By Mudassir Sheikha
Transport: advanced mobility options to grow in the region
This year was a fairly unpredictable one for the GCC. In spite of significant geopolitical events, there were clear signs that the economy was beginning to turn around. Higher oil prices brought fiscal deficits down further, and will likely enable a more expansionary fiscal policy in the year ahead. Non-oil GDP also continued to grow and corporate earnings finally saw a positive inflection – all leading to signs of more growth.
Careem turned five this year. Against all odds and our own expectations, we managed to become one of the largest mobility providers in the region, creating opportunities for 500,000 people to earn a living. And as we look ahead to 2018, we expect on-demand services will further boost productivity in the region. We will see advanced mobility options become available to more parts of the region and more people start depending on on-demand services for transport and other daily needs.
Other than a few exceptions, most cities in our region did not build the advanced transportation systems that other cities in the world built 50 to 100 years ago. The advent of on-demand mobility (aka ride-hailing) has given our cities a chance to catch-up, a chance to leap-frog, and a chance to provide a fast and reliable means of transport for our masses.
Ride-hailing and related technologies have the ability to build transport infrastructure at one-tenth of the cost of traditional methods of spending, and with limited fiscal burden, by enabling individuals to buy assets and add them to the network.
I would argue that the spread of ride-hailing services and supporting regulation has now made mobility for our people as easy as it is for people in other world regions.
In fact, some developed cities, mostly in Europe, that have advanced transportation systems of the last era have failed to adopt ride-hailing with the same passion and intensity, and are today second to our regional cities in regard to the ease of mobility.
However, ride-hailing is still a phenomenon adopted by a few in our large and accessible cities. In the cities in which ride-hailing services operate, less than two percent of trips are happening on these platforms, and there are at least 100 cities in the region that are still waiting for these services.
The next year will see increased adoption of ride-hailing services. From serving pent-up mobility demand and taking share from existing means, ride-hailing will start evolving into becoming the primary means of transport for more people.
It is already cheaper to use services like Careem than owning a car in most cities of the region, as well as benefit from the convenience of being able to work in the car and not have to worry about traffic, parking or car maintenance. This greater adoption along with the expansion of ride-hailing services to the 100 or so cities in the region where these services do not exist today, will boost overall productivity in the region.
The rise of such on-demand mobility is also leading to fundamental shifts in people’s expectations, and over time, may undermine the habit of forward planning. If I can get a car on-demand within minutes, why should I not be able to get food, groceries and other services on-demand too?
In 2018, this shift in expectations will lead to consumers expecting more services on-demand from their existing service providers. Where these providers fail to deliver, consumers may switch to others or aggregators that will fill that need for instant gratification.
Unfortunately, this move to on-demand services may come at the expense of forward-planning skills, which is an important capability for success in many professional and personal aspects of life.
Our schools and colleges, and society at large, need to recognise this shift in consumer expectations and put extra emphasis on teaching and internalising the science of planning in our people.