Ground transport: Change of gear

Costing and managing ground transport has always been a challenge. Does new technology have the potential to bring it under control?

Talking about “door-to-door” travel is nothing new, but while everybody frets about getting the right flight and hotel room for the best price, it’s often the first and final stages of any business journey that can prove problematic.

While the cost of ground transport can seem relatively low compared with the price of a flight or accommodation, most business travellers will have experienced the dread of a pre-booked taxi failing to turn up for an early-morning transfer to the airport.

Similarly, what happens if you arrive in an unfamiliar airport or city after a long flight and your pre-arranged transfer just isn’t there? The traveller may be forced to take a local cab – even if their employer has warned against using such services in some destinations.

Andy Boland, chief executive of Addison Lee Group, calls these transfers “the critical final mile” and stresses that while ground transport has “low ticket value”, it also has “high emotional impact” for the traveller.

But ground transport still remains an afterthought in many travel programmes, with the focus understandably continuing to be on those larger chunks of spending.

Many organisations still seem content to deal with ground transport through their expenses systems. But this approach is inevitably fragmented and can create duty-of-care issues – for example, if a taxi or private hire vehicle is involved in an accident, what’s the insurance situation if the traveller is injured?

Then there’s the issue of not knowing how much your company is spending on ground transport and, in consequence, being unable to come up with accurate costs for an entire business trip.

Improvements in technology are now offering more solutions to these problems – with traditional providers being forced to tackle these issues by the rapid emergence of ride-hailing titans, such as Uber and Lyft in the US.

There are many reasons why buyers are scrutinising ground transport. American Express Global Business Travel, which has just launched a ground transport platform, says there was a whopping 95 per cent “leakage” rate for ground transport bookings among its clients in 2017.

Bumpy road
Many travellers still jump in a cab and claim the expense from their organisation using a handwritten receipt. Research from managed taxi service Cabfind concluded that the majority of UK companies (55 per cent) did not have a defined taxi expense policy, while 51 per cent of employees “round up” a taxi expense claim by an average of 25 per cent. Tipping can add another 13 per cent to the journey cost.

As one UK-based travel buyer says: “Ground transport is something that often gets lost in the mix. We want to tackle it properly, but other priorities get in the way. Ideally, we would like to find one suitable ground transport provider which operates in all our markets.”

John McCallion, chief executive of ground transport technology platform GroundScope, says companies, particularly global corporations, are “becoming increasingly focused on this area” due to the need to control costs, as well as recognising their duty-of-care responsibilities.

Abi Cummings, an associate at consultancy Festive Road, agrees: “More corporates are now thinking and including ground transport in their managed travel programme. Consideration is also taking place on how to re-educate and change the behaviour of their travellers in order for them to use the programmes they have in place, with duty-of-care normally being a primary driver and cost management the secondary driver.”

Technology solutions
While the technology platforms to manage and consolidate ground transport are undoubtedly improving, most travel managers in the sector admit there is “plenty of work to do” in improving these services, particularly with so many players and sources of data involved.

For example, Amex GBT’s new ground transport platform offers access to more than 750 ground operators in 2,000 cities across 18 countries, with options such as black cabs, taxis, limousines, airport express train services and ride-sharing through a deal with Lyft. The platform is designed to capture bookings with suppliers, whether they are made online, offline or through the TMC’s mobile app.

Of course, what’s really shaken up the sector has been the emergence of ride-hailing apps, most notably Uber. For all of the seemingly endless controversy swirling around the company, Uber is at least partially playing the corporate game through its platform, Uber for Business, by providing management information (MI) for organisations and working with expense management specialists such as Concur and Chrome River.

But Erinn Collier, UK head of Uber for Business, says the company will resist offering corporate discounts. “We will not be offering guaranteed rates through Uber for Business; it’s the same price as our other services. If we introduced price fixes it would mess with our natural supply and demand.” she says.

“Historically we find that we are 20 to 30 per cent cheaper than other comparable ground transport providers, even with surge pricing. It’s not just about cost savings, there are convenience and safety aspects as well because it’s a cashless system. The driver is being tracked and you know what routes they are using.”

However, surge pricing remains an issue. Beth Sampson, commercial director at ride-hailing service Brunel, which is part of Europcar, says there should be no surcharge pricing during peak or busy periods. “We offer competitive prices with set rates for point-to-point journeys, meaning customers enjoy the consistency and transparency of knowing how much they are paying, irrespective of the time of day or traffic conditions.”

For Cabfind, it’s not just about providing technology but how clients are addressing issues, such as compliance rates.

“As always, compliance is the key,” says commercial director Daniel Price. “Our technology is designed to fit seamlessly within existing policies. But true adoption will always require a complete wraparound service. Without people behind the scenes, there is no way to effectively manage the supply chain or deal with incidents.”

Wesley Bishop, Gett’s UK head of enterprise, says that technology is also “bridging the gap” between traditional taxi services and the ride-hailing newcomers. Taxi app Gett also owns ground transport platform One Transport.

“The transport industry has found itself moving from being in a car service competition to a technology competition,” says Bishop. “We are noticing that any new technology that becomes available is being adapted to suit ground transport.”

The content, data and functionality offered by ground transport platforms continues to become more sophisticated. The CMAC Group’s platform, for example, has integrated suppliers such as Autocab, iCabbi, Addison Lee, Gett/One Transport and Auriga. It can also provide live tracking and detailed journey information.

Balancing priorities
While technology has been the main driver of change for ground transport, Addison Lee’s Andy Boland makes the point that “technology won’t see you safely through your front door or return a lost laptop.”

