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Public transit has seen little change over the last 50 years.  Vehicles run on fixed routes at predetermined times and riders plan their routes and timing according to the transit schedule.  But with new technology, public transit does not have to be this way.  In the fall of 2018, Pantonium, a Toronto-based technology company, began a pilot project with Belleville, Ontario, which proved that public transit can run on-demand without fixed routes. With a combination of operational changes and artificial intelligence, Belleville transit used technology to increase the quality of service to riders, reducing ride time and increasing service area.  Instead of buses following a fixed route, the technology created journeys based on passenger demand dispatching buses only to stops requested by riders. After three months, Belleville saw a 300% increase in monthly ridership and a per vehicle increase from 6 riders per hour to over 30 riders per hour.  This change was made without costly consulting fees, using Belleville’s existing infrastructure, and without any human dispatching.

Quality public transit is the backbone of thriving communities.  While many cities provide quality public transit in urban cores, doing so outside these areas is much more challenging.  Without quality public transit, many people are unable to get to and from work, to run errands or attend social commitments.   Better public transit will also lead to increased ridership and reduce greenhouse gas emissions.

Although it is typically overlooked as a prime public transit option – the bus is the best option to re-design public transit in lower density areas combined with technology. Pantonium’s hybrid on-demand public transit system uses automated algorithms to determine the best route to meet rider demand, in real time.  Unlike streetcars and subways, buses are not limited by rails or wires and this allows them the freedom to move about according to rider demand.

When trying to improve the convenience of public transit many people look to the more traditional “taxi-esque” model of using software to arrange pick-ups and drop-offs of people from door to door.  However, this is not public transit and the model is too costly and does not move enough people to function at a municipal level.  Due to the high labour cost, taxis are a luxury service for which there is limited demand. Instead, a hybrid on-demand public transit model relying on traditional bus stops is better suited to meeting the challenges of increasing public transit service and efficiency in lower density areas.  The difference between these two approaches to public transit has been seen in a few different municipal transit projects across North America.

The “taxi-esque” approach to public transit has been seen in Arlington, Texas and Innisfil, Ontario where small vehicles were dispatched to pick up riders in response to requests.  These systems offered pick ups at the user’s door or at pre-determined locations and served between 3-6 people per hour and operated as more of a ride-sharing service, using only basic computer intervention. In Arlington and Innisfil rides cost between $20-$25 per ride which was highly subsidized through public funding.

In contrast, Belleville, Ontario, has implemented a hybrid on-demand public transit system  using artificial intelligence and existing infrastructure. The system breaks buses free from their fixed routes and creates journeys based on user demand.  By freeing the buses from fixed routes and servicing only where riders wanted to go, the system services over 30 people per hour on a rural night bus route – a figure in line with daytime urban ridership in New York City at a cost of only $4 per ride.  Belleville implemented the software using existing assets and without arranging for costly consulting.  The technology autonomously inputs all data from ride requests and arranges for journeys in real time, without human intervention.

In modernizing public transit to better serve less dense areas it is important to maintain focus on the goals of public transit.  The aim should not be to create a public taxi service and shift the cost of private taxi rides to the public purse.  The goal should be to create a system that serves the needs of people to efficiently get where they want to go while balancing cost, access and service quality.

In order to bring public transit into the 21st century cities need to look at buses with a fresh perspective.  Neither fixed routes or traditional on demand transit appropriately meet the needs of riders outside of urban cores.  Technology is the answer and it can save taxpayers a lot of money all the while giving riders a better service that gets them where they need to go for a fraction of the cost.

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This is a post designed to push the boundaries of how the public transit industry considers its planning, operations and innovation strategies for road based transit service.  Specifically this is for New York City, and their Bus Optimization Challenge. Long story short, the MTA should get rid of some of their bus routes and replace them with a flexible, application based, stop-to-stop, on-demand bus service.  So should every other municipal transit agency in North America. This is not satire, this is backed up by real-life data collected in an on-going transit project.

Here is why: your average city bus can move 40-80 passengers per hour under ideal conditions. Consider buses running with high frequency on a straight line route, without too many stops, in a dense urban grid, with masses of people getting on and getting off all the time. Those types of conditions are perfect for buses. For small towns and rural areas this level of vehicle productivity is much lower. For the MTA Bus Company their average rider count per vehicle revenue hour is 38. Which is just above the national average.

