 1990s, but it has become increasingly practical as technology has become more accessible and mobile.  The major ride-hailing companies that most people are familiar with include Uber and Lyft, which were founded in 2009 and 2012 respectively.  Since that time, these companies have grown until their services were being used to make billions of trips each year.

The growth of this industry has caused many transportation engineers and planners to research ride-hailing and the effect it has on other aspects of the transportation network.  One such study that sheds some light on the purposes of ride-hailing trips and why COVID-19 has had such an impact on the industry was performed in Austin, Texas (Dias et. al., 2019).  This study used trip data from RideAustin, the major ride-hailing company in Austin, as well as census and parcel data to determine trip origins, destinations, times of travel, and frequent user demographics.  These data help us to infer what common ride-hailing trip purposes were before the pandemic and compare them to the trends we see now.

The data summary table from this study is shown in the Figure 1 below.  Some of the key data points to notice are the common origin and destination location types, the time of day trips were taken, and frequent user demographics.  Residential areas were the most common location for both origin and destination. Over thirty percent of ride-hailing trips started or ended in residential locations.  Commercial areas were nearly tied with Central Business District/Downtown Mixed-Use areas (CBD/DMU) with a little over twenty percent of ride-hailing trips starting or ending in each of those location categories. About fifty-five percent of all ride-hailing trips were taken at night between 10 p.m.  and 7 a.m.  Most frequent ride-hailing users were under the age of 45 and did not have a child at home. Nearly ninety percent of frequent ride-hailing users owned one or more vehicles.

Figure 1: Summary of data from RideAustin study (Dias et.  al., 2019)

The high frequency of trips in residential areas is to be expected since people have to travel to and from their homes.  The high frequency of trips to and from commercial areas suggest that many ride-hailing users are commuting between home and work via ride-hailing services. Inferring a trip purpose for the CBD/DMU areas is difficult because of the many purposes people could have to go there, but combining the high frequency of trips to these locations with the high percentage of trips made at night can suggest that many of these trips had entertainment purposes, such as going out to restaurants and bars.  The authors of the study suggest that one major reason people choose to use ride-hailing services is to avoid driving under the influence.  The demographic data from this study show that ride-hailing is most popular among the younger generations.  This is likely because these generations are more technologically literate than older generations.  Additionally, ride-sharing services like Lyft and Uber have been steadily taking over the market traditionally held by taxi services.  In mid-2017, ride-sharing services eclipse taxi services in New York City, as seen in Figure 2.  These trends are likely to continue in the future.

Figure 2: NYC Daily Trips: Taxi, Uber, and Lyft

Other studies have made similar conclusions to the study referenced above. The most common ride-hailing trip purposes prior to the pandemic were commuting and entertainment.  The frequency of these kinds of trips were greatly reduced when the pandemic began because of the work and social distancing restrictions that were enforced throughout the United States.  With many businesses, bars, and restaurants closed, trips to these places no longer took place.  The data presented in the following sections illustrates the effects this had on ride-hailing usage.

During Initial Lockdown

COVID-19 was declared a national emergency on March 13, 2020 by President Donald Trump. Additionally, most state governments, including all the highly populated states that make up the majority of ride-hailing services, initiated several week lockdowns.  In the uncertainty of a new disease, bars were closed, tourism withered away, entertainment died overnight, and a large portion of businesses were forced to close temporarily.  In many states, all non-essential workers were confined to their homes.  All non-essential business was suspended.  Ride-hailing services saw an immediate and large-scale decrease in their services.  Lockdown orders led to a sharp decrease in personal travel.  Individuals were only able to go to the grocery store or other essential business.  There was simply no more demand for ride-sharing services as all leisure and the majority of travel came to a screeching halt.  Customers also had a growing concern for their personal safety in a car that was not their own and were thus more likely to use other means of transportation for the few trips that remained.

Figure 3: Uber Gross Bookings Week on Week 2020

Figure 4: Uber Monthly Average Users and Total Trips

The full effects of these lockdowns can be seen in the figures above, reported by Uber in their quarterly earnings report.  As seen in Figure 3, Uber experienced a 60% decrease in Gross Bookings from mid-February to mid-March.  Their monthly users dropped from 111 million to 55 million, a 50% decrease. Additionally, total trips dropped from 1,907 million to just 737 million, a 61% decrease, both seen in Figure 4. Comparing the drop in average monthly users to total quarterly trips, a difference of 11%, we can see that not only did Uber lose half of their monthly users, but additionally those users who remained took less trips than before March.

