I’m a fan of the ride service UBER, and my friends tell me that Lyft is just as impressive. Whip out a smart phone, punch a couple of buttons, and pick a destination. It’s actually faster than using your phone to call for a cab. Usually in less than ten minutes you’re sitting in the back of a clean and well maintained vehicle, with a polite and well-dressed driver at the wheel, heading for your destination.
This emergent transportation alternative to traditional taxis provides cleaner cars, more professional drivers, a faster response time, and in my experience it costs about half of what a traditional cab ride costs. It is a demonstrably better product at a significantly lower price. No wonder that traditional cabbies are feeling some heat.
This morning my UBER driver was Dionna. Dionna drives for Lyft, as well. I was actually impressed with Dionna more than the UBER service, which says something, because I really like UBER.
Dionna understands logistics far better than your typical thirty-something, and more deeply than most government bureaucrats. Each day she looks at the promotions that UBER has running for drivers, and what promotions that Lyft has running. Somehow she also factors in an estimate of call volume on each of the services, and checks out the number of cars running. Based on what she sees, she decides on which company she’ll drive for that day.
I think they call that market research. Dionna is doing real-time assessments of supply, demand and pricing. I teach business at the collegiate and graduate school level, and I wish I had more like Dionna in my classes. She gets it.
As for the customer experience, UBER costs about half of what a cab ride costs, the drivers like Dionna are more professional and the vehicles are cleaner. It’s no wonder the market for taxi medallions is collapsing in places like New York City.
So why do we still have the antiquated infrastructure and regulations for cab licenses in our metropolitan areas? Why are the regulators trying to impose restrictions and licensing requirements on UBER and Lyft, to make them more like cab companies? Why aren’t the bureaucrats loosening restrictions on traditional cab companies to make them more competitive, rewarding innovation, not stifling it? Instead, in many places government regulators are trying to add restrictions to UBER and Lyft to make them more like traditional cab companies.
Using UBER as a starting point, let your mind run free, and imagine rethinking transportation services – that is to say LTL trucking – or air transportation. If it can work for taxis, why not rethink logistics infrastructure and capabilities on a broader scale? If you think it is far-fetched, think again. They already have test markets up and running. And hey, are you ready for autonomous delivery vehicles – Amazon is talking about them.
Internet-based logistics services are a shining example of how markets themselves can effectively self-regulate transportation and logistics value, and spur innovation more effectively than government bureaucrats. Keep an eye on how things start shaping up with the new administration in Washington. Experienced business leaders will be moving into senior roles. And that means that innovative options in logistics markets might be coming from Washington for a change, and regulatory overkill that disrupts markets – like taxi medallions – will be on the chopping block.