But even for dense cities this rider count only happens under the ideal conditions. We all know transit cannot just operate under ideal conditions, it has a mandate to provide service everywhere. Buses sometimes have to be infrequent, sometimes they have to go through a low demand area. If a route is underperforming, let’s say the demand is not there and you are only getting 10-15 riders per hour you can cut the service and allocate the vehicles somewhere else somewhere with demand that needs high frequencies of buses. But you can only cut so much before it becomes a political problem. People are very protective of their routes, just look at the furor over Jarrett Walker’s proposed redesign of the Dublin Transit network. Even after months of consultation the proposal generated massive amounts of push back.

The typical reaction to the thought of changing fixed routes to an on-demand service is to compare such a service to taxis, TNCs or other microtransit projects. The difference between Pantonium’s EverRun On-Demand Transit (eODT) approach and the others is we are using normal sized buses, existing bus stop infrastructure and autonomous route optimization. The latter feature is something which very few technology providers actually have.

It is no surprise that other microtransit projects only operate as a modestly productive paratransit service, averaging just 2-5 riders per vehicle revenue hour. In Pantonium’s case we saw a monthly average of over 20 trips per vehicle revenue hour. That is on a night bus service in a small town. This is 3 times more productive than the best ever recorded microtranist solution.

In the MTA’s case there is an on-going process of bus network redesign, long overdue as some routes have not been changed for close to 100 years. This is where we really think an on-demand service can help. As shown here in the initial results of our Belleville bus pilot, a fast way to see where your ridership actually is and wants to go is to scrap fixed routes, and let people tell you where and when they want to go to any bus stop, then dynamically route buses there. After several months you can see clearly where the demand is clustered and where your vehicle supply should be.  In other words, before you wipe the slate clean, get a whole new slate. Free the buses, see where they end up. This will save you a lot of trouble on two fronts.

  1. You never really know for sure where people want to go
  2. You know people are going to complain when their routes get cut

On-demand transit can solve both those issues. The bus only goes where there are riders and no one loses service. You pilot for a short period of time and decide how to design your network based on the results. This is an innovative way to generate hard data for a system redesign and still cheaper than hiring consultants.

Look at your bus network if any bus routes ever fall below 20 riders per vehicle revenue hour. Those areas would be feasible for a pilot project using eODT.

As transit operators you know best if such a service is feasible, but this technology is new, so consider this modest proposal. We all know your bus ridership is down, you have bus stops and you don’t know if they are useful. And you have a routes that you are starting to replace. Take a moment, eat your fixed routes, try something new. In this day and age it is the least insane thing you can do.

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Public transit around North America is in decline and transit agencies are scratching their heads at what to do to turn this trend around. Public transit is an essential service in modern communities and is necessary to allow people to go about their daily lives including to get to and from, work, socialize and run errands.  To make fixed route public transit affordable, especially in rural and suburban jurisdictions, has often meant long rides and wait times to ensure access to everyone. The need to increase ridership, the main way to get more funding, becomes challenging for agencies to balance covering their entire service area with their current resources. Belleville, Ontario is trying a new approach to public transit. In September 2018, they started operating a new service, in partnership with Toronto based technology company, Pantonium. The service was designed to let riders order buses, on-demand, to take them to and from any bus stop.

The pilot project’s first week got off to a promising start, making news across Canada. The basic premise is simple, a bus driving along fixed routes is not always the best option. Fixed routes at night time or in low-density areas are usually expensive, unproductive and offer poor service to riders. It has been attempted to provide on-demand transit many times before, however no previous transit has used Pantonium as their provider of an artificially intelligent routing system.

The routing system developed for this pilot is unique due to the requirements for Belleville’s night bus service. The system had to run without human supervision because every night Belleville’s dispatchers go home before the buses hit the road. Rather than assisting dispatchers to build and change plans the technology works autonomously, with the help of connected mobile applications that allow the software to communicate with riders and drivers in real-time. Once it can monitor the locations of vehicles and demand, whenever something changes that could impact the plan the system logs it as an “event” which triggers several thousand iterations of planning.

