If you are growing up in a Western society, your family and your friends’ family most probably owned a car. Particularly ‘dads’ were extremely proud of the car they possessed. It was even common that some families had two cars, so one of the parents could take the children to school or sports practice. Over the years, this resulted in a lifestyle where everyone got used to the luxury and pleasure of owning a car. However, the ever-increasing need to travel and the number of ‘solo-driven’ cars have led to a world where congestion, pollution and noise have become the norm in urban areas. In other words, car ownership is connected to many negative externalities, both at individual and societal level. On the bright side, have you noticed how today’s younger generation has adopted a different approach to mobility?
The way we live is changing
Nowadays, we enjoy flexibility and freedom, moving easily from one place to another. It is not about owning things anymore, but more about having access to mobility solutions. We love the perks of renting assets and having them available on demand, whether it is a drill, a car, a bike or an electric scooter. We have also become digitally connected as most of us have smartphones that grant you access to all the services you need. As a result, you’re now part of a global sharing economy.
Since there are multiple options for being mobile, car possession is and should no longer be a necessity. Moreover, not owning a car is often cheaper, and simplifies your mobility spending (e.g. insurance, taxes). This reflects a significant change in the consumer mindset. The underlying factor influencing this is the rise of the fully digital consumer who increasingly enjoys ‘as-a-service’ offerings, including Mobility as a Service (MaaS).
However, have we really moved from owning our good old, trusted car, and classic mobility solutions, to a flexible mobility solution that benefits you, society and the environment all together?
The dots to offering mobility as a service are not yet fully connected
At the moment, reality is that people’s desires and the supply of mobility offerings do not always meet. We feel the need to take the car even though we know we’ll enter congested roads, busy traffic and the everlasting fight for a parking spot in densely populated areas. The main reason for this is that the alternative mobility solutions do not always provide the ideal balance between cost, speed, convenience, flexibility, availability and comfort. Moreover, a typical journey without a car usually involves multiple modes of transport. Full integration of these mobility modes is an essential condition for really competing with car ownership. The current systems are not as connected as we wish for, which results into a lack of transparency, overall system inefficiency and, ultimately, decreased reliability.
As mentioned before, the car is a very common example of a mobility mode and can be defined as a ‘mobility asset’: an asset that is used to transport individuals or groups from one place to another. Following this definition, mobility assets can be anything from motorbikes to bicycles, but also a subscription to a public transport provider like the train or metro. The problem with these kinds of assets is utilization. For instance, a car is used only 5 percent of the time and when used, it is often occupied by a single traveler. At the same time, cars represent the majority of average household transportation expenditures.
Mobility assets create a so-called ‘lock-in’ with a long-term commitment to one form of transportation, leading to inefficiencies. Due to this lock-in effect, the costs of switching to an alternative are very high. When you own an annual subscription to a city’s public transportation network, for example, but only require using it occasionally. You do not need to use this type of transportation all the time, but your annual subscription has ‘locked you in’. Whenever you‘d like to travel within the city, you’ll use that transportation mode since you already made costs to own that subscription. This is where these ‘asset’ solutions lack the much-needed affordable flexibility.
Over the last few years, several parties have tried to tackle this problem. These parties aim to provide offerings to the market that offer flexibility at a cost that can be considered affordable. A great example is UBER, which connects drivers and riders -existing travel supply and demand. However, UBER cannot always meet the full travel demand. First, it is very rare to find an UBER ride that takes you to or picks you up in non-urban areas. Second, UBER is operating in areas where public transport is the most profitable. Therefore, it is a competition for public transport, which is driven by the needs to use this revenue to fund the non-urban and less profitable public transportation connections. This certainly does not suggest that UBER does not bring more efficiency and a superior car utilization. However, a mobility solution that benefits all parties in the system still needs to be born.
Connecting the dots, can mobility as a service become a reality?
In the last years, changing consumer preferences got mirrored by innovative solutions for the mobility market. We have noticed a considerable shift from ownership towards ‘product-as-a-service’ offerings or platforms aimed at optimizing both people and cargo mobility. In the overview below, you can see key concepts that are active in the mobility sector in the Netherlands in 2018.
