On Demand Buses and the Singapore Land Transport Industry

Industry Focus: Mass Public Transport on Land in Singapore

Being able to transport people between activities while minimizing land use for transport has been a national priority in Singapore given the lack of landmass. This includes land used for roads, parking, bus stations, bus depots, train tracks and train station. These efforts have been led by the Ministry of Transport (“MOT”) at the policy level, and implemented through the Land Transport Authority (“LTA”), with further support from industry participants such as ComfortDelGro, SMRT, Tower Transit etc.

 

The industry’s goals are found in the 2040 Land Transport Master Plan (“LTMP 2040”). They are defined as:

  • A 45-Minute City with 20-Minute Towns – having sufficient public transport and walking paths such that all residents live 20 mins away from a town center, and 90% of all trips during peak hours should be completed within 45 minutes.
  • Transport for All – making public transport more available for every resident
  • Healthy Lives and Safer Journeys – of which one of the priorities is to reduce carbon emissions from the public transport options

 

 

Mapping LTMP 2040 to UN’s Sustainable Development Goals (“SDG”) 

Sustainable transport has been a key feature, especially as transportation is the largest end-use of energy in developed countries and the fastest growing one in most developing countries. The following table breaks down the SDGs and maps them to the goals as defined in LTMP 2040:

 

SDG Indicators LTMP 2040
11.2 By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety, notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women, children, persons with disabilities and older persons 11.2.1 Proportion of population that has convenient access to public transport, by sex, age and persons with disabilities This is directly aligned with the first two goals as both aim to increase the availability and effectiveness of public transportation
11.6 By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management 11.6.2 Annual mean levels of fine particulate matter (e.g. PM2.5 and PM10) in cities (population weighted) Aligned with the third goal, LTMP targets to change all taxis and buses to cleaner energy by 2040
9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all 9.1.2 Passenger and freight volumes, by mode of transport This is mapped to Transport for All, where the focus is to improve barrier free travel, including travel for those less abled.

 

Are the current initiatives in this industry contributing to achieving your sustainability goals? Where do these initiatives fall short?

 

To evaluate the initiatives taken by the industry, there are two levels to understand them 1) at the level of the industry regulator / planner (i.e. LTA), and 2) at the major industry participant’s level (i.e. ComfortDelGro, SMRT etc). For 2), we will be focusing on ComfortDelGro and SMRT given that they are the dominant players in the Singaporean land transport industry.

 

LTA’s Current Initiatives

 

As outlined in LTMP 2040, the initiatives as outlined under the three priorities as found in 1.1 of this document:

 

  • A 45-Minute City with 20-Minute Towns
Initiatives SDG Evaluation
Transit priority corridors, which are dedicated bus lanes and cycling paths, will be built to enable faster travel. 11.2 More robust public transport network contributes to the overall adoption and access to public transport
New lines and stations on the rail network will connect people to even more places on the sunny island.
More integrated transport hubs will be developed to improve the transferring experience to the next ride and make people’s journey easier.
Autonomous, on-demand buses will be available in the future to offer people more flexibility to get to their destination.

 

  • Transport for All
Initiatives SDG Evaluation
More wheelchair-accessible facilities in the public transport network to help those with trouble using steps 11.2 These are tangible initiatives to make public transport more accessible to all segments of the population.
More resting points and lifts at overhead bridges will be provided for the elderly to easily move around.
For the commuters with special needs, new technologies like audio alerts will help them board and alight from buses more easily.
Public transport staff will get more training to provide better support for commuters who require assistance.

 

  • Healthy Lives and Safer Journeys
Initiatives SDG Evaluation
To create a more liveable city, towns will be redesigned with more spaces set aside for community uses. 11.7 Leveraging on the need to create public spaces as part of public transport build up is a smart way to achieve the SDG.
New technologies such as the collision warning system on buses will lead to safer journeys. 3.6 Tangible initiative to reduce traffic accidents
By 2040, public buses, taxis and private hire cars running on cleaner energy make people enjoy a greener and quieter environment. 9.4 Tangible initiative to reduce CO2 emissions

 

  • Others
Initiatives SDG Evaluation
To maintain a healthy road network, a Vehicle Quota System (VQS) has been designed to limit the growth of our vehicle population.

