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Andrew Harrer/Bloomberg

This Is How Transportation Revolutions Happen

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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I'm headed to Houston in a few weeks. The trip will include an excursion to College Station, 90 miles away, so I probably need to rent a car for that. But I've been thinking of otherwise going without. My Houston hotel is a few blocks from the Bloomberg office, parking there costs $33 a night, and I don't know my way around the city. It just seems easier and safer and maybe even cheaper to go car-less.

This is not because the Houston area has suddenly stopped being dominated by the automobile. Yes, there's a light-rail system and a just-revamped bus network, and as on every other U.S. urban transit system I've used lately, they sell handy stored-value cards that work on both.  But while I do hope to take a few train and bus rides, and do a bit of walking, I'm guessing that most of my travel will be in cars -- they'll just be cars driven by other people. In olden times (more than two years and two months ago, say), arranging rides everywhere would have been a hassle-filled and/or hugely expensive endeavor. Now, not so much. Thanks to the Uber app on my phone, I think I can manage.

I've taken you on this tour through my business-travel planning because it appears that more and more people are making similar calculations. Reports Bloomberg's Olivia Zaleski:

Uber accounted for 43 percent of ground transportation transactions expensed through Certify last quarter, while rental cars had 40 percent. Ride-hailing services, with Uber at the forefront, overtook rental cars for the first time in the fourth quarter of 2015 and have since widened their lead, according to a study by Certify published on Thursday.

Certify is a big provider of expense-management software that puts out fascinating spending reports each quarter. The average Uber charge was $26.41, while the average charge at National -- the most-used rental car provider among Certify customers -- was $182.08, so the fact that Uber has surpassed the rental car companies in number of transactions doesn't mean it's anywhere near them yet in dollars spent. But the trend lines are pretty interesting.

These choices by business travelers are evidence of the often-unexpected behavioral shifts that technological progress can bring. The arrival of tiny, wirelessly networked computers in the pockets of 198.9 million Americans has enabled a new, easier way of ordering and paying for a service -- hiring someone to drive you -- that's been around longer than the automobile. This has taken a lot of business away from existing providers of that service such as taxi companies, but it also appears to be expanding overall demand for it.

There's been some talk in the past few years about Americans, especially younger Americans, moving away from the extreme dependence on driving that has characterized life here since the 1950s. There's even been some limited evidence of it happening. But as Chicago urban planner Yonah Freemark wrote last fall:

The basic facts of life on the ground in America -- that our country is an automobile-oriented society -- remain the case. Marginal changes in the way a new generation behaves, or even major changes in the way a new generation thinks, cannot overcome the realities of a country where more than three-fourths of jobs are located more than three miles from downtowns and where only one-fourth of homes are in places that their residents refer to as urban.

Freemark's point was that without changes in those basic facts of life of the ground ("meaning not only the way our transportation is planned but also the way our neighborhoods are structured"), Americans have little choice but to keep relying on automobiles. That's what makes the ride-hailing services so interesting. They match up with those basic facts of life on the ground, while at the same time modifying them.

They don't change the facts for everybody -- Uber and Lyft cost too much to be practical for long-range commutes, for example. Most Americans aren't about to give up on owning a car just yet. But the ride-hailing business is still in its infancy. It may only be when self-driving cars arrive that it really takes off.

Where will this evolution lead? Ride-hailing services don't directly do much of anything to ease the traffic congestion that is one of the biggest plagues of the auto-centric life -- although their ride-sharing operations (such as Lyft Line and UberPool) help a little with that. These services do reduce the need for parking spaces, which is great. And I get the impression that they're more complementary to public transportation than competitive with it. In a sprawling place like Houston, they may make public transit seem practical for the first time for some people (you take the train most of the way, then use Lyft or Uber for the last mile). It can be really irritating when Silicon Valley entrepreneurs claim to be changing the world. Sometimes they do, though.

  1. I mention this because it's a relatively new development that many Americans -- including, until recently, Bernie Sanders -- are unaware of.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Zara Kessler at zkessler@bloomberg.net