Dutch mobility innovations in 2018: Overview of the innovative concepts participating in the annual Accenture Innovation Awards 2018
Even the car industry has observed this new development and sees the big value potential of this mobility trend. We can already notice the automotive ecosystem’s acceleration towards Mobility-as-a-Service1 offerings. Looking at what is globally trending in the innovative mobility concepts spectrum, UBER is definitely a great example of connecting the important dots and providing an affordable alternative, and better service, to owning a car. There are, however, many mobility-as-a-service providers aiming to bring us to a world where mobility is a synonym for efficiency.
- A great example of an innovation that aims to make public transportation more seamless for the consumer, is Tranzer. It’s an app that ‘uberizes’ mobility and works as a one-stop shop for travelers who would like to find the best option in time, price and comfort for using the bus, tram, metro, bike or taxi. Its uniqueness lies in the fact that it connects multiple travel means and keeps the user constantly informed by using real-time monitoring, QR codes and, potentially in the future, blockchain solutions.
- Scarcity and constraints often lead to greater, innovative achievements and solutions. A good example is Helsinki, a city which is located at a peninsula surrounded by the Baltic sea with limited space for traffic and parking spots. They had to come up with an ‘outside-the-box’ idea for solving their mobility needs. The Finnish company Whim, covered by its mother company MaaS Global, claims to be the first mobility-as-a-service operator in the world aiming to revolutionize the way we travel. Whim intents to cover all journey types, even cars outside urban areas, whenever you require one. It offers various options, whether it is a ‘pay-as-you-go’ consumption for ad-hoc users or ‘unlimited’ use for customers who swapped Whim for owning a car. Although they do not cover all the consumer segments yet, this concept has already proven its benefits and managed to persuade some car owners to exchange their car for a service-based mobility solution.
Municipalities do not stay behind and aim to improve the urban mobility experience and relief the burden of their transportation system by exploring mobility as a service. Such example can be found in Amsterdam, the Netherlands, where, due to the city’s growth, some areas will be facing serious accessibility challenges in the coming fifteen years. The Economic Board of Amsterdam is active in this space and has launched a campaign calling for mobility-as-a-service providers to offer innovative mobility solutions for their pilot in the office district Zuidas.
Moving from "owning mobility assets" to "gaining access to mobility"
Several key factors are at play that could bring us to an ideal situation where we have been able to fill the current gaps that stalled the development of mobility. The consumer mindset, shifting from an asset-focused to a digital-focused and asset-less environment, is going to boost mobility as a service. The rise of developing technologies, such as blockchain, will play a vital role in satisfying the increasing demand for transparency, trusting ecosystems and driving the change towards a fully connected infrastructure. Platforms with data sharing and seamless connectivity between services and devices will allow organizations in the mobility domain to gain insight in users’ habits to accurately forecast demand and tailor their offerings, turning into a one-stop shop for mobility-as-a-service offerings.
Moreover, these concepts will help answer specific questions about mobility. For instance, to address car owners, companies and public parties need to answer the question: ‘What is the best substitute for car ownership?’ The pride of ownership will fade into pride in the efficiency of a system, which offers complete freedom to the user, who can then move independently from one point to the next.
Nevertheless, organizations in the mobility space should also create offerings for consumers who still want the same comforts they have always enjoyed, by offering them customized and specialized ‘luxury’ packages. These may include dedicated assets for their use on demand, bringing the luxury of asset ownership, but at the same time mitigating personal responsibility and risk. For instance, if you always want to travel in a blue car or specific brand, you should be able to get these, at a premium of course.
The increasing need for tailored travel demands a sustainable and efficient solution that can take on a world where everybody owns a car and drives it alone.
As the eco-system grows and service providers efficiently understand user’s demands, a ‘mobility access’ economy with both economic and societal benefits will far outweigh our current mobility-asset ownership-based way of moving.
So, what are you waiting for? Get ready to drive the future, get ready for mobility as a service.
1 Mobility-as-a-Service (MaaS) is a relatively new mobility concept. MaaS aims to ensure, that all the customer mobility demands with journey specific needs are fulfilled through seamless integration and combination of different public and commercial transport offerings. The elements of MaaS products are digital services—trip planning, ride hailing, car sharing, accompanied by seamless booking, ticketing and payment through a single digital interface.