Prior to 2009, the growth rate was 3% per annum; from 2009, the growth rate was 1.5% per annum; from August 2012, the growth rate was 1% per annum; from February 2013 to January 2015, the growth rate was 0.5% per annum; from February 2015 to January 2018, the growth rate is set at 0.25% per annum.

11.3 This is crucial as roads and car parks remain one of the highest land uses. Hence efforts to reduce car population will reduce the ratio of land consumption rate to population growth rate.  
LTMP 2040 was the result of inputs from over 7,000 members of the public and industry stakeholders. These include launching a Public Consultation Document to kick start discussions, electronic polls and REACH Listening Points to seek wider feedback, business luncheons to engage industry players and focus group discussions. 11.3 Through LTA’s efforts, there is clear participation from the industry and civil societies to arrive at LTMP 2040.

 

ComfortDelGro and SMRT’s Initiatives

 

Beyond what has been highlighted by LTA, it is also important to note how the industry participants are responding in terms of their sustainability efforts. Below outlines the initiatives done by two of the largest land transport operators in Singapore.

 

Initiatives SDG Evaluation
Use of alternative fuel vehicles 9.4 ComfortDelGro is leading one of the early pilots of electric taxi, with the aim of understanding how charging and batteries impact cost and driver shifts.  
JurongHealth Mobility Park with aims to educate and trial public transport for those less abled 11.2 This is necessary as user centric testing and empathy is key to improving accessibility to those less abled

 

Improving the Initiatives

 

The initiatives are aligned with the SDGs, with clear tangible goals. However, there are two areas which could be improved: 1) public education about the initiatives and 2) over reliant on top-down initiatives.

 

LTA (and the Singapore government) are not organisations accustomed to touting its successes. LTMP 2040 remains a roadmap discussed by the industry players, but not necessary by the users of the transport network. A different perspective may be taken that public education could be considered a teaching point for the purpose of the public’s understanding of SDGs.

 

The second improvement point is that as evident by the tables above, the SDGs aligned initiatives are being driven by the regulator/planner, LTA, rather than at the industry participants’ level. This may be a reflection of the different incentives, where government planners are naturally more concerned with sustainability efforts, while companies are more concerned with shareholder value.  

 

Propose and explain a business model innovation for a company (or set of companies) in this industry that can help achieve your chosen UN SDGs and that is also profitable. This can be an existing business innovation or a new business model that you propose. State clearly the context and the social/environmental challenge addressed. Furthermore, explore the following questions:

 

One initiative in the public buses transport that should be specially highlighted in this instance is the “On-demand Public Transport”. Traditionally, public transport’s planner collect information of travellers and pre-plan bus routes, service type (e.g. feeder, express, cross border, etc), and frequency through predicted consumption. Despite constant monitoring, supply in this case are quite fixed.

 

On-demand public transport however, allow real time aggregation of demand and optimization for best route and frequency, that not only allowing supply to be responsive and adaptive, it could bring travellers closer to their destination while wasting less fuels. Traveller input commute request in the platform, the bus en route to similar path and destination determined by the system will be notified and their route plan will be updated to accommodate this commute plan.

 

This was done in two ways:

  1. A LTA developed platform, Beeline, that allows riders to input their route in advance, then provide the crowdsourced routes for private bus operators during peak hours to fulfill the demand. Third party apps (i.e. Grab) are further encouraged to integrate into it to ensure greater adoption.
  2. A 6 months trial (concluding in June 2019) that routes the buses real-time, especially for low utilisation low traffic periods such as late night services.

