Should railways fear the sharing economy ?
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24/06/2015
In recent years, we
see that new ways to travel is common practice for many people. All these
innovations have in common what is called "the collaborative
economy", which affects all sectors, both travel side than the hotel
industry or also the taxi business. The railways, which live widely under the
state protection, seemed badly prepared for this new economy but can
nevertheless to react. Analysis.
History, motivation and definition
The alternative
marketplaces were initially organized by the Anarchist Movement as a form of
resistance to the capitalist economic model. However, many consumer groups far
removed from this ideological movement now utilize this model to stage public
sharing events as a means of raising awareness about various issues including
sustainability and overconsumption. But it seems that with the proliferation of
many forms of alternative economies, there is now a problem of definition
between the collaborative economy and the sharing economy.
According Rachel
Botsman (1) collaborative economy is an
economic system of decentralized networks and marketplaces that unlocks the
value of underused assets by matching needs and have, in ways that bypass
traditional middlemen. But sharing
economy is an economic system based on sharing underused assets or
services, for free or for a fee, directly from individuals. This the case of
the french BlaBlaCar or RelayRides, which are genuinely built on the sharing of
underused assets.
As described by some
Finnish researchers « collaborative
economy has been expected to alleviate societal problems such as
hyper-consumption, pollution, and poverty by lowering transaction costs related
to coordination of economic activities within communities…. The motivation to
participate in collaborative consumption is often regarded as fuelled by the
aspirations to do good, but at the same time collaborative consumption offers
participants possible economic benefits. » (2) Other questions are
more sociological. As reported Journalist’s Resource « One
central area of argument relates to whether the sharing economy is simply
bringing more wage-earning opportunities to more people, or whether its net
effect is the displacement of traditionally secure jobs and the creation of a
land of part-time, low-paid work. » (2) « The uncomfortable truth is that the sharing economy is a
rent-extraction business of the highest middleman order » wrote Izabella
Kaminska in the Financial Times.
A new financial target
It is not a surprise:
money is never far away from these good intentions. Some specialized offices
have calculate that in the UK alone, an estimated 25% of people already take
part in this type of sharing economy, and current global revenues of around
£9bn could reach £230bn per year by 2025, wrote tnooz.com. In the U.S., the
sharing economy is expected to generate revenues up to $335 billion by 2025,
and its impact is predicted to affect nearly all industries, according
techcrunch.com. The new paradigme of the sharing economy seems to sharpen the
business senses - and the financial appetite. Economists such as Robert Reich
and Larry Summers wrote «It’s now
possible to sell a new product to hundreds of millions of people without
needing many, if any, workers to produce or distribute it ». Capitalism
would not be death… We do not focus anymore towards these important social and
political issues but we look more to the travel component of the collaborative
economy.
The fact
Technological
developments are allowing people to share more goods, skills and services than
ever before, and new business models are springing up all around the world.
What these services – such as Blablacar, Air&B - all have in common is that
they are peer-to-peer networks making travel truly unique, sometimes
unpredictable and more than anything a shared experience. Sharing is seemingly
something we cannot get enough of, a rule which has proven to be more
consistent than many thought possible in the travel industry. Collectively
these websites have become so successful that they have begun to worry the
established travel industry (3).
And the railways ?
In the travel area, car-sharing
start-up BlaBlaCar is eating into rail's market share by playing to people's
preference for flexibility and freedom, but is heavily data-driven. Indeed, the
only railway technology - such as high-speed train - not enough to ensure
sustainable growth. This was demonstrated recently with a report of the French
Court of Auditors. And in Germany, Inter-City Express of the DB are also highly
subject to competition despite a train per hour on all major routes of the
country. As reported Railway-technology (4) at the Amadeus forum in Barcelona
(in June 2015), Amadeus director of rail and ground travel Thomas Drexler
highlighted that while high-speed rail infrastructure had almost doubled
between 2002 and 2012 across the 28 EU states, rail travel's market share of
transport had only increased 0.6%. The primary service of getting people from A
to B had markedly improved, but something else had stopped the investment from
delivering the expected dividend, says Drexler. Moreover, a very intense
intermodal competition - by bus - is added to the sharing economy, which makes
more pressure. It appears clear that the train journey through the traditional
business model needs to be reviewed in the light of new clients settings, such
as the door-to-door travel, that is the bane of the railways.
How to counter a
sharing economy into a old technical industry from the 19th century ? That's
the big challenge. The first lever is price, to meet the low-cost aviation,
which does not part of the sharing economy. This is what the French did with
the TGV Ouigo, which starts from the outskirts of Paris (and not from main
stations), where the bar was removed and where the space between seats was
reduced. Some people told about the come-back of the third class...But the
low-cost railway is not enough to counter the business of car-sharing.
