The rise of mobility as a service has been saved
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By 2025, private cars might become obsolete. With growing congestion along with innovative transport options, mobility as a service—using public and private transportation seamlessly and on demand—is gradually becoming a reality, says Warwick Goodall.
Ninety-five percent of the time, those cars that people have spent thousands of dollars on are sitting around unused. I think maybe we will see families that have more than one vehicle think about whether they really need to spend that money on that capital purchase, or whether of use of on-demand services means they can get around without owning more than one car.
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TANYA OTT: Whether you’re single or have a family, the way you get around in your daily life is going to change—and perhaps very dramatically—in the next few years. I’m going to tell you why today on the Press Room.
I’m Tanya Ott, and this is Deloitte University Press’s podcast on the issues and ideas that matter to your business today. Today, I’m going to take you on my commute.
I work in Atlanta, Georgia—a place that has some of the longest commute times in the country.1 I’m lucky. I live just a few miles from my office, so I can avoid the interstates by taking surface streets. Right now, I’m driving down Ponce de Leon in midtown. And yes, we do say it that way here.
Lots of my fellow Atlantans don’t have the luxury of my 15-minute commute. Instead, they have to fight the traffic or take public transit, which can mean driving to a station, getting on a train, getting off, and then transferring to a bus, or maybe picking up one of the new bike shares in town. For many people, it’s a process that takes either a lot of time or a fair bit of thought and planning. But it may not be that way for much longer.
There’s this guy, Warwick Goodall, and he says by the year 2025, commute by car may be obsolete! Warwick is an engineer who worked for several multinationals and consulted on the transportation system in London. Now he’s a director in the Public Sector Technology practice of Deloitte UK, and he says you and I might not need to own a private car because transportation services—from public transit to private ride hailing and semiautonomous vehicles—will be so developed and coordinated [that] we won’t need [cars]. I’m in my office now—walking into the studio—and I’m going to dial up Warwick in the UK to get more details.
I tell him I’m particularly interested in what’s going on in Finland.
WARWICK GOODALL: In Helsinki, they are trying to rethink the way transport works in the urban environment. They're trying to think about how can they create a transport system that's seamless, that helps people to travel across the city, and that combines publicly operated transport with privately operated transport infrastructure, helping people really travel anywhere they want in the city in a seamless and integrated way.
TANYA OTT: There’s an app that you can use to do that. Walk us through the process of using the app—as a consumer, what does it look like?
WARWICK GOODALL: The app is called Whim. A bit like you might [subscribe to] Netflix for your TV, you could buy a subscription for all your transport needs across the city of Helsinki. You would then be able to use it as your ticket effectively to travel across the transport network, but also be able to use it to, for instance, rent a car for the day or by the hour using private car-sharing operators as well.
TANYA OTT: So if I were using that, and I couldn't take a bus from one location to my destination, I might be able to cobble together a bus or a bike share or any variety of different transportation things in that one app?
WARWICK GOODALL: That's right. The idea is that app in your pocket is really an entry point to a digital platform. And that digital platform allows you to flexibly plan, book, and pay for your trip end to end; and it might suggest, depending on traffic or otherwise, different routes to take on different days to get you where you need to go. But then it's just going to be able to charge all of those components of that journey straight back into your account. The importance there is having that seamless ability to pay for many different types of transport, but also having a fare structure that simple for users to understand so that they know they're never paying more than they should to do.
TANYA OTT: I live in a major metropolitan area in the southern United States, and it's a place that's known for some pretty challenging traffic congestion. But most of the people that I know either fall firmly into the “I want to drive alone in my car” camp or “I take public transit as much as possible.” There are not a whole lot of people, who I know at least, that sort of bridge those two. But what you're suggesting here, though, is that it doesn't have to be an either/or.
WARWICK GOODALL: I think the important part here is being able to link up with different types of transport. But if you look at that today, that’s a complicated proposition. You pay separately for your car, for the parking, for the train. It's not very integrated. But if you could do that in a simple way, then the people would be more attracted to making journeys across different types of transport.
TANYA OTT: So what is it going to take? What conditions are necessary to make mobility as a service really take off?