 

This is a radical improvement that could bridge the gap between LTA’s goals and SDG goals given its ability to impact multiple SDGs. To understand on-demand public transport fully, first we need to look into the value chain of public transport and how incentives are aligned in each stakeholder.

 

How does this business model outperform existing business models both financially and environmentally/socially?  Do financial growth and social/environmental impact form a feedback loop (i.e. the faster the growth, the larger the impact and vice-versa)?

 

There are 3 main stakeholders in this value chain, Singapore’s Land Transport Authority (LTA), Bus Service Provider (private companies), and traveller or users.

 

Since 2014, LTA has changed from privatized model (where bus operator bid for route’s right) to be contracting model (where LTA own all asset and let bus operator bid for service package). This lead to radical change the relationship between LTA and Bus Service Provider and lead to an increase in service level and reduction in waiting time.

 

Main points in Contracting Model to note

  • Land Transport Authority
    • Owns buses, depot, station, and fleet management system
    • Open bid on 14 route packages covering certain area of singapore
    • Contract renewed every 5 years or could be extended for 2 years depend on service performance
    • LTA set fare prices for affordability
    • LTA set service level required to all Bus Service Providers
  • Bus Service provider
    • Rent buses and other assets from LTA
    • Focus on providing services and maintaining buses
    • There is currently 4 operators  
      • SBS Transit operate 8 packages, co-operate 2 packages
      • SMRT Buses operate 2 packages, co-operate 3 packages
      • Tower Transit Singapore co-operate 3 packages
      • Go-Ahead Singapore operate 1 packages

 

In the last quarter of 2018, LTA has been experimenting with on-demand model in certain type of service offering. The project is currently in pilot stage. In relative to the current contracting model we can identify following improvement opportunities:

 

  • Financial Impact
    • Better performance management ability from increase in visibility of the demand and servicing
    • Reduce operating costs given the natural ability for an on demand network to react to capacity requirements, could lead to lower prices for consumers or new project investment
  • Environmental Impact
    • Reduce pollution through efficiency improvement
    • Reduce maintenance effort through optimal usage, reduce waste
  • Socially Impact
    • Reach further areas without costing operation efficiency
    • Ability to obtain information of unique needs (disability) and tailor supply to demand
  • LTA and Bus operator relationship
    • On-demand model is compatible with contracting model
    • But for a country that is using privatized model, this will need a lot of change

 

On-demand model is interesting as it changes the current platform from service provision to be marketplace. This is relying on network effect. As more type of service change to on-demand, it will create better overall efficiency and induce more change. It is possible to see the majority of the system to be on-demand. The challenge will be in creating adoption, implementing and ensure incentives between LTA and bus service providers.

 

Why could this innovation be game-changing (demand and/or supply point of view)?

 

More importantly, the on-demand model turns the transport business on its head by resequencing supply and demand. The traditional public transportation takes a supply centric approach by looking at incremental increase in bus services, bus stop or priority bus lanes. This is further reinforced through LTA’s contracting model as outlined in 2.1, as contracts are defined for 5 years with fixed routes.

 

In this new model, the riders will input their request first, then supply (the buses) will be routed accordingly. With sufficient network, this allows buses to pre plan their routes and ensure optimal routing and timing.  

 

Furthermore, this allows generates more demand information as more details can be captured during the demand aggregation step.

 

These changes could impact both operation

  1. Change in type of service,
    • Currently 11 Types of services, on-demand could eliminate and drastically improve certain services. While other services that are operating in high efficiency will have less upside.
  2. Customization of service
    • Ability to cater to unique demand in each area
    • Increase accessibility through different mode of service (e.g. vans)
    • Able to specify vehicle and service to service special needs individuals

What are the potential costs and risks of this innovation? What are the barriers to scaling this business model?

 

Despite the merits of this innovation, there are potential costs and risks. First, the model is highly dependent on network effect. Its value improves when numbers of participants increase. Unless this innovation gathers enough mass to run the service, it will be difficult to maintain the innovation. Another difficulty comes from the point that high adoption rate might be required to hit critical mass for proof of concept. Before running the actual model, it is common to realize the method or idea to demonstrate its feasibility, with a small size. But since the viability of this innovation can be only validated running a sizeable pilot test, it would be difficult to expect the success of this model.