The real mobility, door-to-door
The first wave of
actions is more basic : enter on the same market that your competitors and
scrape together the maximum of market share,
without having to offer the same service. While BlaBlaCar is positioned
more for long trips carpool, SNCF launched in September 2014 IDvroom.com that
carry people for shorter trips, daily, to get to work or train station. That's
the answer to the door-to-door problems of many railways companies. Add to this
the bike-sharing services are available in many stations and in many cities. So
we are here in a less technological and more practical field, even more
environmentally friendly.
The travel and the brand experience
The railway industry has focused too much on getting people to
their destination and not enough on enabling them to enjoy the journey.
Consequently, it must now put customer service at its core. It must look to
learn more about those customers than just age and gender to understand why
they are travelling and how get the
most out of it, wrote
Railway Technology (4).
 |
| The travel experience |
An example is the ‘Stories Are Waiting‘ , which is a Pinterest-style gallery that
aims to inspire EUROSTAR customers to explore top destinations with film and
photos from the travellers, as well as top bloggers and photographers. Richard
Branson, from Virgin Train (UK), has announced an overhaul of the service in an
attempt to lure passengers from other forms of travel, starting with a swanky
new ad campaign. The CEO of Eurostar told about
‘the experience of travel’. « Don't
think about just selling a ticket to a customer, but try to engage into a more
meaningful relationship. » says Decius Valmorbida, Amadeus vice
president of distribution marketing.
Other example is the
travel experience by the 'brand experience'. SNCF announced in June 2015 the
launch of a new offering "100% digital" for young travelers, called
TGVpop. Inspired by the codes of the collaborative economy, it is described as
"the first community TGV SNCF" : TGVpop gives users the opportunity
to vote the departure of a train on a dedicated website and mobilize their
communities to strengthen their chances of seeing him go, through the use of
#TGVpop. If the TGV receives a sufficient number of votes, corresponding to
almost a third of its total capacity, it is confirmed for sale in the four days
preceding his departure. The user can confirm at the time of purchase and enjoy
attractive rates of between 25 and 35 euros per ticket depending on the
destination. Nearly 100 000 places in 203 TGV, toward 30 destinations in
France, will be offered to visitors for departures during summer time. The
categorization of customers and the travel experience are the second wave of
actions to counter the competition of other sharing economies of mobility.
Open Data
The third wave of
actions embraces the field the communicating devices connected to networks and
the proliferation of applications, especially by mobile. That's a part of the
concept of smart-city which connects all device as much as possible, such as
the connected watches or the automatic positioning of everyone by mobile. Technology
has the ability to connect the different parts of our everyday lives, and that,
as simple as it sounds, is the entire premise of smart cities. All of these
data can be aggregated to produce estimates of the number of clients available
during a defined period of time. It is possible return them to travellers and
customers by an app on mobile and to present the best choice of transport or by
road. Many of these apps have need of sharing computer data on a large scale. As
told Patrick Senti, the boss of Shrebo : « Lastly, I have done a lot with analytics. I realized there could be
process improvement and optimization if people and companies could successfully
share information and results. For example, we cooperate with Swiss Federal
Railways, who awarded us a winner for innovation as a start-up, and they
operate tons of trains and cars each day. The trains are very overused in many
city areas. When they are full, commuters don’t know where to sit. In fact,
this is a sharable resource. So, my “aha” moment here was about connecting
people via a smartphone app—we could allow them to see and chose travel based
on load and occupancy. They could make a conscious decision to board a certain
train. We could really help improve this if we use predictive analytics. So, we
do that too—this is much like managing meeting rooms but on a really large
scale. » (6)
 |
| Open data and connections |
As wrote UITP (7),
public transport is taking steps to integrate all the different mobility modes,
including traditional transport and newcomers like bike-sharing car-sharing and
ride-sharing providers, as well as cycling and walking.
Have clear ideas
These new modes of
travel and communication will undoubtedly benefit for many client. But it
jeopardizes the traditional work of railwaymen and it may even decrease the
number of jobs in the railway sector. In reality, the future depends on what
perspective one takes. If you carry a mentality of technical differentiation,
ecological train against polluting car, it is certain that the modal shift will
not take place because the ecological conscience quickly eclipsed by the
reality of the travel and the trip price. If we take as perspective a plural
mobility, making no technology distinction, and using the best technologies for
a better distribution of travel, then in that case one can achieve certain
goals to counter the greenhouse gas emissions and even consider a world with
less oil. Finally, we come back to the social and political issues ...
(1) Rachel
Botsman : Defining The Sharing Economy: What
Is Collaborative Consumption—And What Isn't?
(2) Journalist’s Resource : Uber,
Airbnb and consequences of the sharing economy: Research roundup
(5) Full survey :
Future traveller tribes 2030
understanding tomorrow’s traveller, by Amadeus
