I Remain Bullish on Bikeshare

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Relax – – the bikeshare industry in the U.S will be fine. It will not collapse with the implosion of PBSC (Bixi) and will actually emerge stronger.

As with all new industries, the bikeshare industry is transforming. We are shifting from Bikeshare 1.0 to Bikeshare 2.0 if you will. And like other industries, this is a good thing.

First generation technologies always seem (and are) crude, cumbersome, clunky and costly in comparison to future generations. Bikeshare may well be the new poster child of this natural progression. The expansive and expensive racks and kiosks are already on their way out. SmartBike technology, although having considerable room for improvement, is clearly a better solution.

In addition to technology advances, the bikeshare industry will also benefit from new business models and management arrangements. The consultant turned supplier turned manufacturer model is taking on water. Cities are realizing that it’s usually not such a great idea to have the same folks that sell “feasibility studies” be the same as those selling management services and (gasp!) equipment.  In fact, often laws exist that explicitly ban such arrangements. For instance, here in New York it is illegal to be both an environmental testing company and an environmental abatement company. The logic here is obvious.

As we move to Bikeshare 2.0, we will enjoy increasing competition among technology providers, equipment manufacturers and management companies. Concentrating on their specific areas of expertise will yield superior products and greater efficiencies. The ultimate result will be the industry’s advancement towards the grand quest – financial viability.

Of course, there is another partner in all this – the cities who field bikeshare systems.  We need the cities that already have programs – and those considering them – to have some patience and a whole lot of commitment. Bikeshare will only succeed when it is seen as an integral part of the public transportation system and not just a nice amenity. This will take time. Taking Americans out of their cars is a daunting task. Honestly, bikeshare has not even scratched the surface. Its “mode share” is a largely a cannibalization of other public transportation systems and walking. But this will change – slowly. Already we are seeing statistics showing that “millenials” are moving away from cars in huge numbers. Research shows that car ownership among young, urbanites is not very desirable. Bikeshare, along with car sharing services such as ZipCar are making car ownership largely unnecessary for city dwellers. The only people who seemingly do not see this “sea-change” occurring are big city governments who stubbornly continue to support – and indirectly subsidize – car drivers. The best example: the toll-free bridges that span New York’s East River which allow drivers, many of whom live outside the city limits, to travel into Manhattan for free. New York City bears the cost of maintaining the bridges, receives no revenue from these drivers, and disincentivizes them from using mass transit. A better approach is taken in Hangzhou, China where the world’s largest bikeshare program exists. To discourage people from driving into the city, Hangzhou makes their bikeshare free to those using mass transit to enter the city.

All this means the future of the bikeshare industry is bright if it can get past the need/desire of cities to make the bikeshare programs financially self-sustaining “from the git-go.”  Bikeshare can absolutely result in positive revenue if viewed as part the greater overall city financial picture. Imagine, if you will, that New York City slapped a hefty toll on those East River bridges. Drivers just might take another look at mass transit. They will pay for a monthly commutation ticket resulting in higher revenues for the MTA (Metropolitan Transit Authority) and help defray the cost of a massive transit system in which the majority of expenses are fixed costs anyway. Maintenance costs for those bridges will decline if fewer cars use them. Perhaps NYC will even need fewer parking enforcement officers (although at the price of NYC parking tickets the city is probably making out pretty well here!) City streets will be less snarled making buses move faster which may make New Yorkers do the unimaginable – actually like them!  Taken from this perspective, bikeshare may be a great way for cities to actually create new revenues. At the relatively modest cost of establishing a bikeshare program vis-à-vis other major city projects, it may actually be a bargain.

But it takes some vision. Luckily, there is no shortage of that in the bikeshare industry. I have met so many really smart people in this space, particularly young people with brilliant ideas.  I also see a new breed of urban planners taking the reins in city halls across America bringing with them a new vision of the modern city freed from the mayhem of automobiles. One day they will crowd out those who cling to automobile commutation as an “inalienable right” while failing to see the inter-related cost structure of the entire urban transportation mix.  Like I said, it will take some vision. But like I said in the title, I remain bullish on bikeshare.

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