Transport-as-a-Service makes more sense to walkers than drivers
20th December 2020
We will explore the opportunity that is presented in targeting nonconsumers of transport and how generating demand for transport will support local economic growth and deliver positive social impacts where it is most needed.
Looking at a transport-as-a-service model in developed countries, such as the UK, major challenges are presented in offering this service where there is already a well-established principle of car ownership, an emotional connection with vehicles and an expectation of convenience. With nearly 40 million vehicles on the road in the UK today, the barriers to the acceptance of a shared mobility service are high and provides a starting point that is less than favourable. The convenience of each household having access to 1.2 vehicles (Department for transport stats 2019) is difficult to match by offering a service – the barre of customer expectation is set incredibly high! This leads us to the title “TaaS Makes More Sense to Walkers Than Drivers”.
Customer expectation for a walker, someone that does not have access to motorised transport, exists but on a completely different level. In Sub-Saharan Africa, it is typical for someone living rurally to carry heavy loads on foot for considerable distances. Rwanda has a population of 12 million people, yet only 216,000 vehicles - the expectation on having instant access or ownership of a vehicle is not the “norm”. Where there is a significant impact of access to transport is where there is a real opportunity to introduce transport-as-a-service. By utilising models that have already been established by the likes of Uber and Airbnb, where they have shown that sharing can work, even in countries where ownership is king, we can start to break down the main barrier of access to transport in rural Africa - affordability.
This brings us to discuss how the OX Ecosystem works…
To enable an affordable solution, transport must be offered as-a-service, as selling a vehicle directly to the people who need to transport most is not possible no matter how “low-cost” the transport is considered to be. To ensure the offer is affordable to a country with an average GDP/capita of $4 per day, multiple services need to be offered to spread the cost, therefore expanding the service to more than just the transportation of goods and produce, but perhaps energy and data too. This turns the traditional transport-as-a-service offering into something that is affordable, accessible and unlocks opportunities for everyone within the “ecosystem” that is created by these services. This makes it better than just affordable - it will encourage local economic growth which is at the heart of eradicating extreme poverty.
Enabling access to new markets by providing transport broadens scope for trade and increases equitability and efficiency. To do this, the vehicle usage itself must allow the user to increase their revenue by a higher margin than any associated costs of the service. Just as importantly, the vehicle itself needs to be fit for purpose and must reliably meet the demands of the customer, prove itself capable over challenging terrain, increase quantities and improve the condition of produce that is sold. With the livelihood of the farmers at stake, the service needs to be reliable, to allow them to introduce the service as part of their business model, reduce produce waste and ensure they meet commitments to others in their supply chain. Reliability here does not just refer to the reliability of the vehicle itself, but also to the availability of the service, on time. All of this will contribute to a better bottom line to the end user.
So, what does this increase of income mean to the customer? Not only can they have better access to education, healthcare and further opportunities, but they will use this extra money to invest in their business. This will drive an increase in demand for access to off-grid energy, payment services and further transport demands, such as higher quantities of produce and transporting raw materials. All of which will drive further demand for transport.
To summarise, the OX ecosystem is a self-reinforcing cycle of economic growth that is kickstarted by introducing a clean, affordable transport-as-a-service solution to businesses in rural areas. This transport provides access to new markets and increased profitability for businesses, which not only gives societal benefits but also allowed businesses to grow, creating further opportunities for OX services. If every cent spent on transport could create more cents worth of economic growth then the difference this will make is almost unimaginable. The scope of the opportunity is huge – taking only Africa into consideration, the population of Sub-Saharan Africa is 1.1bn which is projected to double by 2050, with an estimated 60% of the population living rurally. In the next and final part of this series of articles we will explore the enablers for the solution, the OX truck and a 2G capable mobility-as-a-service ecosystem, that we believe will enable Africa’s transportation system to be more efficient and sustainable than that which exists today in countries such as the UK.