Last week, on Channel News Asia, the program “It Figures” covered a topic of great interest for Singaporeans, especially on rainy days – Taxis! More specifically, the availability of taxi cabs in Singapore was the main discussion of the episode, and it had some interesting numbers to share. From the get-go, the first set of figures caught my eye, when the program revealed that Singapore had three times the taxis per population compared to New York. In fact, Singapore had the highest ratio among five major cities: City Taxi to Population Ratio New York 1.6 per 1,000 people Hong…
Last week, on Channel News Asia, the program “It Figures” covered a topic of great interest for Singaporeans, especially on rainy days – Taxis! More specifically, the availability of taxi cabs in Singapore was the main discussion of the episode, and it had some interesting numbers to share.
From the get-go, the first set of figures caught my eye, when the program revealed that Singapore had three times the taxis per population compared to New York. In fact, Singapore had the highest ratio among five major cities:
|City||Taxi to Population Ratio|
|New York||1.6 per 1,000 people|
|Hong Kong||2.5 per 1,000 people|
|London||2.7 per 1,000 people|
|Tokyo||3.6 per 1,000 people|
|Singapore||5.1 per 1,000 people|
With comparable figures like these, it would be natural to assume that Singapore’s taxi availability would be among the highest as well. However, despite the highest taxi per population ratio, the program went on to show that the perception of availability of taxis in Singapore were quite different from what the data suggests. Anecdotal quotes suggested that folks struggled to get a cab when they needed one.
A potential cause of this issue was highlighted by the episode. It commented that Singapore had 7 different taxi companies, each with their own separate fleets and calling systems. This meant that the large fleet of taxis lacked a centralized calling system to bridge the demand and supply gap.
And, that’s where GrabTaxi has managed to wedge itself into. Through a mobile app, GrabTaxi offers to link cab drivers with commuters needing a ride. It’s also becoming very popular among consumers and cab drivers alike – a possible reason could be that being an app, GrabTaxi could be used by any cab driver and commuter with a smartphone.
According to a Sunday Times report, GrabTaxi already had the second largest network of cabbies, behind Singapore’s land transport giant ComfortDelgro Corporation Limited (SGX: C52). Another Digital Life report published in May 2014 suggested that apps were already giving taxi companies a run for their money. The report also shared a lament from Transcab’s General Manager:
“We have invested in call centres. It seems unfair that these apps are using our cabs”
But before any panic sets in, let’s also view the topic from ComfortDelgro’s perspective. The transport company has some strengths of its own. A peek into its 2013 Annual Report revealed key figures about its taxi business and the company’s efforts behind them:
a) It owns a fleet of 16,600 taxis in Singapore
b) The ComfortDelGro Taxi Booking app registered a total of 2.13 million downloads in 2013
c) Taxi bookings made via the app accounted for about 41% of all taxi bookings.
d) Together with other services and channels such as SMS-A-Taxi, automated bookings made up 88% of all bookings made.
e) The company invested S$16 million into IT security, quality, and operational efficiency.
Further, in 2013, ComfortDelGro’s taxi operations only contributed to less than a third of the company’s revenue and profits. Instead, its bus operation was the major contributor at 50.2% of revenue. Finally, the company makes more than half of its revenue overseas.
With a taxi fleet that makes up more than half of Singapore’s taxis, and its own highly used app, it would appear that ComfortDelgro has a large enough network to hold its own against an upstart like GrabTaxi. As such, this latent threat might not be imminent yet. This sentiment was shared on the Digital Life report where most of the disruption appears to be happening on taxi companies with smaller fleets at this point of time.
No matter which side you choose, it seems certain that there is great interest to bridge this demand and supply gap between taxi providers and commuters.
Whoever provides consumers with their expected level of convenience may ultimately win out and the possibilities are significant. According to research outfit Nielsen, Singapore already boasts one of the highest penetrations of smartphones in Asia at 87%. With this level of devices already in the hands of many commuters, the opportunity lies with ComfortDelgro to continue to step up its efforts to reduce the user’s friction in the simple action of booking a cab.
Especially, I would add, on a rainy day like today.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.