These planning sessions are attempts to locate a globally optimal solution for all transit vehicles and trips in Belleville. Doing this is one most complex problems in mathematics, titled the “vehicle routing problem.”  Which is notorious for its difficulty as the necessary number of calculations increases at a factorial rate. For example, solving a day of travel for moving only 10 people to 10 different stops, has millions of different options. At 20 stops the options go into the trillions. On an average night the system will run itself a new planning session hundreds of times and can complete each session in about two seconds. The result is that every bus stop in Belleville is now accessible in less than 30 minutes, but the bus will only travel to one if riders are planning to be there.

Here are some statistics on the Belleville pilot project in its first month: 1) Ridership has increased by 300% 2) Per vehicle mileage has decreased by 30%  3) The number of bus stops covered by the service is 70% greater than the previous bus service, using the same number of vehicles and service hours Overall analysis of a month of collecting vehicle data has shown that the previous fixed bus route is very different from where riders have wanted to go. This can be seen in Map 1 and Map 2 below.

Map 1: Belleville’s Old Fixed Night Bus Route

Map 2: Red is where Riders Have Actually Wanted to Go:

One of the most critical differences between the two maps is that Map 2 shows a concentration of rides in a central area, that was not previously serviced in Map 1.

The pilot will run until early 2019, when Belleville will decide to continue or expand the service. So far, the biggest challenge facing Belleville Transit has been the extent of the increase in demand for its services. Buses that used to carry only a few passengers per night are now being filled. The latest news from the City Council Transit Committee is that more vehicles are needed to cope with the increased demand.

Doing real world pilots is a great way to prove to the world that on-demand bus service is not just an idea, it is a real option available to public transit agencies to overcome challenges of traditional fixed route public transit systems.

Since starting in September 2018, the pilot project has also shown:

When and where on-demand public transit service will be most useful: It is not just low density areas that work for this service type, Belleville has a density of roughly 500 people per square mile.

The importance of having flexibility in service to handle riders requesting trips: Not everyone owns a smartphone, not everyone wants to call a dispatcher, not everyone knows about the pilot or service changes. You need to take riders on an ad hoc basis, from any stop, and allow drivers to input these ad hoc riders into the system.

That automation is critical for both routing and on-boarding in an on-demand model: Automation enables cheaper service scaling; rather than hiring more and more dispatchers the system only needs more computational power to grow.

Software can help transit agencies maximize their existing infrastructure:  Rather than replacing transit with Ubers or taxis the more sustainable option is to apply a layer of technology to existing infrastructure to improve efficiency and public access.

Read more about the lessons here.

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Pantonium is now in the midst of deploying our newest on-demand transit technology to a public transit agency in Canada. So far it has been running since September 17, 2018, ridership has doubled in two weeks, and the initial pilot is expected to last until January 2019. Here is a video containing interviews of citizens of Belleville about their hopes and opinions regarding the new service. So far Pantonium has learned a lot about how our technology fits into a public transit operation and how more places could adopt an on-demand service. Here are four major lessons from our ongoing pilot for transit and technology enthusiasts to consider:

  1. Know when and where on-demand service will be most useful. When it comes to on-demand transit the knee-jerk negative reaction by people is to say “that will not work here,” this criticism is sometimes correct. For example, on-demand transit would not be a good option in a downtown core of a city during rush hour. Toronto, New York, Los Angeles or pretty much any major metropolitan core have so much demand that they need massive capacity to move people, that means high frequency, fixed route vehicles, like trains or large buses. This is why Uber, is still losing massive amounts of money and is in fact increasing congestion in major cities, because forcing on-demand everywhere will not work. Many public transit industry veterans can attest to the story of dial-a-ride’s death from success. Where a transit agency used to offer a dial-a-ride service, which is a phone based on-demand transit, and had to convert it to fixed route after demand increased. There are however many cases where it does not make sense to run fixed route buses, that includes night time service and low-density areas. For example the TCRP has found on-demand/flexible services working in population densities that range from very rural areas with 5-10 people per square mile, while others that are suburban, with 1,000-2,000 inhabitants per square mile work as well. Belleville, where Pantonium is operating has a density of roughly 500 people per square mile.
  2. The technology must have flexibility and robustness to handle all cases of riders requesting transportation. Not everyone owns a smartphone, not everyone wants to call a dispatcher, not everyone knows about the pilot or service changes. Therefore Pantonium’s system has the flexibility to take riders on an ad hoc basis, from any stop, then allow drivers to input these ad hoc riders into the system, from terminals on the bus, then those trips are automatically scheduled. This is important because public transit has an obligation to provide service to everyone. And when it comes to technology, not everyone is as comfortable interfacing with it and that includes drivers, riders and administrators. Rather than scorching all fixed routes and forcing drivers to only pick up people who order via the portal, Pantonium’s approach is to change operations as little as possible, but to allow an additional way for people to engage with the transit agency.
  3. Automation is critical for both routing and on-boarding. Belleville Transit is deploying this service for its night time routes, and during those hours there are no available dispatchers. Unlike every other demand-response system so far deployed by public transit, this service runs autonomously thanks to Pantonium’s Everrun platform. The system is capable of making on the fly decisions about schedules and routes without human supervision. This is key for scaling a service to control many vehicles and handle many trips, rather than hiring more and more dispatchers the system only needs more computational power to scale. When it comes to on-boarding riders, drivers do not have to do any extra work, riders merely scan a uniquely generated QR code to identify themselves to the system when the get on and off the bus. This process will help public transits set up automated payments and also prepare for a future of driverless vehicles.
  4. Use the infrastructure you’ve already got. There are 130,000 transit buses operating in North America, Belleville has 14, which is still a considerable investment in capital resources, there are also hundreds of bus stops that already have been built and paid for and that is the case for every agency. Rather than throwing that all away and doing something like a door-to-door service with Ubers or Lyfts, the more sustainable option is to apply a layer of technology to existing infrastructure to improve efficiency and public access. This way we can experiment with new service features, without eroding the capabilities of transit agencies.

We will keep you posted on news from the pilot. Do you think your area could use on-demand transit? Let us know in the comments.

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It turns out that everyone, including the UN might be wrong about cities. At least how many people are living in them, according to new research using high-resolution satellite images, today 84% of the world’s population or 6.4 billion people live in cities right now.

If we expect to improve the lives of the vast majority of the global population, it is time for these cities to get smarter, and the market potential to do so is massive. City Lab notes that the hottest technology sector is urban technology, where investment reached more than $75 billion in the past three years, it doubled between 2016 and 2017, from $20 billion to $44 billion, and has now has a share of 22% of all global venture capital, that is much more investment than pharmaceuticals and biotech ($16 billion in 2017) or artificial intelligence ($12 billion in 2017).

To illustrate how hot urban technology solutions are getting, look at the lowly scooter. This year, Bird, an electric scooter company became the fastest ever Unicorn, Bird, just one of several companies entering the scooter scene, was founded in September of 2017, in May of 2018 it was raising $150 million Series C at a $1 billion valuation. While these electric scooters littered the streets of cities causing knee jerk regulatory outbursts, which probably will help the marketing for these companies, much like reactionary laws spurred by taxis helped market Uber. Electric scooters are child’s play when compared to the AV players. Cruise Automation, Waymo and others are already getting massive valuations before their technology is even commercialization ready.

Meanwhile, below the commanding heights of Silicon Valley venture capital is an alarming decline in the key operational provider of urban transportation, public transit. According to the Washington Post, transit ridership in 31 of 35 US metropolitan areas has fell last year, 2017 was the lowest since 2005. Bus ridership, a mainstay for most urban transportation, fell 5% in 2017. If that trend holds for just 20 years that would mean the absolute end for buses. Some might say that is just in time for autonomous vehicles, which are predicted to hit 25% market penetration by 2030.

Autonomous vehicles might be coming but they are not the trends that are killing transit right now. In a very recent 14 year longitudinal analysis of the determinants of public transport ridership of North American transit, researchers found that the strongest reasons for the decline of transit, was the reduction in vehicle revenue miles/kilometers and increase in car ownership. This seems like a no brainer, as transit agencies reduce their service levels they will get less riders and people will choose to drive more. That study also found that the impact of TNCs (transportation network companies) was not a significant cause of the decline in buses. But as others have noted, ride-hailing is not really making things better.

2018 will be the first year that the trips performed TNCs, outnumber bus trips, however despite the window dressing of ‘shared rides’ improving urban mobility, research is showing that ride-hailing type services are adding to and worsening traffic in major urban markets. So more and more people are choosing to ride in Ubers and Lyfts, which mean more and more of those cars driving on the streets to service demand, which means more and more dead-heading drivers waiting for fares. In New York City there are now close to 70,000 TNC vehicle operating, compared to just 13,000 licensed cabs.