In response to this dramatic decline, ride-sharing companies quickly rolled out new policies.  Beginning in May 2020, these policies were designed to both protect the company and their drivers from liabilities, as well as calm fears of COVID transmission experienced by users.  The policies common among all major ride-sharing services include:

●        Requirement for everyone riding, driving, or delivering to wear a face covering.

●        Free cancellations for riders feeling unsafe by drivers not wearing a face covering.

●        Required checklist for drivers including: having on a face cover or mask, sanitizing vehicle or food delivery equipment, and not allowing anyone to ride in your front seat.

●        Required checklist for riders including: wearing a face cover or mask, sanitizing hands, and sitting in the back seat with windows open for ventilation.

●        Required selfie from drivers before pickup, confirming that they are wearing a face covering.

Current State and Efforts to Recover

Ride-hailing services around the world have been hit hard by the COVID-19 pandemic, and Uber was no exception.  Prior to the pandemic, Uber released quarterly reports that highlight their tri-monthly gross bookings, revenue, and trips among other categories as shown below in Figures 5-7.  Additionally, Uber provided a summary of their gross earnings broken down by services. Because the first quarter was hardly affected by the pandemic, we will look closely at the second and third quarters. While the net revenue in the second quarter of 2020 was lower than that of 2019, we see that there was a decrease in revenue from mobility and an increase in revenue from delivery (Figure 8). This is because there were less trips made using Uber’s ride-hailing section and more food deliveries made in their UberEats section.  In this pandemic, people are encouraged more than ever to stay home and have food delivered to them.  Therefore, there was such a large spike in this year’s second quarter compared to the same time last year.  Delivery revenue increased from $3.386 billion to $6.961 billion which is a 106% increase.  The change does not stop here because on July 7th of 2020, Uber launched its grocery delivery system.  This effort was to combat the decrease in ridership Uber was seeing in its ride-hailing service.  Thus, we see in the third quarter of 2020 an even larger increase in revenue under Uber’s delivery service from $3.658 billion to $8.550 billion boasting a 134% increase (Figure 9).  While the ride-hailing service of Uber is still recovering from the pandemic, the delivery service section has been flourishing to maintain numbers in revenue near pre-COVID 19.

Figure 5: Uber Q1 Report

Figure 6: Uber Q2 Report

Figure 7: Uber Q3 Report

Figure 8: Uber Q2 Supplemental

Figure 9: Uber Q3 Supplemental

Figure 10: Uber Net Revenue

Predictions for the Future

While the pandemic is still on-going, the trends that we see in Uber’s data show some promise for the recovery of the ride-hailing industry (see Figure 11). In the first quarter of 2020, Uber’s ridership had increased since 2019.  Uber has currently recovered 90% of its Gross Bookings as of September (see Figure 3), 70% of their average monthly users, and 60% of their total trips (see Figure 4 for both) as compared to before the pandemic.  Restrictions and lockdowns for the pandemic began in mid-March and continued for the rest of the second quarter.  During this time, ridership was very low.  However, Uber has already begun to recover, and we see increased ridership in the third quarter.  Ride-hailing rates are still not back to where they were in 2019, but it is increasing from the lowest point in 2020.  As society continues to adapt to the pandemic and medical researchers come closer to creating a vaccine, this trend is likely to continue.

Figure 11: Quarterly data comparison of 2019 to 2020

Figure 12: Global Net Revenue for Uber

Once a vaccine is created and restrictions are lifted, it is likely that the use of ride-hailing will resume the steady increase in ridership that it had before the pandemic.  There may be a decrease in the number of ride-hailing trips for commuting, since many businesses which have adapted to working from home may continue to do so, but it is likely that the number of trips used for recreation and entertainment purposes will increase.  As seen in Figure 12, Uber has consistently become more and more profitable. As of Quarter 3 of this year, they have regained most of that revenue, putting them in the same position as they were in Quarter 1 of 2019.  Additionally, the trend of ride-sharing services to take over the taxi market as seen in Figure 2 is also likely to continue.  This, combined with the recovery rates stated above, shows that that companies have weathered the storm of COVID-19, retaining much of their revenue and user base.  As people return to working in offices and social distancing restrictions are lifted, people will turn to ride-hailing again as a reliable mode of transportation. As future generations become more comfortable with technology, we can expect ride-hailing to become a very popular mode of urban transportation in the future.  We fully expect the total recovery and expansion of ride-sharing services.