 

High cost is still a big problem. LTA ran a pilot to gauge the success of the innovation in the market. On December 2018, LTA started a 6-month trial of on-demand public bus (ODPB) services. It allows commuters in the Joo Koon and Marina-Downtown areas to request the on-demand services during off-peak hours on weekdays.

 

However, in June 2019, LTA decided not to roll out on-demand buses because of higher costs involved. The LTA said that during the trial, it found that these buses were costlier to run than regular fixed-route buses. Also, it is currently less cost-effective for on-demand public buses to be scaled up due to high technology costs.

 

The upside was that compared with fixed and scheduled bus services, operated mileage in the same area was 18 per cent lower during the trial, noting that this meant fewer buses were required. But the system is currently less cost-effective because of high software development costs and larger-scale deployment of on-demand public buses is expected to become more cost-effective in the future when the efficiency of algorithms improves. Another problem was that some people felt that regular bus services provided greater certainty and thought it is uncomfortable using a mobile application to book a bus ride.

 

What are the possible next steps to mitigate the risks associated with this business model and to allow it to scale?

 

First, as mentioned above, there should be measures to mitigate concerns regarding high costs. Without giving a solution to how to reduce the costs, it seems that it will be difficult to go live with on-demand buses.

 

It is not the first time that on-demand plan failed due to high costs. Finland’s capital Helsinki was among the first cities to roll out on-demand buses about six years ago, as part of a move to reduce the usage of personal cars. But just over three years later, it terminated the scheme because city authorities found that it consumes too much taxes. Earlier this year, Ford-owned on-demand bus company Chariot, which operated in various US cities, went out of business.

 

Second, there should be marketing efforts to make more people aware of the on-demand bus scheme. During the LTA’s six months’ pilot, almost half of people were not aware of this strategy. Also, it is critical to convince people that buses are readily available, and it is not difficult to call buses via mobile app.

 

Following the evolution of technologies such as driverless buses etc., there could be more rooms to reduce costs and make this plan go live.

 

Having said that, a simpler model for on demand bus services still has high potential. Beeline, the platform that offers the ability to crowdsource bus routes by allowing users to request for routes, remains a popular product in Singapore with integration into other mass transportation apps such as Grab. It is arguable that Beeline is the Minimum Viable Product for on demand bus service, where transport planners and riders can continue to experiment on the business model.

 

What are the potentially negative social/environmental impacts of this business model?

 

Given that there has yet to be a successful implementation of on demand buses, we speculate the negative social and environmental impacts as described next.

 

Accessibility for low density areas is a potential concern. At the moment, transport planners can use highly utilised / profitable transport routes to cross subsidise low utilisation / unprofitable routes to achieve the SDG to make public transport available for all. With on demand bus services, we risk catering capacity for dense routes, while ignoring the routes with high cost to serve.  

 

The other potential negative impact is the generational technology gap. The population segments that may not have access to smart devices or have low tech literacy will be marginalised for any solution that is tech dependent.

 

Having said that, the above remains tertiary points that can be addressed through careful planning. The critical mass issue as discussed in 2.4 would remain the key problem to solve as we move forward.

 

Prepared by GOH Aik Chuan, WANG Yuwen, LAITAVORN Yongyuth, OH Sharon

 

Sources

“Land Transport Master Plan 2040 | What We Do | About LTA | Land ….” 25 May. 2019, https://www.lta.gov.sg/content/ltaweb/en/about-lta/what-we-do/ltmp2040.html. Accessed 14 Jun. 2019.