Regardless if you think transit should be hollowed out and replaced by ride-hailing fleets, or if you think we should invest more in transit to make it a preferable option to driving. The key will be technology, either way will be enabled by technology. Doubling down on just traditional transit investments like rail and fixed route buses does not work everywhere. But replacing all our high capacity transit would be the fastest way to choke out our metropolitan areas with traffic.

And if cities want to be smarter it is going to and if they want to own their data and have operational control over the vehicles on their streets, then they better procure the right technology and not just hand it off to a private company:

“Ride-hailing companies are in an awkward position if they refuse to share data with governments that subsidize them. ‘If I’m paying you to move a passenger, the data for that passenger isn’t yours,’ I heard a Texas transit official say recently to a ride-hailing executive. ‘It’s mine.’ The executive had no response.”

As Holger Hürtgen and Niko Mohr, both with McKinsey, recently put it:

“Data has become the new corporate asset class—and the best way for companies to generate and access it is to digitize everything they do. Digitizing customer interactions provides a wealth of information for marketing, sales, and product development, while digitizing internal processes generates data that can be used to optimize operations and improve productivity.”

Here is the rub, regardless if you go public or private there needs to be some intelligence, all this data needs to be used to alter operations in real time. We need to start treating urban mobility like air traffic control. No matter how many vehicles you can put on the roads or take off the roads, it does not matter if they are not controlled intelligently, in way that that reduces vehicle kilometers traveled yet increases productivity.

Right now public transit is caught in a trap, they need to provide a reliable, frequent grid of service across their entire area of responsibility. In the expanse that is North America, there are simply too much low density populations to cover with this traditional fixed route grid. A way to quickly do this is by turning low productivity fixed route bus lines into on-demand services, these can be coordinated with higher productivity fixed route assets like BRT, trains, streetcars, subways. Or by procuring vehicles through contractors and activating them on the system to cover certain areas.

This will help people who do not have access to their own vehicle but have tight schedules where normal fixed route transit is not be sufficient. There is a population of shift workers, part-time workers, students and retired people, who all struggle to be mobile and have the most specialized transportation needs. Studies in the GTA by the Toronto Atmospheric Fund and MaRS have proven that microtransit can significantly reduce greenhouse gas emissions. Unlike transportation network companies or traditional taxi cabs, trips will be designed to be shared, a smart mobility system is made to maximize the number of shared rides possible across the entire fleet, not just one-to-one matching used by taxis or other trip marketplaces.

Bring transit to people, where they are, when they want it, based on their travel schedules and the schedules of fixed routes. Gather demand data through mobile applications and online portals to build schedules for fleets of smaller vehicles or transit buses. Provide flexible route service to pick up people for shared rides to and from transit hubs and across low density regions. This will eliminate 3+ transfer travel, solve first/last mile challenges, create massive amounts of data to make transit more accessible and convenient for everyone, and finally it will help make transit more competitive in the growing ecosystem of new mobility options. It may well be the next urban technology unicorn.

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Greyhound Canada has recently announced it is pulling out of Alberta, Manitoba, Saskatchewan and BC this year, their senior vice-president in an interview with Canadian Press said, “simply put, the issue that we have seen is the routes in rural parts of Canada — specifically Western Canada — are just not sustainable anymore.” This failure of a business model is sad for those who relied on the service, but is an opportunity for everyone in the transportation industry to reflect on the question, how can we make rural transportation sustainable?

Greyhound blamed lower cost of car ownership and rival transportation services that are subsidized as the main culprit for the struggle to maintain in the region. Probably the answer is that demand for transportation was too low and too sparse for them to continue. Of course the demand is not zero, there are already stories of people who relied upon these routes for medical treatment and businesses that used the buses to move goods throughout the area.

The inter-city bus model is not dead, as seen by the enormously successful “Chinatown” bus companies in the US that have been operating in a grey market for years, without subsidies or regulation. Compared to Greyhound Canada which has been operating at a loss for more than 10 years. Chinatown bus companies do not offer a pure on-demand trip booking experience like a taxi cab would offer, but they did offer something better than a fixed route. The main idea is that they get people to tell them when they need to be somewhere. And the bus service gets enough people close together in the time they need to be there, and gets the bus ready for that trip. Pantonium’s CTO Khun Yee Fung explains:

“For flexible long distance bus service, there are three parameters: who wants to go, where do they want to go, and when do they want to go. The basic idea is to ‘form’ a trip to accommodate as many people going from one city to another city, with enough people to be profitable, both ways, based on the times and location given by potential riders.”

