U.S Taxi Market, The Need for Reinvention
The taxicab has spent a century solidifying itself as an iconic fixture on the streets of U.S cities. Be it the sea of yellow that floods New York City or snaking lines outside of the grand casinos and hotels of Las Vegas, you can always count on catching one.
The industry has adapted and re-adapted itself consistently for over a century, with technological advancements from horse and cart to hybrid and electric vehicles, hailing to e-hailing, and the ever changing regulatory environment. However, the recent introduction of ridesharing has seen taxis face their toughest competition yet, with taxi trips falling by 11% since 2015. However, while the industry has undoubtedly been affected by the emergence of ridesharing companies like Uber and Lyft, it is a common misconception that the industry is failing.
A market boasting over 340,000 businesses and 409,000 employees, the Taxi and Limousine Services industry has experienced consistent growth over the last five years, despite substantial new challenges and competition from TNC’s. A recent report from IBIS World suggests that economic improvements such as the increase of corporate expense accounts and everyday consumer spending has allowed the industry to remain relevant and competitive, at least in the short term. Despite the increase in rideshare companies, which have siphoned significant demand from traditional operators, overall, industry revenue increased at an annualized rate of 6.0% to $18.9 billion from 2011 to 2016, including a 2.1% increase in 2016. This growth is anticipated to increase again over the next five years. Having fought and maintained its status in the for-hire transportation business over the last three years, it is now imperative that the taxicab transforms itself once again.
Taxi companies need to look inside as well as outside of the vehicle. While mobile apps have changed how drivers receive and passengers request rides, the use of technology to modernize legacy taxi infrastructure will change how today’s taxi fleets operate. With all the historic changes to the taxi ecosystem, the one constant has been the taxi meter. Yellow cabs have used taxi meters since the late 1800’s, adopting the electronic meters used today in the 1980’s. Even rideshare uses what is commonly known as a ‘soft meter’ that operates through a mobile app. While it lowers the cost of hardware and offers flexibility, it is not subject to the same rigorous government regulation as a traditional hard meter. There is an opportunity in the market for investment into a federally regulated meter that marries the backbone of a hard-metered rate with the flexible integration and processing capabilities of a ‘soft meter’.
The open connectivity of a SmartMeter allows fleets to continuously improve and innovate their business. From fleet management software platforms that provide cashiering, shift tracking and performance data to be easily tracked and reconciled, to automated dispatch solutions that aggregate all demand into a single funnel to create reliable taxi supply across the market, the industry benefits are countless. Drivers will no longer need to futilely waste time in lines and lots, crowd their dashboards or doubt the connectivity and reliability of riders. Owners can repurpose their resources with back office efficiencies, and use real time and historical data for performance monitoring, training and driver behavior improvement. Regulators can access specific reports based on live driver and fleet data to better understand and impact their city’s taxi market. Taxi businesses in their entirety become empowered with the tools and technology to compete in the digital demand driven world.
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