Micro-mobility

Before COVID-19

In the decade before 2020, micro-mobility was a new and emerging market.  According to a study from the National Association of City Transportation Officials (NACTO), 88 million bike share trips were taken in the US in the seven years between 2010 and 2016.  Afterwards, there was a 100% increase in ridership from 2017 to 2018 and an additional 60% increase over the next year.  The overall growth of the micro-mobility market and the individual modes of transit that are a part of micro-mobility is shown in Figure 13. Per NACTO’s study, the average trip in 2019 was around 11 to 12 minutes long and traveled 1 to 1.5 miles in distance.

Figure 13: Total Micro-mobility Riders by Year and Mode.

In a recent interview, Wayne Ting, CEO of Lime e-scooter service, commented on the nature of rides before and after the pandemic.  According to Ting, about 30% of Lime riders before the pandemic were tourists, or people not from the city they were riding in.  The main purpose in e-scooter ridership was as a form of “first-mile” and “last-mile” transit.  Basically, to get people to and from public transit options that they would use for most of their route.

In 2019, LINK introduced a fleet of 500 e-scooters to Provo, UT.  In an interview with Mayor Michelle Kaufusi, the Daily Herald reported that each of these scooters averaged 3 trips a day, or 1500 total trips a day.  Mayor Kaufusi confirmed what Wayne Ting had said in his interview: the primary purpose behind e-scooter trips was first and last-mile transportation.  Utah County data shows that 50% of e-scooter riders connect with UTA at some point on their trip.

During Initial Lockdown

With the initial lockdown and work-from-home initiatives launched worldwide in response to the continuing COVID-19 pandemic, transit in all forms took a major hit. NACTO’s micro-mobility report shows that the top 8 bike share companies saw a 44% drop in total number of trips in March and April of 2020.  This is a relatively small hit though compared to an 80% drop in public transit trips and an average 68% to 72% drop in total US household trips.  The drop in ridership forced micro-mobility companies to adapt.  This caused some of the smaller companies, like LINK in Provo, to completely withdraw scooter service for time.  Other cities worked with micro-mobility providers to focus e-scooter and e-bike service in areas near primary care centers and hospitals.  Bird, Lime and other companies instituted free rides for healthcare workers as an attempt to aid in the fight against COVID 19 and as an effort to stay relevant (Bird, 2020).

An analysis of credit card data by The New York Times found spending on scooter rentals had decreased by nearly 100% (Leatherby and Gelles, 2020).  NACTO reported a significant drop in profits and massive layoffs in the global micro-mobility market.  According to an online layoff tracker, layoffs.fyi, there were about 1000 full-time employees laid off by early May.  One of the biggest companies for micro-mobility, Bird, infamously laid off 400 employees in a two-minute zoom call (Tamplin, 2020).  For some companies, this hit was catastrophic. With the poor outlook for micro-mobility and no hope of the market returning anytime soon many companies were sold or went under.  Uber sold its shared bike and scooter business “Jump” to Lime, making Lime one of the biggest companies in the industry today (Hawkins, 2020).

To lessen the spread and encourage people that the scooters are safe, strict cleaning regimens were designed.  One company went as far as automatically locking their scooters after each use until someone could clean the scooter.  As their efforts began to pay off they were allowed to increase their presence in many cities, though as protests, unrelated to COVID-19, began to be wide-spread across the country, many companies removed their products from the streets (Lekach, 2020).

Some companies managed to weather the storm.  Super pedestrian, a micro-mobility company based in Cambridge, MA, is a company whose initial success comes from their e-bike product, the Copenhagen Wheel. Initial prior financial success and security allowed the company to secure the purchase of Zagster, the corporation that ran LINK.  The more secure company, combining its own experience and resources with that of the former Zagster, allowed for the reinstatement of LINK in many areas, including an initial 200 e-scooters in Provo, with a scheduled increase around the time when school would start up again.

Current State and Efforts to Recover

After the initial pandemic hit, the skies began to clear for the micro-mobility sector. According to NACTA, micro-mobility ridership in New York City was higher in July of 2020 than it was in July of 2019, and the data from Austin, Texas is showing a strong recovery. Micro-mobility has not only returned but has grown since the onset of the pandemic, and this growth came in ways that no one was expecting.  Former trends for when and where people were taking rides totally changed.