WARWICK GOODALL: At the top level, the city really needs a sponsor who is going to make that business case for how this will simplify the way people travel in the city, and having ownership there for a public and private forum that will bring together the components needed to set out the foundation for a mobility as a service arrangement.
TANYA OTT: I would think one of the other things that's really crucial to making this work is that you've got pretty good penetration of smartphones that are working at pretty high level with great connectivity in the community. Otherwise this doesn't work.
WARWICK GOODALL: That's right. We need to be able to do what we call assistive digital: helping people who are less familiar with new technology. But I think actually the opportunity here is to allow people who might not have tried this kind of technology before to be able to use it; and I think you'll see the increase of people using ride-hailing services on iPhone and Android platforms isn't restricted to just the young Millennial generation. Many people are now using these kinds of services to get around.
TANYA OTT: I want to talk about how this could affect some other sectors and give you just a couple of hypotheticals based on conversations I've had with other folks around this issue. First, fewer cars on the road could mean fewer car sales, which could affect automakers.
WARWICK GOODALL: I think the real opportunity is looking at cars and how they’re utilized. Most cars are only used for 5 percent of the time. That means 95 percent of the time those cars that people have spent thousands of dollars on [are] sitting around unused.2 It is a great opportunity to get greater use of our cars. I think maybe we will see families that have more than one vehicle think about whether they really need to spend that money on that capital purchase, or whether, in fact, the use of on-demand services means that they can get around without owning more than one car.
TANYA OTT: So where does that leave the auto industry?
WARWICK GOODALL: I think the auto industry is already adapting to the new future-of-mobility scenarios here. One thing that's very interesting is how some of the players in the auto industry are already announcing that they want to move into city services. They want to be able to offer mobility services themselves. And they're investing in start-ups and new types of transit services to be able to offer those kinds of services to people who may no longer want to just buy a vehicle like they did in the past.
TANYA OTT: I've talked to some other folks who have said if we move to this kind of mobility system where fewer people are taking individual cars, that [may mean] fewer traffic violations written by law enforcement officers. Traffic tickets, at least here in the United States, are huge revenue for many local law enforcement agencies. Is that something that you’ve thought about: the unintended consequence of this shift towards public transit?
WARWICK GOODALL: There are a lot of consequences as people take different approaches—many industries that might be affected. I think for the public sector, they need to balance the revenue they currently generate from car driving, whether that's through fuel or tax or, as you say, enforcement tickets versus having enough revenue to invest in the capital programs that cities need, the capital infrastructure, to move millions of people around. Government needs to be able to create that balance and manage the taxation base versus the capital investment.
TANYA OTT: You alluded to this shift affecting other industries as well, and I would imagine the insurance industry might see some impact from this as fewer people perhaps need private auto insurance.
WARWICK GOODALL: I think the interesting challenge for the insurance industry here is if you start paying for your travel by the mile, say you're using a mobility service, then you're paying by the mile to travel around your city, and then perhaps your insurance should be by the mile as well. Insurance companies are trying to assess how can they build and understand new, different kinds of risk models that would enable them to provide coverage in a very different way to the way they do today.
TANYA OTT: That is a really huge shift for them. How does this idea of mobility as a service integrate into other transportation trends that we're seeing—things like driverless cars and that sort of thing?
WARWICK GOODALL: We're reading a lot in the press about the trends and investments in driverless cars and autonomous driving. This will be a very large factor in how these sorts of new services are adopted when they come online circa 2020. If you can imagine autonomous vehicles or autonomous minibuses that could transport people around cities or around suburban environments, then that really creates new kinds of mobility services that could plug in ideally alongside other kinds of transport options, whether that's the private car or public transport. What we will be interested to see is how we can create this platform of choice where people can create end-to-end journeys seamlessly that may use different types of mobility services.
TANYA OTT: You mention the year 2020. I was interested to read that Tokyo is coming up with fleets of robot shuttles and self-driving buses for the 2020 Olympics.3 Sounds like a pretty big venture there.
WARWICK GOODALL: One thing we've learned from being in London is that the Olympics drives a lot of innovation and a lot of progress in cities. It drives improvement of entire city neighborhoods that are transformed for the Olympics, but it also does catalyze people to take on big challenges. It sounds like Tokyo is taking on a great challenge in trying to push the boundaries of autonomous driving, at least maybe in a limited environment, to be able to support the Olympics.
