ITC considers the impacts of the sharing economy on travel
How is the sharing economy changing travel?
One of the many ways through which technology is reshaping our lives has been the rise of platforms for collaborative consumption and sharing resources. The rise of this phenomenon of the ‘sharing economy’ has attracted considerable attention, and is already reshaping the way in which we travel, work, holiday and spend our leisure time. Such changes are challenging established business models and are forcing us to rethink our travel behaviour and needs.
To discuss this important topic the ITC hosted a Discussion Evening on 23rd February 2015 chaired by ITC Chairman Simon Linnett. The event was attended by more than 60 guests and the subject was introduced through talks from a panel of distinguished experts, including Helen Goulden, Executive Director of Nesta’s Innovation Lab; Ari Kestin, Chief Executive of Nimber; Andy Boland, Chief Executive of Addison Lee; and Indy Johar, the co-founder of the Impact Hub, Westminster.
The sharing economy – key issues raised by the speakers:
- Helen Goulden provided an overview of the sharing economy. She observed that a new digital infrastructure was reshaping how we co-ordinate labour, physical assets and money. This was, by extension, reconfiguring the physical world and how we interact with others. The rise of online marketplaces and platforms for exchange had created new opportunities for selling one’s labour, but this also brought with it concerns about the status of workers and employment. In terms of future developments, she suggested that platform providers might increasingly diversify and move into the supply chain and she also questioned whether the sharing economy would remain dominated by peer-to-peer activity, or whether mixed modes of provision would develop. To conclude, she suggested that the beneficial elements of the sharing economy should be harnessed, particularly by cities and communities in ways that would allow local people more control over transport, housing and amenities.
- Ari Kestin offered an entrepreneur’s insight into the sharing economy. He explained the origins of the Nimber concept, which offered a platform matching travellers with people wishing to move goods. The main challenge, he observed, was raising awareness of the platform, but users quickly understood the concept, particularly for its convenience and the interactions it offered with other people. He pointed out that digital technology was providing a means for people to monetize their movement, although he suggested that ‘access’ economy was a better term to describe this than ‘sharing’, since the latter term was sometimes seen as excluding monetary transactions. He offered an optimistic view of how this ‘access economy’ could reshape economic activity, by providing a range of income streams for people.
- Indy Johar explored the nature of the sharing economy. He explained that cloud computing was creating a micro-efficient allocation of resources and had reduced the costs of bureaucracy. What we call the sharing economy, he noted, was being shaped by two different models: a platform system providing an intermediary for transactions and a blockchain model offering the possibility for direct interaction. The platform model tended to result in monopolies, which could aid efficiency but also brought ethical concerns about accountability, privacy and the experience of users. As a result, he expressed concern that the sharing economy could develop into a fractional rent system with power held by massive international corporations. We might, he suggested, be advised to treat such platforms as global utilities, and think carefully about appropriate regulation.
- Andy Boland explained how a traditional company was adapting to changes wrought by the sharing economy. He observed that Addison Lee had pioneered the use of apps and digital bookings in the private hire market, but the firm was also having to compete with platform economy providers such as Uber. These platform providers were generating regulatory concerns, particularly over issues such as safety, service quality and customer experience, as well as how to cover the external costs of such operations, such as congestion. He suggested that regulation needed to be updated, but the sharing economy offered the opportunity to use spare capacity more efficiently.
Key themes raised in the discussion:
- We need to rethink appropriate regulation for the sharing economy. Much discussion was focused on the kind of regulation necessary to ensure that the sharing economy generated activity in the public interest. It was noted that transport regulation had been slow to develop, and was often motivated by safety issues; similarly, it would take time to understand where regulation was necessary for the sharing economy. Concerns were raised that regulation should be kept to a minimum until the public interest dimensions were better understood, while others recommended a non-confrontational relationship between regulators and firms, noting that firms were capable of self-regulation to a large degree. One recommendation was to develop a new typology of regulatory behaviour suitable for a digital and global economy.
- The platform economy has a tendency to create giant monopolies. There was discussion about the public benefits of such monopolies, and it was suggested that it would be best to distinguish between those on the production side and on the consumer side. In cases where technology had created a new market where buyers and sellers could not previously connect there was a clearer public benefit. There was some criticism that existing regulators were protecting current monopolies while failing to anticipate the creation of new ones.
- The sharing economy is likely to be disruptive. Delegates observed that the impacts of the sharing economy could be profound, particularly for the large number of people who earned a living from road travel. The effects, it was noted, could be particularly disruptive for labour, since those making a living using the platform economy were unlikely to enjoy the security of employees and had little opportunity for career progression. The move towards a contract- based economy was thought likely to require new forms of regulation to protect safety and prevent exploitation of workers. Others had a more optimistic view of these changes, noting that economies had adapted to major technological changes in the past. One observation was that in places where the sharing economy was well established, such as California, new economic strategies were being considered, such as the universal basic income.
- We need to understand better the implications of the sharing economy for cities and places. Attention was drawn to the way in which the sharing economy was reshaping how we move around places. With the rise of virtual or shared workspaces the whole city was becoming a workplace or campus, in some cases resulting in more travel in order to make use of the amenities on offer. However, other delegates warned that we should also think about the effects on the disabled, and on rural areas, where online access and mobility was often much more restricted. In such cases fears were expressed that the sharing economy could widen the gulf between the quality of urban and rural lives.
- The sharing economy could provide opportunities for better use of transport network capacity, such as road space. Several delegates noted that technology could create new markets for the use of spare network capacity. This was particularly the case for road and parking spaces, although there was disagreement about how to allocate this equitably between different categories of users. Some expressed a view that sharing platforms and autonomous vehicles could result in much greater road and parking space capacity in the future, while others suggested that technology would reduce the cost of personal car travel, siphoning demand away from passenger transport modes.