Uber launches in Christchurch

By Jordan Yadoo

Uber's flexible labor supply and exemption from licensing regulations are giving it a leg up when it comes to securing customers, according to a new National Bureau of Economic Research paper. Photo / Bloomberg
Uber's flexible labor supply and exemption from licensing regulations are giving it a leg up when it comes to securing customers, according to a new National Bureau of Economic Research paper. Photo / Bloomberg

Uber, the ridesharing pioneer and global nemesis of the taxi industry - has announced its launch in Christchurch.

From today, Cantabrians can download the Uber app to request a ride wherever they are in the city.

As part of the launch, Uber is offering five free rides over the next two weeks.

Announcing the launch, Uber said that ridesharing "opens up exciting new possibilities for residents and visitors alike. Heading into the CBD for a meal or glass of wine is now an appealing option; commuters can choose whether to leave their car at home or share a ride; and small businesses can open up without worrying about their proximity to transport hubs or parking space."

"In a city rebuilding for a strong and sustainable future, we believe that ridesharing will be a positive for Cantabrians and the local economy and will contribute to making Christchurch a more livable, economically vibrant and better connected place to be."

Uber is now available in more than 400 cities around the world and its popularity with both customers and drivers might be due in large part to its successful marriage of demand and supply.

A new study into the economics of Uber has found that it beats older-school rivals.

In economics, capacity utilisation is jargon for how much of your available resources are being used at any given time. For taxi drivers, that means how often you have a passenger in your backseat. And when it comes to this metric, taxi-rival Uber Technologies is winning.

The ride-sharing company's driver-passenger matching technology, flexible labor supply and exemption from licensing regulations that hurt efficiency are giving it a leg up when it comes to securing customers and keeping the meters ticking, according to a new National Bureau of Economic Research paper.

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Measuring either the amount of time drivers have a passenger in the car, or the share of miles they drive with a rider - which were the two sets of data available in the five cities surveyed - Princeton University researchers Judd Cramer and Alan B. Krueger found that the capacity utilization rate is on average 38 per cent higher for Uber drivers than for cabbies.

In Los Angeles, traditional taxi drivers have a passenger in the car for 40.7 per cent of the miles they drive. By contrast, Uber drivers have a passenger in the car for 64.2 per cent of their miles, or a 58 per cent higher capacity utilization rate. In Seattle, the other city surveyed with mileage data, Uber drivers were 41 per cent more productive.

When measured by time, Uber drivers in Boston, San Francisco and New York on average have a passenger in their car about half the time their smartphone app is turned on. That compares to a range of 32 per cent of the shift for taxi drivers in Boston to 49.5 per cent for cabbies in New York.

The service's use of internet-based mobile technology to connect passengers and drivers certainly contributes to its efficiency, according to the report. It makes sense: tapping your smartphone screen a few minutes before you need a ride is often easier than waiting on a street corner and hoping an empty cab drives past.

Meanwhile Uber allows drivers to set their own shifts, and when combined with their use of so-called surge pricing that increases fares during times of increased ridership, supply and demand are more smoothly matched.

Uber drivers are also exempt from regulations that prevent taxi drivers who drop off a passenger in a jurisdiction outside the one that granted their occupational license from picking up another customer in the same location.

Given their 38 percent advantage, Uber drivers could charge 28 per cent less than traditional taxis and still earn the same amount per hour under certain assumptions, including ignoring fixed costs, according to Cramer and Krueger.

That may be one reason investors last year valued the company at $62.5 billion, more than Ford, General Motors and 80 per cent of companies in the S&P 500.

- Bloomberg

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