Introducing flexibility in route scheduling can help but the main reason why some long distance services thrive and others fails is the economics of the routes, taking people between big cities that are close together is easy to make profitable, taking people between small communities that are far apart is going to be hard to make profitable. However there are businesses that do this constantly, at extremely low levels of demand using a very different model of pricing, scheduling and service level.

Pantonium provides a technology solution for long distance medical transportation companies across North America, including many city to city transportation companies operating in low density regions. For instance in Idaho there are companies that provide transportation all over the state, they collect hundreds of trips up to the day before. Asking riders for their location, and desired pickup or drop off time at another destination.

This is door-to-door level of service, unlike traditional buses, thus solving the first/last mile problem. Then the company runs a fleet management algorithm on the list of trips to first of all make sure that the entire list of trips can be handled and that all the vehicles are at maximum capacity. Another major difference of this service, one that all bus operators should consider, is the size of vehicles. The transportation providers in Idaho realized quickly that large vehicles are not as economical, even though a big van or a bus can carry more people, and more fares, there is only so much demand and it is spread out and large vehicles cost far more to operate. Procuring smaller vehicles allowed the algorithm to fill more vehicles and cover more ground. This gives better customer service as the fleet can match people’s schedules closer and reduces the cost of maintaining a large fleet.

Having a fleet is important, for low density areas ride sharing like Europe’s BlaBlaCar wouldn’t be reliable and neither would ride hailing services like Uber, due to the challenge of having vehicles always available and keeping drivers where they need to be. An unpaid driver is not going to idle all day waiting for a few fares, nor will there always be a driver willing to share a ride to another city when people require it.

The way forward for rural communities is partner with operators that are willing to use new methods and technologies to provide a reliable service that actually matches demand. Luckily there are still a few months before Greyhound officially pulls out of Western Canada, time enough for interested stakeholders to think about people transportation systems of the future.

Photo credit: Ken Greyhound 2972

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Pantonium is announcing a joint project to improve access to public transit buses in the town of Belleville using mobile applications and new scheduling software. This is a new approach to an old challenge for public transit in low density public transit areas, attempting to improve upon the “dial-a-bus” model without replacing or undercutting the existing transit infrastructure. 

The goal of the project is to allow Belleville Transit riders to order bus trips via a free app to be picked up at any bus stop and be dropped of at any bus stop in the town. Removing the need for some fixed routes with low ridership and give on-demand service to riders. Pantonium has been providing this type of optimized, on-demand scheduling to public and private passenger transportation companies around the world. 

The project is already in the development stage, a pilot with three buses covering a late night route will begin in the last quarter of 2018.

Successful implementation will reduce the time required for riders to contact transit to schedule trips. Current trip requests need 12 hours advance notice. During the pilot project these times will be reduced to 30 minutes. The project will also save on the costs of operating buses by reducing the number of empty buses driving on fixed routes. Pantonium sees this being applied across the world in rural, suburban, low density areas,  night bus services, and first/last mile challenges around transit hubs.

Unlike other on-demand transit projects in Ontario, the Pantonium project will involve shared ride route optimization and utilize existing transit infrastructure and vehicles, thus it will be relevant for transit agencies that are looking for ways to economize their existing fleets while providing a new service for ridership.

The project is supported by investments from Belleville City Council, the Public Transit Infrastructure Fund and the Ontario Centers of Excellence, i3 Customer Demonstration Program. It will conclude in January 2019 with a summary report on the impacts and further potential of new technology enabling on-demand transit.

Photo Credit: J.Davidson, Belleville Bay Bridge Looking North

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“We are approaching the end of the automotive era… the end of the line for the automobile because travel will be in standardized modules. The end state will be the fully autonomous module with no capability for the driver to exercise command.” – Bob Lutz (former Vice Chairman of General Motors), “Kiss the good times goodbye,” Automotive News, November 2017.

