Innovation and the changing role of taxis now - and in the future

"Higher levels of automation have already begun to change the landscape of the taxi business, providing owners with significantly improved insight and the ability to optimise their companies"

Published on 19.01.2018, in automated taxi system

What’s your definition of a taxi? Sure, you’d say, it’s a motor vehicle that’s licensed to transport passengers in return for a fare. And if you asked the average person on the street, that’s likely the answer you’d get, too.

But the meaning is changing. New technology means there’s an opportunity for taxis to be so much more than that.

Higher levels of automation have already begun to change the landscape of the taxi business, providing owners with significantly improved insight and the ability to optimise their companies. With this foundation comes the potential to use new technologies to position taxis as an invaluable part of future transport solutions. Below, we’re taking a look at five ways innovation looks set to change the taxi business.

Taxis to combat anti-driver measures
In an effort to combat an increase in air pollution, a growing number of large cities such as London and Toronto are clamping down on private cars. Easing traffic gridlock and limitations on parking are also part of these new policies. Some clampdowns seek to make the costs of driving into a city prohibitive, with congestion charge zones in effect and increased parking fees for diesel vehicles.

These measures seem to do little more than antagonise motorists. Forcing private car owners to use a public transport network that isn’t yet efficient, reliable or good value for money isn’t solving the problem.

However, an uptake in electric vehicles (EVs) by the taxi industry could have a hugely positive effect on city living. With zero emissions from each EV and almost silent running, the immediate effects are obvious and beneficial.

Plus, this approach could form part of a wider strategy which changes how traffic flows around a city. The local authority could designate certain areas EV-only, with dedicated parking spaces and more on-street chargers.

For taxi companies, EV holds a promising future. Large fleets are already in operation in places such as Amsterdam. There, more than 160 Tesla Model S taxis ferry people from the airport. Bios-groep, one of the larger taxi companies running this scheme, has even built its own dedicated charging station, ensuring EVs always have access to top up their batteries.

Taxis become part of a public/private journey
Some companies and cities have had success in merging public transport systems with on-demand services. Helsinki residents can use all modes of public and private transport within the city via an app called Whim. Cab company Lähitaksi is the cab partner in the chain, and users choose either a monthly subscription or a pay-as-you-go option. The aim is to make getting from A to B as smooth and seamless as possible.

Bob Nixon, our co-founder, says that this model could pay off. “If people are signing up and getting an average of 10 or 12 taxi journeys a month, then that’s great for the taxi company,” he points out. “People who get used to taxis are proven to use them more and more often. The taxi company love it as they are guaranteed income.”

The public/private model widens the net of usage too. “Imagine if seniors got subsidised mobility as a service (MaaS) passes from their governments? This really could be huge for the taxi industry,” Bob says.

According to a report from McKinsey and Bloomberg New Energy Finance, the greater integration of advanced mobility systems could be worth $600 billion in societal benefits by 2030.

It could help to knock traffic gridlock on the head too. Indeed, it’s something that even car makers are aware of. William Clay Ford Jr, CEO of the Ford Motor Company, says, “lots of cities are trying to deal with this in different fashions, but those aren’t long-term solutions. Those are Band-Aids. Today, 30 percent of all fuel burned in cities comes from cars looking for a parking spot. And that’s not only fuel. That’s time, that’s aggravation.”

If there are fewer cars in cities, traffic will flow more freely and using taxis will make even more sense, because decreasing journey times means it can become even more affordable.

Taxis and eCommerce
ECommerce has the potential to create additional revenue for the taxi industry. In 2017, total retail eCommerce sales worldwide was predicted to reach $2.29 trillion, and according to a report on Statista, this figure is on course to almost double to $4.48 trillion by 2021.

Growth opens the door to the opportunity for taxi companies to take on deliveries during off-peak business hours. eCommerce purchases often aren’t bulky items, so while traditional delivery companies still use vans for transporting goods, most of these purchases could easily fit into a regular passenger car.

This concept isn’t entirely new: in 2014 Amazon trialled using taxis in San Francisco in conjunction with the Flywheel mobile app. Cars carried out deliveries in the early morning when fewer people required rides. Its distribution centre hailed a taxi via the app, and it’d pick up as many as 10 packages all going to the same area.

Amazon paid around $5 per package delivered, and it kept drivers busy during times when regular fares were more infrequent.

Developing this kind of co-operation with businesses isn’t just limited to huge multinationals like Amazon. Smaller taxi firms could look to SMEs such as florists or bakeries in their locality to explore the potential for establishing delivery partnerships.

Geofencing advertising as a new revenue stream
The rise of targeted marketing and in-car advertising could potentially play a bigger role in how taxi companies earn additional incomes.

When a taxi has a fare onboard, advertisers have a captive audience. Using readily-available technology that utilises GPS and location-based services, it’s possible to tailor digital ads to the passenger’s likes and needs.

And this is already happening. The luxury hotel chain, Wynn, placed Samsung Galaxy tablets inside 1,000 taxis in Las Vegas for 12 months in a bid to geo-target passengers while highlighting specific businesses based on their journey.

Given that automated taxi systems such as iCabbi’s can know where the customer is coming from and going to before they begin their journey, it could be possible in the future to tailor specific advertising for businesses in that area.

Advertisers could supplement the journey by offering specific discount codes for passengers. Google was awarded a patent for arranging free or highly-discounted transportation to a third-party advertisers’ business location.

For example, if a passenger in Vegas flags a taxi to go to a casino, Google’s technology could show an ad for that casino via its advertising networks and bring the customer to the casino at no charge. This could apply to multiple locations, with passengers being shown an advert alongside a ‘Take me there’ call-to-action.

Connected cities are the future for taxis
Increased connectivity in everyday life could have significant benefits for taxi companies, with smart maps making journeys easier by generating highly accurate real-time traffic data and re-routing drivers around congestion blackspots.

As cellular data networks improve, both car-to-car and car-to-X systems will bring a level of traffic management not yet seen. To be scalable, it’ll require substantial investment by city authorities. Traffic will flow more freely, journey times will reduce, and emissions should be lowered by keeping vehicles moving at more constant speeds.

Sitting at red lights when there are no vehicles travelling through the junction could become a thing of the past as traffic lights monitor every aspect, and adjust according to demand rather than the current model of using simple timers.

In Pittsburgh, the city collaborated with Prof. Stephen Smith at the Robotics Institute at Carnegie Mellon University to install a network of smart traffic signals. When the project began in 2012, a total of nine smart signals were installed and travel times improved by 25 percent. Idle times fell by 40 percent while vehicle emissions dropped by 20 percent.

Another city embracing advanced technology and making good use of it is Singapore. Its road network of Electronic Road Pricing, expressway monitoring and clear advisory systems has helped to give its users an average speed of 27km/h. In contrast, London can claim an average speed of 16km/h, Tokyo lags further behind at 11km/h and Jakarta at just 5km/h.

The coming years will be interesting for the taxi business, and the opportunity for companies to maximise earnings and reduce downtime is significant. Thinking outside the box and crucially, working with a partner who does, could help your business continue to reap financial rewards now and into the future. 

Future-proof your taxi business
To prepare your business for the future, talk to us today: We’ve helped hundreds of taxi companies become more efficient and profitable so we can help you with any questions you might have.

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Sorcha Jowitt

Marketing Executive

iCabbi is the leading global innovator in cloud based dispatch systems, created with and for enterprise taxi partners to drive business growth.

The platform offers full visibility and control of business and is designed to reduce operational costs, increase efficiency through automation and drive customer satisfaction.

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