One of the biggest micro-mobility companies, Bird, posted on their blog in June what they are calling “The 3 Most Compelling E-Scooter Trends Post COVID.” Number 1, more people are trying scooters for the first time.  Number 2, Nearly twice as many riders are becoming repeat riders. Number 3, scooter riders are more than 50% longer (Bird, 2020).

Scott Tong, with marketplace.com, verifies Bird’s claims saying that micro-mobility is now being used for regular errand trips, recreational trips, and complete alternatives to potentially crowded public transit.  According to NACTO, the increase in NYC trips also includes a more spread out usage, with longer trips.

Wayne Ting expounded more on these changing trends.  In his interview with marketplace.com, he revealed that trips have moved away from financial and downtown areas and instead have turned to residential areas where the average trip is increasing in length and time by about 33%.  According to him, “We see people start at their home, they go on a 30- or 40-minute trip…” Some of these trips are running errands, some are visiting friends, but some are simple joy rides.  “What we think is happening is people want to be outdoors, and they’re not quite sure how to be outdoors while observing social distancing.  But they want to get the sun, they want to get the air, and they find bikes and scooters a really good way to do that,” he told marketplace.com. Lime introduced scooters to Orem and Lehi in early June 2020 and to no one’s surprise, has focused on placing these near residential areas.

The data collected by Austin, Texas, corresponds perfectly with these claims. Both scooter trips and trip duration have increased starting in May 2020 with a large increase in August and further increases month after month.  While many people lost their jobs and many companies went out of business, micro-mobility is poised to make a full recovery in the years that follow.

Figure 13 Trip Distance

Table 14 Scooter Trip Distance

Figure 15 Trip Duration

Table 16 Scooter Trips Duration

Figure 17 Trips

Table 18 Scooter Trips

Predictions for Future

The future of micro-mobility is promising, but the picture of where it’s heading is still not clear.  Hard financial times have removed many competitors from the market and allowed stronger companies to acquire their supply of scooters and bikes.  With less competition and an increased supply, companies like Bird and Lime are the ones to watch.

Predictions by NACTO rely on the adaptability of individual companies and the cities in which they provide their services.  They note that adaptability works best when the city and provider work together, as was seen in areas where micro-mobility was focused around care centers as part of the collective COVID-19 response.  Lime, as a business, is yet to turn a profitable year, however Wayne Ting notes that 2020 was expected to be profitable until the pandemic, but 2021 is still looking to be a profitable year.  Ting notes that the areas hardest hit by COVID-19 (such as Korea and Italy), have shown the greatest improvements in micro-mobility.

Conclusion

COVID has hit ride-hailing and micro-mobility hard, with both markets losing around half of their demand.  At the same time, they have bounced back and are here to stay.  Both sectors are highly adaptive due to their innovative approaches to personal transportation.  Each of these modes is data and optimization driven.  Therefore, companies can quickly change policies, like cleaning and tracking, and provide information to consumers to maintain operation and reduce rider fears.  By seeing how the innovative frontier of the personal transportation market adapts to COVID, we gain a clearer picture of the future for other transportation systems as well.  

The future of both ride-hailing and micro-mobility are bright, though for different reasons.  Ride-hailing, while still relatively new, is an established market with appropriate infrastructure.  The few companies that control it, namely Uber and Lyft, have weathered the storm of COVID-19 and are poised for further expansion.  They have regained the majority of their pre-COVID metrics without a loss of infrastructure.  Ride-sharing will likely continue to take over the taxi industry and may even accelerate as Uber and Lyft are more capable of adaptation than traditional taxi services.  Trends of increased profitability, efficiency, and market expansion will continue in a post COVID world.

Micro-mobility is an emerging and risky market.  This is evident in the many companies that have shut down and sold off their inventory in response to the pandemic.  As weaker companies die, this will leave massive holes in the market. Those stronger companies that have survived the pandemic are now better equipped for rapid expansion by filling those holes.  Armed with the inventory and markets of their former competitors, companies like Lime will be more profitable and likely expand into new urban and residential areas.

The future of ride-hailing and micro-mobility markets shows a very likely future for transportation systems in general: a move away from traditional transportation in favor of more flexible high-tech systems.  As systems adjust to a rapidly changing world, we are likely to see large and innovative solutions.

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