Cars that can drive themselves are coming faster than many have predicted, but they are coming in a way that the general public might not expect. If you take away a car’s steering wheel, you take away more than the driver, you also take away the navigator. This is not a loss, it is great opportunity in transportation. The future of fleet management will become a critical feature of the entire autonomous vehicles technology stack. If done correctly this will be a good thing for our roads, environment and daily commutes. Just this year the CEO of Uber described an example of their AV roll-out plan, in their recent test city Phoenix:

“there will be 95% of cases where the company may not have everything mapped perfectly, or the weather might not be perfect, or there could be other factors that will mean Uber will opt to send a driver. But in 5 percent of cases, we’ll send an autonomous car, when everything’s just right, and still the user will be able to choose whether they get an AV or a regular car. That initial 5 percent is going to grow to 10… in five years, we will have the perfect driver in Phoenix.”

This was of course before the tragic incident in Tempe, Arizona where a pedestrian was killed by one of Uber’s self driving cars while it was driving autonomously. This has lead to Uber suspending their program, Toyota has followed suit, other companies are continuing to test. Regardless of accidents, development will continue, Waymo has already stated that this accident would not have happened with their self driving technology,  which means we are moving toward a future with more fleets of AVs on the road. 

There is a difference between AV use cases where you have a car in your driveway, and can have it drive you anywhere after you put in an address. Most people imagine a similar use case for AVs in the future. This is not how a fleet will operate. A fleet has a different mindset, it is not a individual one, it is a global one. Without this mindset we get the ghost car scenario.

If people get AVs, the roads will become clogged with an autonomous, efficiency destroying, traffic causing ghost, a ghost that our society will happily create in the name of convenience. You just know this will happen. Let’s say your brand new Level 4-5 Autonomy self driving car, that was miraculously made legal, and purchased for several hundred thousand dollars is driving you and you want to step into the mall for a smoothie and shopping excursion, but don’t want to pay for parking, because parsimony is how you saved up for a high tech luxury vehicle. You tell your car to circle the block while you shop. Which it does for several hours. While this is a future full of more choices and more control it also has massively more cars clogging the road providing even less utility than when there only have one person riding inside, imagine a whole city of empty cars driving around at the whims of their individual owners.

The zero-occupancy scenario is not in the cards just yet for two interrelated reasons: limitations on technology means that we need to control cars in fleets first, and limitations on road space means self-driving cars improperly used means much more traffic and inefficiency than we have today. But just as making cars capable of driving themselves is very difficult, it is also difficult to manage a fleet of them transporting people.

We do not want self driving taxis, taxis are only good at transporting a few people from point A to B. They are not a comprehensive solution, and really are just a product of 20th century transportation paradigms. We also do not want public transportation, as it is now, no one in North America would give up the convenience of a personal car just to have a self driving bus pick them up. You need to share the cars, as this is how spectacular reductions in vehicles on the road will be possible, check out this article regarding the potential of shared autonomous vehicles for taking 9 out of 10 vehicles off the road. This is what applying route optimization software that can automatically manage the routes of shared vehicles in real-time can do. This is why every self driving vehicle fleet is going to need this type of technology.

Without optimizing routes and schedules of shared vehicles the roads will be worse than they are now, without fleet management software self driving cars will be empty taxis, not a revolutionary force in personal transportation. With multiple companies testing their AV “ride-hailing” and “robo-taxis” in 2018 and 2019 the importance of real intelligence managing the coming and goings of the vehicles will come to the forefront. 

Photo credit: Travis Wise – Self Driving Car

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We all know the story, in the US, every year 3.6 million Medicaid beneficiaries “miss or delay healthcare” due to transportation problems. This causes a knock-on effect through the healthcare system. Therefore $2.9 billion is spent by the government on non-emergency medical transportation (NEMT) to provide roughly 103 million NEMT trips annually. After some quick maths, your average NEMT trips costs an average of $27. This is not public transit, it is a complicated ecosystem of private companies working closely with states and federal regulations. But all is not well, despite existence as a program since 1966, fifty years later, according to the Government Accountability Office (GAO) study from 2016, “NEMT is at high risk for fraud and abuse,” their reviewers noting the gaps in federal and state guidance. These gaps and variances across the country have made NEMT a fragmented and highly variable industry, where billions of dollars are spent paying for trips that no one is sure even happened. Now looking into 2018 with the emergence of new technologies there is hope that the chaos can be rationalized, history tells us we should be pessimistic. Beyond the marketing hype, there are some interesting stories worth talking about for the first quarter of 2018.