TANYA OTT: Let's look beyond the individual traveler. I’m wondering if this mobility-as-a-service concept has applications for businesses and their needs to get products from one place to another. Is there that more commercial aspect to it?
WARWICK GOODALL: As supply chains are being transformed by these same kinds of technology, we’re seeing parcels traveling through much more diverse networks that include rail, roads, and last-mile delivery using vans. And the increase in e-commerce is really driving that kind of growth in freight, particularly small freight. That does indeed put a requirement for that space on the road for doing those deliveries. And these [companies] are always looking at new ways to be able to do it more effectively. While some people in transport refer to “the last mile” as the challenge—that’s the mile between your house and a station or a bus stop – interestingly, in freight, people are interested about the last 50 yards, which is the distance between your front door and the autonomous vehicle that might be bringing your parcel—how that parcel gets from the curbside to your front door is perhaps that last 50 yards of the problem.
TANYA OTT: Isn't that the robot or something that gets out of the autonomous vehicle and then hand-delivers it to me at the door?
WARWICK GOODALL: Absolutely. I think that that just highlights that you need different types of autonomy to cover different parts of the journey, even if it's just the last few steps to take the parcel out of the vehicle and then take it to your door.
TANYA OTT: Right. So what are the biggest challenges facing this idea of mobility as a service?
WARWICK GOODALL: One of the challenges is, in order to enable this environment where there's many different transport services working seamlessly together, access to data, data sharing, and making data easily accessible are key requirements. For example, to be able to plan a route using those different types of transport, you need to be able to access data on the available services, when the next one will come past, how long it might take, and also how much it might cost. So having that data easily accessible is a really important factor in being able to realize this vision.
TANYA OTT: If you’re a corporate leader or if you're a government leader, what are the things that you need to be thinking about when considering how this fits into your future?
WARWICK GOODALL: I think securing buy-in at the government level and city leaders is really key, but also building the right partnerships with private partners that need to be part of that ecosystem, and being able to promote the benefits of that system as well, to your citizens as travelers. Also, with many [cities] that are stretched for investment, working with private partners that can bring some of that capital investment and innovation capability into your city is a really great opportunity. It's also important to set out the right approach for integration, whether that’s integration of those services or maybe integration of the technology and those platforms that sit behind them as well.
TANYA OTT: If you're willing to, let's take out your crystal ball. Let's have you [look] well into the future and give us sort of the roadmap for the city of the future as it pertains to transportation.
WARWICK GOODALL: Today, you know, [a city] has many transport services, but they're not well integrated. I think as we look over the next few years, maybe the first phase, up to say 2020, is getting those services better connected. Some of that is by connecting the data. Some of that is physically connecting those services better together. Then, I think from 2020 and beyond, we'll start the emergence of more innovative shared- and autonomous-type mobility offerings, and those offerings will sit side by side with the traditional offerings as part of that integrated transport journey. And then, as we look further ahead 10 or 15 years, [there will be] a much larger shift, as shared autonomous vehicles, for example, really bring about a lot of revolution in the way that people get around.
TANYA OTT: It’s going to be very, very interesting to watch this develop over the next couple of years, and then beyond that as well. Warwick Goodall says he expects there will be many new kinds of jobs coming online as the mobility as a service ecosystem matures. Of course, there will be the transport operators themselves: not just bus and train, but other services like carpooling on demand. There will also be mobility managers who will arrange bookings and payments across different types of transport. And data scientists gathering and breaking down all of that information from different data sources so others can use that data to build platforms that help the ecosystem to operate smoothly. Warwick foresees a diverse patchwork of different public and private operators, and lots of cross-industry collaboration. You can learn more about it in his article “The rise of mobility as a service” at dupress.deloitte.com.
SCOTT CORWIN: I’m a Baby Boomer, and the minute I could afford to get a license, I bought a used car with all the money I saved up cutting lawns and odd jobs and all of that kind of stuff in high school, and it was freedom.
TANYA OTT: But here’s a surprise (not): Some Millennials think about it completely differently. Find out how in the podcast.
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