[T]he effect of surge factor is temporary. The impact becomes zero after an hour.
“Or they can wait out till the surge pricing is over. Or use another mode of transportation. After all, Singapore is small and we can go from one place to another using alternative transportation such as the bus or MRT.”
“Wow! So my parents can save 18 percent if they use taxi booking instead of Grab when there is surge pricing. And if they can outwait the rain, the surge pricing will go away after half hour to one hour,” said Teng as he digested the information. “I should tell Pa and Ma this, and even to Siew Ling as I can’t be driving them around all the time.”
Better Prediction
For Teng as a taxi driver, this meant it pays for him to look at the weather forecast so that he can anticipate areas where there’ll be rain and hence increased taxi demand. He’s a bit of a kiasu. So knowing such information before other drivers would give him an advantage. He wished Singapore’s weatherman would provide more granular information on location and time of rain. Then he would be around that vicinity when it starts raining to maximise bookings.
Such information would be beneficial not only to him, but also to the taxi company. If the taxi company could make better predictions of taxi booking demand, then congestion could be alleviated and there would be fewer idle taxis in no-rain areas.
The young man had told him that if a taxi operator could predict demand more accurately by 15 percent, this would lead to an almost 10 percent of additional reduction in vacant roaming time for drivers.
When taxis are better utilised on the roads by carrying passengers instead of vacant roaming, it makes for a greener environment.
The young man had also told Teng that there is a prototype already developed outside Singapore with 500 taxi drivers where recommendations are given by the taxi company on where to drive to for more pick-ups. These drivers experienced almost 30 percent reduction in their vacant roaming time.
“Wouldn’t that be fantastic if my taxi company could give recommendations on where these ‘hot spots’ are? Provided of course they are accurate,” thought Teng.
The Future of Taxis
“What about this new ERP that I hear about?” asked Teng to the young man, who seemed to keep up-to-date on transport matters.
“Oh, that one. Some call it ERP 2.0,” replied the young man. “The toll you pay is based on distance. And I think it uses some GPS system.”
“Doesn’t that mean that when I drive around looking for passengers, it will cost me more if I can’t find one?” asked Teng as he mentally calculated the average distance he drives without a passenger on board.
“That’s right. The new distance-travel toll would put a damper on taxi cruising. If you drive Grab, you know where your next passenger is from bookings, at least for most of the time. Then you’ll be cruising less and save on costs,” rationalised the young man.
“But what about the older people who don’t use Grab? I don’t think they know how to use these ride-hailing apps,” said a concerned Teng thinking of his parents.
“That’s true,” answered the young man. “Young people just use the app instead of flagging down a taxi along the road, even though at times it might just be cheaper to flag down a taxi. It’s usually the old folks who still flag down taxis. I see the demand for flagged-down taxis declining. And with the new distance toll, I think that may further discourage taxis from cruising for passengers, thus making it harder to flag down an empty taxi.”
It’s usually the old folks who still flag down taxis. I see the demand for flagged-down taxis declining.
“Do you think taxis will become obsolete?” asked Teng.
Seeing the disheartened look on Teng’s face, the young man offered some comfort.
“Uncle, look at it positively. Times have changed. I see the new distance-travel toll discouraging cruising. Which means as a taxi driver, you’ll have to be smarter. You have to know where to find passengers easily to reduce the distance travelled. You’ll also need to depend more on bookings for the ‘confirmed’ passenger. If you do this, your earnings will be higher as you drive less looking for passengers. Moreover, you won’t be so tired and you’ll be safer on the road. And think about this – there’ll be less pollution on the road when fewer empty taxis are cruising about.”
Teng had much to consider. His prospects as a taxi driver did not look too promising. He might have to consider taking up a sideline job or maybe even setting up his own business.
WANT TO KNOW MORE?
This chapter is based on Sumit Agarwal, Ben Charoenwong, Cheng Shih-Fen and Jussi Keppo (2019), “Fickle Fingers: Ride-Hail Surge Factors and Taxi Bookings,” Working Paper, National University of Singapore, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3157378
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1For more on this research on how taxi drivers set targets, see Sumit Agarwal, Ang Swee Hoon and Sing Tien Foo (2018), Kiasunomics: Stories of Singaporean Economic Behaviours, Chapter 2 “Taxi Driver, Where Are You?” (Singapore: World Scientific Publishers). To read the academic article, see Sumit Agarwal, Diao Mi, Jessica Pan and Sing Tien Foo (2015), “Are Singaporeans Cab Drivers Target Earners?” Working Paper, National University of Singapore, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2338476. This research has also been published as a commentary; see Sumit Agarwal and Diao Mi, “Why it’s so difficult to get a cab,” Today, (6 October 2016), https://www.todayonline.com/commentary/why-its-so-difficult-get-cab
2For more on this research on the effects of nearby construction on utilities bills, see Sumit Agarwal, Ang Swee Hoon and Sing Tien Foo (2018), Kiasunomics: Stories of Singaporean Economic Behaviours, Chapter 14 “Mama, Don’t Forget to Switch on the Air-Con,” (Singapore: World Scientific Publishers). To read the academic article, see Sumit Agarwal, Satyanarain Rengarajan, Sing Tien Foo and Derek Volmer (2015), “Effects of Construction Activities on Residential Electricity Consumption: Evidence from Singapore’s Public Housing Estates,” Working Paper, National University of Singapore, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2371314
2
CHAPTER
Productivity
“So hot, so hot,” grumbled Ah Mah at Singapore’s sweltering heat. “I never remember Singapore to be so hot. Last time when I was young, I could wear long-sleeve blouse when going out. Now I cannot tahan (tolerate) the weather. I perspire so much even when I’m wearing my short-sleeve cotton blouse. Singapore is getting too warm for me.”
“It’s because you are older now. And fatter too. More fat means more insulation. So you feel warmer,” joked Ah Kong. He thought his wife had been pampered by the air-conditioned comfort since shutting their windows to block out the noise from nearby construction.
Truth be told, he also shared the same sentiment as