Pre-Empting the Next Transportation RevolutionFri, 09/01/2017 - 12:06
Necessity is the mother of invention and the modern world’s mobility needs are paving the way for new solutions. In fact, by 2020, the shared-mobility industry is expected to be valued at US$300 billion. Ricardo Weder, General Manager of Latin America for Cabify, is certain that a third transport revolution is coming and Cabify is determined to be one of its leaders and most relevant players.
“The combination of shared mobility, autonomous and electric cars will be the long-term solution for mobility problems,” says Weder. The expectation that the shared-mobility industry will be worth US$300 billion is small compared to 2020 expectations for global light vehicle production alone, which was seen at US$1.6 trillion in a ProMéxico report, but the estimate is enough to interest companies like Cabify.
Weder’s premise is simple: newer technologies have improved the power and safety of cars. However, the underlying value proposition for the use of private vehicles remains unaltered. Several factors point to the upcoming transformation of transport services. “For young people in developed countries, it no longer makes sense to buy a car and in the future people will stop owning them.” Though the future for shared-transportation companies seems bright and growing in popularity, there are still several challenges. The biggest hurdle in Mexico, Weder says, can be found in government regulations. “Companies must lobby to change regulations that will open markets to mobility startups,” he says.
Encouraging healthy competition between all industry participants is important. “More competition equals more alternatives for users. The more competition, the bigger the industry becomes and we all win.” Weder argues that the only way to keep users’ interest at heart and promote the creation of mobility startups is to define laws that promote open industry, locking the possibility of price dumping out of the sector. For Cabify, this is not a matter of protectionism but of regulations that make sense socially and economically. “Mexico City is the first place in Latin America with regulations for transport networks. Now it needs to perfect them,” says Weder. Cabify’s competitor, Uber, holds 60 percent of the Mexican market, while Cabify dominates the other 40 percent, says Weber. Mexico holds untapped potential that makes it attractive for shared-mobility companies. INEGI reported around 50 million people using smartphones in 2016 with the capacity to host the platforms of shared-mobility companies.
Market openness allows for the creation of diversified products. Cabify has over 65 different offerings. The company’s digital platform has five options in Mexico including Executive, Lite, Access, CabiFLY and CabiFLY Shuttle. The Lite and Executive options are similar to those offered by competing on-demanddriver companies. Both options offer the possibility of making reservations for future trips, a feature that stopped being exclusive to Cabify in late 2016 when Uber started a similar service after users asked for it.
Innovation and originality of service become evident in Cabify’s third and fourth service offerings. The Access service is intended for people with physical disabilities. Vans used for this service are conditioned to fit five passengers, including the driver and a wheelchair in the back of the van. Data from INEGI show that as of 2010 Mexico had more than 5 million people with physical disabilities, accounting for 5.1 percent of the total population.
Meanwhile, CabiFLY Shuttle is today a helicopter service offered between Mexico City’s Polanco neighborhood and the Mexico City airport. The company expects to extend the service to the Santa Fe area in Mexico City in the future. Cabify is also working with IT suppliers such as Google to create real-time information on traffic and a street’s physical condition such as potholes and road work. Should the plan be successful, information gathered will contribute to the creation of an integrated mobility system meshing private companies such as Cabify with public transportation. According to Weder, technology companies such as Google and Apple could benefit immensely from information retrieved from mobility solutions, since it opens doors to new business opportunities. But IT suppliers are not the only partners Cabify foresees. Weder believes that in the future, e-commerce companies such as Amazon and Alibaba will depend on alternative mobility companies to provide express delivery solutions.