What have I learned this year about trends in ground transportation from TNCs (transportation network companies) to limo companies?

First of all, the names and definitions are changing. The word "limousine" has developed a poor reputation in corporate circles and with many suppliers because for many it means the stretch limo which is not to be used in the corporate world and reserved for events like weddings. Today most fleets are made up of sedans and SUVs and larger equipment. "Black car" is a term for a corporate chauffeur-drive service above a taxi and below a fully vetted and full-service luxury chauffeur drive. Rental car companies are creating a new description of themselves as they are morphing into technology (mobility) providers that offer all types of transportation.

The talk last year was secretive, exciting and about technology and suppliers all seemed to be working on it behind the scenes. Here's an update on what's happening this year.

Technology

The hype around "technology" has had a reality check. Many are still working on the "tech" but what seemed like a sprint to the finish has turned into a marathon.

Technology can develop glitches and it can be costly in both time and money to work out solutions. Another issue can be the implementation of that technology which is done in smaller segments of the supplier's business but marketed as "The Solution". As an example, take telematics and Avis's "connected fleet". At the end of last year, it was in 75,000 cars. That tech helps Avis operationally and the end-user but this is only in a small segment of its business, less than one-third of the fleet.

The good news is that as OEMs (original equipment manufacturers) continue to add telematics into their fleets that number will grow and not just for Avis but for all ground suppliers. In the chauffeur-driven sphere the apps of many of the suppliers work only at specific locations and on specific routes. There is a problem of drivers accepting and using the apps and the functionality differs based on the location of the traveller and where they want to go. The app may work for an airport transfer but not on a point-to-point trip or work in one city but not another. Very little progress has been made here.

Hertz has installed biometric units at Hartsfield¡ªJackson International Airport in Atlanta and plans to roll out the service, known as Hertz Fast Lane, to 40 more airports around the US, including New York JFK, San Francisco and Los Angeles. The "Hertz Fast Lane powered by Clear" service will be available only to members of Hertz's Gold Plus Rewards who enrol with Clear separately. According to a company spokesperson, eligible customers can simply walk to the vehicle they have reserved, use facial recognition or fingerprint to prove their identity and drive to a check out terminal. This is a pay-for-play service which will limit who uses it and it is also in a segmented number of locations.

Enterprise Holdings which includes National continues to work behind the scenes on its technology offering. It has acquired Deem to which is working on its platform which will allow it to offer many types of transportation on its app. It is in production and will not been launched until it is fully functional.

Artificial intelligence

Sixt has been investing in AI which combines car rental and car-sharing along with other forms of transportation. This is in currently available only in Germany.

Another example of AI is the progress of "Driverless Cars". Last year the manufacturers who make the autonomous vehicles (almost all the OEMs) and the tech companies like Goggle/Apple seemed very optimistic about the timeline of a fully autonomous product. Since then, there have been indications that there are some bugs and glitches which need to be worked out and that timeline is getting longer. (A travel manger from a major OEM tells me that their launch is now estimated at 2030.)

Its implementation may be slow, but the future is rosy. SoftBank founder Masayoshi Son built his fortune investing in telecommunications, Yahoo and Alibaba. Now, he believes that AI is taking over the world and that he can make another fortune off the trend while defining his legacy as the greatest technology investor of all time.

AI absolutely seems to be the future and the ground transportation world will certainly be one of the first to benefit from it.

Ride-sharing: Uber and Lyft

This has been a big news year for TNCs with both Uber and Lyft going public. The result has been a disaster. I suggested in an article in May that they would have a hard time answering to investors and that their profitability would continue to be an issue. The result would be logically they would have to raise prices. A recent article in Forbes explains this well.

"Every business has to eventually make more money than it spends. Period.

"Yes, you can sacrifice profit to win customers at the beginning¡­ but eventually you have to make money to cover your expenses and reward investors.

"The thing is, after 10 years, Uber is still highly unprofitable. Worse, its losses are growing at astronomical levels.

"Last year, it lost $1.8 billion¡­ while last quarter, it lost a whopping $5 billion.

"To put this in perspective¡­

"In its IPO, Uber raised $9 billion¡­

"¡­ five of which it has already burned. IN A SINGLE QUARTER."

As I wrote in that May article, Uber loses 25 cents on every dollar it brings in and an average of $1.20 on every ride.

This could get much worse.

The California state legislature recently passed a bill that paves the way for gig economy workers to get holiday and sick pay. Some estimates suggest costs for firms like Uber and Lyft, which are based in California and depend on those working in the gig economy, would increase by 30% if they have to treat workers as employees.

Uber is burning money so fast that it lost more in the nine months leading up to the IPO than Amazon did in its first seven years! Now, here's simple math. If you are losing money as a business, you have two options: cut your expenses or raise prices. Uber's biggest expense is driver pay. It pays back to drivers about 80% of all the money it generates. That means that to turn a profit, Uber must cut driver pay¡­ or raise its fares.

In the Forbes article quoted above the writer makes the point the because of the competition, Lyft in the US and many others worldwide, Uber is unable to raise the prices enough to be profitable. My question is how long can a company sustain these massive losses? The problem is not just for TNCs but for the taxi, limo/ black car industry which are being the most financially damaged by the low subsidized prices and it is tearing those businesses apart. How do you compete with a company that is losing $5 billion in a quarter after 10 years of being in business?

Corporate managers should watch this sector as most do not control it and most are not watching to see if they are spending more per ride. The first thing that companies should be checking is their premium use as they may be able to get a more competitive price for their limo supplier and whether the price per ride is increasing.

There is also the issue of duty of care.

CNN recently revealed that fourteen women are suing Lyft over allegedly mishandling their sexual assault, sexual misconduct and rape complaints against drivers that occurred while using its service, bringing renewed attention to the issue of safety in the ride-hail industry.

The women allege that Lyft "chooses to stonewall" law enforcement investigating assaults and that it fails to inform victims about the status of the drivers they've accused of sexual assault or rape. They allege that Lyft is negligent in its background checks and fails to protect passengers with added technology. They claim Lyft has chosen to "hide and conceal" the scope of its "sexual predator crisis" on the platform.

TNCs have a problem with duty of care and now that they are public more will come of these issues. Until fingerprint background checks and random drug and alcohol testing are implemented this will be an issue. You cannot add technology to eliminate this problem such as a panic button. By the time you are using a panic button it is too late.

It should be noted that the full-service luxury chauffeur/black car industry should be performing those "duty of care" tests on their drivers. In some cities, it is mandated but not all. It is very important for companies to choose and vet their suppliers as not all suppliers are complaint in every location their travellers go.

The end-user has not seen much change year on year in technology. That does not mean that behind the scenes the technology is not progressing. What I do know is it will take time and money and testing before there is a total solution. There is a lot happening simply because of the Uber and Lyft IPOs and these have negatively affected the taxi and limo business.

As my mother said to me a long time ago "in time all things will change". It is not a sprint it is a marathon.