(n.d.). Goal 11 .:. Sustainable Development Knowledge Platform. Retrieved June 12, 2019, from https://sustainabledevelopment.un.org/sdg11

(n.d.). MOBILIZING for DEVELOPMENT – Sustainable Development …. Retrieved June 12, 2019, from https://sustainabledevelopment.un.org/content/documents/2375Mobilizing%20Sustainable%20Transport.pdf

(n.d.). Sustainable transport – Sustainable …. Retrieved June 11, 2019, from https://sustainabledevelopment.un.org/topics/sustainabletransport

“SUSTAINABILITY – ComfortDelGro.” https://www.comfortdelgro.com/sustainability. Accessed 13 Jun. 2019.

“Beeline – Singapore’s first crowdsourced bus services – The Online ….” https://www.theonlinecitizen.com/2017/04/26/beeline-singapores-first-crowdsourced-bus-services/. Accessed 13 Jun. 2019.

“Bus Industry to Complete Transition to Bus Contracting Model on 1 ….” 11 Aug. 2016, https://www.lta.gov.sg/apps/news/page.aspx?c=2&id=e1fbdb6d-3200-4b23-846e-bb2184ba3dcc. Accessed 13 Jun. 2019.

“On-demand public bus trial gets off to a slow start, but service still ….” 18 Dec. 2018, https://www.channelnewsasia.com/news/singapore/on-demand-public-bus-trial-a-slow-start-but-service-impresses-11039308. Accessed 13 Jun. 2019.

“LTA drops on-demand bus plan due to higher costs, Transport News ….” 1 Jun. 2019, https://www.straitstimes.com/singapore/transport/lta-drops-on-demand-bus-plan-due-to-higher-costs. Accessed 14 Jun. 2019.

“Why Kutsuplus, Helsinki’s On-Demand Bus Service, Failed – CityLab.” 7 Mar. 2016, https://www.citylab.com/transportation/2016/03/helsinki-on-demand-bus-service-kutsuplus/472545/. Accessed 13 Jun. 2019.

“Ford Shuts Down Its Chariot Shuttle Service | WIRED.” 10 Jan. 2019, https://www.wired.com/story/ford-axes-chariot-mobility-is-hard/. Accessed 13 Jun. 2019.

“No on-demand public buses for now, as LTA cites high tech costs – CNA.” 31 May. 2019, https://www.channelnewsasia.com/news/singapore/lta-on-demand-bus-trial-end-11583408. Accessed 13 Jun. 2019.

4 Comments

  1. Thank you for the great post! On-demand buses certainly seem like the most effective way at transporting large numbers of people with low carbon outputs, though as Andre mentioned technological constraints are currently barriers to the spread of this system. One intermediary solution I have seen in the US and more recently in Europe is the spread of government-subsidized on-demand vans through ViaVan. The service typically costs less than a bus ticket, requires the user to walk a short distance to a designated pickup spot, and can transport around 6-8 passengers per vehicle. Perhaps such public-private partnerships would be first steps towards a full on-demand bus option.

  2. Thank you for the insights and the great post! This is one of the main targets as a society, as more and more cities push towards keeping private cars out of the downtown. It is a very challenging and interesting optimisation problem and I do not think any city so far has been able to propose an optimal solution. In London for example, trying to serve as many people as possible with a very high number of interconnected bus routes, the large number of buses has led to some congestion in particular streets that are actually only designed to allow public buses. One of the solutions that I have seen there, through an app called citymapper, is that they would constantly monitor the activity of the users and the routes they are searching at a particular moment of time and, when they observe a particular peak of demand, would deploy a minivan that will pool users with a common origin and similar/common routes or destinations.

  3. Thanks for the great article! Despite the technical challenges, this could potentially result in a large reduction of costs and pollution if we are able to come up with the right operating model. I believe that close cooperation between Singapore government and private sectors (esp. companies with massive transportation data, i.e. Grab / Gojek) will be crucial to accelerate the development of the operating model.

  4. Super interesting concept! It might be interesting to see how electric vehicles can also play into this picture. For example this company is lowering barriers to EV adoption through servicisation: https://www.evdots.com/

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