Home ›› 06 Nov 2022 ›› Front
Seven years since they came into being, the app-based ride-sharing services have gained much popularity but they are still struggling to achieve steady growth in the capital Dhaka and significant expansion in other cities of the country.
One of the main reasons behind this is that most of the riders, and many passengers, are no longer interested in using the apps. Instead, they prefer to share rides on contractual fares to avoid paying the mandatory commissions to the ride-sharing companies.
Industry insiders say the recent fuel price hikes, coupled with inflation and low purchasing power, and regulatory obligations are hitting hard and impeding the sector’s growth and expansion.
Ride-sharing services became popular and widely accepted after the launching of Pathao in 2015 and the multinational company Uber in 2016.
Within four years, in 2019, the ride-sharing industry was valued at an estimated Tk 2,200 crore and accounted for 23 per cent of the transportation sector, according to a Policy Research Institute study.
The estimated market value of the ridesharing start-ups is expected to reach $1 billion within the next five to seven years as well. But the current scenario shows a grim picture.
“Before the Covid-19 pandemic, we would share rides and earn Tk 25,000 -30,000 per month based on our given target, apart from bonuses, from popular ride-sharing companies like Uber and Pathao,” said Sabuj Miah, a Pathao motorcycle rider.
“But now the companies have stopped offering the benefits to the riders, which has angered many riders. They have also increased the rate from Tk 12 to Tk 15 per kilometre ride but it’s still low for us.
“At the same time, many passengers do not want to pay the increased fares for sharing rides,” Sabuj said.
Contracts over commissions
Talking to The Business Post, many riders said at least 80 per cent of passengers avoid using the apps when they see the hiked commission or surge (due to higher demand) has pushed up the ride fare. They then choose to negotiate with the riders and take rides against their preferred fare to avoid paying more.
The same can be said for the riders as well. They also prefer to not use the apps to share rides because of the higher commissions imposed by the companies during peak hours or in areas with applied surges.
Sharing his concerns, Mirpur resident Shamol Saha said, “I enjoyed using ride-sharing apps to go to my office at Karwan Bazar for five to six years because it was convenient.
“It would cost around Tk 100 and often I would get discounts. Now it costs up to Tk 140-150. It’s not convenient using the apps anymore.”
NGO worker Shikha Monayem, who lives in Jigatola, said, “I’ve stopped depending on ride-sharing apps because they cost me 40 per cent more than they used to before 2020. Currently, I use public transports and rickshaws to travel to and from my office at Babubazar.”
She added, “The app ride drops me [as per Google Maps] at a spot from where I need to take a Tk 20 rickshaw ride to get to my office. But with contractual riders, I can bargain to have them drop me in front of my office against an affordable fare.”
Meanwhile, Obaidur Rahman, a motorcycle rider in Dhaka, told The Business Post, “It’s becoming impossible for me to continue to use my motorcycle for ride-sharing as my 150 CC bike consumes more fuel than any other bike.”
“The fuel price hike and the excessive commission have curbed my income. The number of passengers, especially on apps, has already reduced drastically. That’s why many riders have left the on-demand services and are choosing to share rides on contract,” he said.
He added, “Unlike the bus or public transport owners or drivers, motorcyclists using the ride-sharing platforms do not have an association to have their voices heard. That’s why the app companies can charge whatever they want.”
Weighing in on the issue, Pathao President and CEO Fahim Ahmed said that making trips without using the apps can raise multiple safety concerns for both users and drivers.
“We are constantly working with different government bodies to ensure the safety of both parties. Besides, we are organising training sessions and campaigns to raise awareness among riders and passengers,” he said.
Asked about the 25 per cent commission that drivers claim is excessive, Ali Armanur Rahman, the region head of East India and Bangladesh at Uber, said, “Maintaining a safe and reliable platform in Bangladesh requires significant investments.
“Our commission reflects Uber’s need to reinvest in technology and other solutions to ensure that drivers and passengers get the best service. We strongly discourage off-platform trips as these have no accountability or safety support for either party.”
Car rides down too
At the same time, usage of app-based car services has also dropped following the hiked fuel prices amid inflation. General people prefer to ride CNG-run auto-rickshaws that are available all the time.
“Bikers are not using apps to avoid losing money. It’s okay for them since doing that does not impact their total number of rides. But the car segment is dependent on apps. People don’t want to share rides on cars without using the apps,” said Rajesh Khan, the president of Dhaka Ride-sharing Drivers Union.
“In the absence of regulations, ride-sharing companies are imposing excessive commissions as per their will. The government also does not want to hear our demands. A foreign company is virtually oppressing the local drivers but we cannot do anything,” he vented.
Specific regulation is needed to ensure this sector’s growth and save the educated and young drivers and riders working here, Rajesh added.
Although companies impose a 25 per cent commission on every ride, he said, they take 30-35 per cent commission in total which is gross oppression.
Situation outside Dhaka
Although big companies like Uber and Pathao operate in almost all populous cities, the ride-sharing culture has not been created there because no remarkable campaigns have taken place or any special offer has been made to attract people.
“Uber has expanded its operations in 20 cities of Bangladesh as the market is still growing, smartphones and mobile data are becoming cheaper and digitisation of services and products are happening significantly,” Uber’s Armanur told The Business Post.
He said Uber has created livelihood opportunities for over 200,000 people in Dhaka and elsewhere and the number is on the rise. Barishal University student Mizanur Rahman, who now lives in Barishal city, said he used Uber and Pathao frequently when he lived in Dhaka. “But I have never used the apps here because they are costlier here. My friends also don’t use the apps mainly because they cost more and regular transports are always available.”
“Since regular transports are available, why should I wait for ride-sharing vehicles? It takes more time to receive these services. That’s why the culture has not been created here,” he added.
During visits around Gazipur city, The Business Post’s local correspondent found no presence of app-based ride-sharing services. Most of the motorcycle riders and car drivers shared rides for fares decided on an instant contract basis.
Meanwhile, the situation in Chattogram city is nearly the same as the capital city.
Companies also bear the brunt
So far, some 15 companies have received the licences from Bangladesh Road Transport Authority to operate their ride-sharing businesses in the country.
Of them, the major ride-sharing companies are Uber, Pathao, Obhai, Obon, Amarbike, Texiwala, Gariwala, Essyride, SAM and Chalu.
Meanwhile, three other companies have recently either shut down or shrunk their operations after incurring massive losses. Multi-services start-up Shohoz stopped its app-based ride-sharing services, despite being a major player in the market, last year due to high operational costs and poor response from the people.
“We shut the ride-sharing wing because the operational costs were climbing while revenue dropped significantly due to low number of passengers. We were thinking about returning but the situation is only worsening,” said Forhat Hossain, the head of communications at Shohoz.
The blows to the industry started after the government in 2020 suspended motorcycle ride-sharing to curb the spread of Covid-19 alongside other restrictions.
However, struggling ride-sharing companies are not willing to give up without a fight.
Syed Fakruddin Millath, senior manager for corporate and regulatory affairs at OBHAI Solutions, said, “We are hoping to see brighter days soon with over 5 lakh active users and several rejuvenated strategies that are fit to tackle the challenges of today’s market.”
