Shaping city travel: multimodality is the game changer

Gil Laser argues that multimode travel schemes offer a greater chance at true profitability than single mode alternatives

The popularity of shared mobility services in cities around the world has grown rapidly in recent years with Forrester predicting their market value will reach US$608.86bn by the end of 2021, almost doubling in size from US$305.92bn in 2020. The popularity of shared services comes thanks to an ability to provide affordability and flexibility that ownership cannot offer. Traditionally shared mobility services have been offered in a single mode model—delivering users access exclusively to either bikes, e-bikes, mopeds, e-scooters, or cars.

Yet increasingly, city commuters are reliant on more than one mode of transport in a single journey, so why focus on just one mode of travel? Madrid is a prime example. For 70% of the population there, as many as half of all trips are multimodal, and for 26% almost all trips are multimodal.

Business model challenges 

The challenges for providers of single mode transport solutions is that their management and operation can be limiting for both customer and business success. The difficulty is two-fold; the high cost of acquisition and maintenance of vehicles, and then acquiring and retaining customers.

As a result, some single mode shared transport businesses struggle to deliver regular strong profit margins, despite growing investment and share prices, whilst others have pulled out of markets all together. Scooter brands like Bird and Lime for example saw overnight success in the US, however, the short lifespan of their scooters is a key economic limiting factor according to research by Quartz and ARK.

The more trips with any single asset, the better it is for shared mobility companies—all of which need to recover the cost of their fleet before turning a profit. That requires a regular flow of customers and commuters, which becomes more difficult in seasonal cities. Few people will pick up a moped, bike or scooter on a wet winter’s day in Northern Europe, so being able to offer those same users a car for rainy or cold days can help to ensure they don’t simply stop using a service because the weather is bad.

The multimodal opportunity

Developing a multimodal approach where customers can use a single technology for multiple journey types across a city can help create more value and deliver true mobility confidence. Users of one mode of transport can quite feasibly become users of another with zero cost of acquisition. Further, having access to multiple modes of transport within one technology can significantly improve the overall travel experience and speed of movement through an urban area.

Multimodality offers a clear future-proof approach to future city travel, delivering scalability and a greater chance at true profitability than single mode alternatives

Post-COVID, multimodal offerings will enable businesses to invest in transport services on behalf of their staff to enable flexible and effective means of getting to work. Multimodality is by nature more appealing than a single mode transport solution to a corporate customer because it is more likely to provide a means of transport relevant to a broader numbers of user.

Corporate use cases could be a key catalyst to enabling multimodal businesses to scale further, offering a clear path to drive revenue alongside long-term customer retention, thus fuelling fleet expansion and increased service offerings.

Whether it’s their corporate use case or providing an all-seasons mobility service, multimodality offers a clear future-proof approach to future city travel, delivering scalability and a greater chance at true profitability than single mode alternatives.

The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Gil Laser is Chief Executive of multimodal vehicle-sharing technology GoTo Global

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