There is bad news in Kentucky, there are over 60 transportation providers in the state they are all about to have fewer trips to go around. The shrinking of NEMT due to federal and state efforts was finalized on January 12, 2018, when the waiver from the Kentucky state government to change requirements for Medicaid was approved by the federal administration,“the Kentucky waiver includes a Medicaid knockout period of six-months for violations, a work requirement… [and] eliminating non-emergency medical transportation...” The implications of this are simple, the state will have to pay for fewer trips. A big money saver, however people will have to find their own way to health care. Tragically Kentucky is gripped by an opioid addiction crisis, a “public health catastrophe”, so bad that some counties are suing drug manufacturers. Studies show that 60% of those seeking help for opioids need to travel more than 10 miles for regular methadone and suboxone treatments. Transportation is key especially for rural populations that have been hit hardest by this epidemic. Other states, like Ohio are also considering a similar move to constrict NEMT benefits and are watching what happens in Kentucky.

Meanwhile in Connecticut, Veyo took over providing NEMT for the state officially on January 1st, 2018, from the incumbent, Logisticare. This is good for Pantonium users as Pantonium has integrations with Veyo, just like it has with Logisticare. But things are not looking too good for the NEMT brokerage or the people it needs to transport. Almost immediately there were complaints of missed appointments and failures of the new call taking system. The state health department called on Veyo’s CEO Josh Komenda, for comments, he said Veyo received an “avalanche” of calls, more than double what they expected. Veyo also blamed the information it received from Logisticare. The fear is, according to a letter from the now dissolved Quality Assurance Committee for the Non-Emergency Medicaid Transportation (NEMT) program, that the state is on the hook to pay Veyo a capitated rate of roughly $5 per Medicaid member, regardless of if those people receive quality transportation, and Veyo is aggressively pushing a new model of service delivery. One with “Uber style” contract drivers delivering NEMT rather than using traditional transporation providers. With this new payment structure and their history of abandoning contracts early, we will see what happens to that $140 million contract, will it last longer than Idaho?

What Veyo is pushing in Connecticut and was pushing in Idaho, is in alignment with what their CEO outlined in this recent blog post. In true blog fashion his list article could be reduced to the simple platitude of: we should increase visibility and efficiency across the industry. What is unsaid, is that Veyo, along with Uber-like startups, such as Roundtrip and Circulation, are basing their businesses on an unsound model developed by Uber. They relate their technology to Uber’s without relating the economic features of transportation network companies (TNCs), which are problematic. As shown in a comprehensive take down by Hubert Horan, Will The Growth of Uber Increase Economic Welfare, released in mid-2017. The article’s abstract is so effective it should be quoted in full:

This paper lays out the economic evidence showing that Uber has no ability— now or in the foreseeable future—to earn sustainable profits in a competitive marketplace. Uber’s investors cannot earn returns on the $13 billion they have invested without achieving levels of market dominance that would allow them to exploit anti-competitive market power. The growth of Uber is entirely explained by massive predatory subsidies that have totally undermined the normal workings of both capital and labor markets. Capital has shifted from more productive to less productive uses, the price signals that allow drivers and customers to make welfare maximizing decisions have been deliberately distorted, and the laws and regulations that protect the public’s interest in competition and efficient urban transport have been seriously undermined. Absolutely nothing in the “narrative” Uber has used to explain its growth is supported by objective, verifiable evidence of its actual competitive economics.

So when Josh Komenda of Veyo says:

Cost savings in the consumer space have been greatly improved over the past five years, in large part because of the introduction of the ridesharing model. Ridesharing allows private vehicles to deliver transportation service on a temporary basis – that’s the key reason why consumer transportation network companies (TNCs) can often be half the price of a taxi.

He is missing the point as to why TNCs are cheaper. The cost of rideshare vehicles has been halved mostly because Uber and its competitor Lyft have been using their huge piles of venture capital money to subsidize the cost of their trips, not due to any spectacular improvements on the logistical efficiency of transportation. Now Veyo’s exit of their Idaho contract makes a lot more sense.

This is why the traditional providers of NEMT, the businesses that own vehicles and have experience operating in the sometimes volatile are still going to be around. Well managed providers that focus on efficiency and keeping up to date on their technology  will still flourish even in the face of changing regulations, increased competition and constant disruption. These are the trends of 2018, is your NEMT company ready?  

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