“A truly superior service differentiates based on quality – of people, services and delivery,” says Boland, as well as “providing the consistent service and peace of mind the corporate customer needs”. It can also save up to 40 per cent on ground transport costs, he adds.

Groundscope’s John McCallion agrees travel buyers have to balance the twin priorities of cost control and offering a “reliable and safe service”.

“If you are being collected at 5am for a flight, you need the car to be on time and this reliability is worth a small premium,” he adds. “Buyers also require detailed MI reporting so they can analyse ground transport spend and travel behaviour so that all ground transport expenses are as visible as air and hotel spend.”

It’s also clear that more traditional ground transport operators see an advantage in emphasising their duty-of-care credentials to corporate clients, especially when this has been an area of concern with the ride-hailing services and also local taxi firms in some destinations.

Craig Chambers, group chief executive of TBR Global Chauffeuring, says: “Businesses are acutely aware of the importance of being able to track their travellers’ movements at all times and avoid them being ‘unaccounted for’ when they jump in a local taxi to take them to the airport or their hotel.”

And Brunel’s Sampson adds:  “Providing a safe service without incident is paramount. Our clients travel globally with the reassurances that all our vehicles are fully licensed, insured and maintained, drivers are fully vetted and trained, and all our vehicles are fully tracked.”

The rise of Uber may seem inexorable but the company is currently facing a crucial fight to be allowed to continue operating in London after Transport for London (TFL) refused to renew its licence in September 2017. TFL claimed Uber was not a “fit and proper” private car hire operator and had shown “a lack of corporate responsibility” when it came to public safety.

Uber has been granted a 15-month probationary licence with a strict set of conditions, and has been keen to talk about the changes it has made in recent months to try to tackle TFL’s concerns. These include improving how criminal offences are reported, limiting drivers’ hours and launching a 24-hour helpline in the UK. A full court hearing on Uber’s appeal is due to take place this summer.

It’s not just in London that Uber has run into difficulties. Councils in York and Brighton have also refused to renew the firm’s operating licence, with both councils citing a major data breach affecting 57 million Uber customers and drivers, alongside other concerns.

But despite these troubles, nobody is really expecting Uber to disappear from UK cities, particularly as its services are popular with many travellers – especially those aged 24-35 (the millennials), according to Cabfind’s research.

Festive Road’s Abi Cummings says there is a “50/50 split” between clients who have allowed ride-hailing providers to become part of their ground transport programmes, and those who do not approve their use.

One factor that may change the balance in the market once again is the potential for ride-sharing firms to have to increase prices as they are forced to comply with more regulations so they can continue operating in key cities.

Ellen Trotochaud, vice-president of business development at SAP Concur, says: “The cost-differential gap will start to decrease as ride-sharing companies have to get approval in cities and markets by dealing with issues, such as regulations and taxes – that’s going to increase their costs.”

Trotochaud also expects the fragmentation of the ground transport industry to continue as new players enter the market and cause more disruption. “You’re seeing consolidation in so many other areas of travel, but this market seems to be getting more and more fragmented every day,” she adds.

Self-driving cars
Another area where Uber has been grabbing the headlines for the wrong reasons was an accident in Arizona in March when one of its self-driving cars killed a pedestrian. The incident led Uber to suspend all of its self-driving trials in the US while the accident is being investigated.

Despite this setback, the development of autonomous vehicles continues to gather pace – other companies working on similar projects include Tesla and Waymo (formerly Google’s self-driving car programme) – even if surveys suggest the public is wary.

Most commentators on this subject, including Uber’s new chief executive Dara Khosrowshahi, think these vehicles are probably ten years away from being deployed on the world’s roads. But what sort of difference will they make to the ground transport sector?

“Self-driving cars will be infiltrating ground transport and we always aim to incorporate new technologies, rather than seeing them as a threat to the business,” says Gett’s Wesley Bishop.

Addison Lee’s chief commercial director Rob McGinn agrees: “We don’t see the development of autonomous vehicle schemes as a threat; rather it’s an opportunity for businesses including Addison Lee to provide a holistic mobility offering to our customers.”

Even with the onset of autonomous cars, insiders maintain there will still be advantages to having an experienced human driver behind the wheel.

“The advent of this type of technology – while hugely exciting – will not immediately remove the need for a chauffeur as the first and last touchpoint of the customer experience,” says TBR’s Craig Chambers. “I don’t see this changing in the foreseeable future. Our chauffeurs give our customers the peace of mind, which can never be fully replicated by a driverless vehicle.

“Many of our chauffeurs, often security-trained ex-police or ex-forces, are trained in anti-hijack and evasive driving techniques, situational awareness, accident management and threat assessment.”

Car sharing
Another element of ground transport that’s evolving is the increase in car sharing programmes. Initially, they were mainly used by public organisations, such as local councils, universities and NHS trusts, but are now becoming more widely utilised by companies, both to save money and cut down on CO2 emissions.

Chris Morris, managing director of car club brand Ubeeqo, which is part of Europcar, says: “These services are now an important part of the transport mix for many organisations looking to reduce travel costs and emissions. The potential reduction varies depending on existing solutions, but it is usually most significant where there has been a historical reliance on pool cars or reimbursement for miles driven by employees in their own vehicles, where savings can exceed 30 per cent.”

Morris also argues that car clubs are complementary to other ground transport options, such as taxi services and car rental, as they work best with journeys ranging from 30 to 160 km.

The way forward
With so many working parts, it’s not surprising that buyers can struggle to get a grip on their ground transport programme (if they have one) and spending. But if there’s one major positive impact from the emergence of Uber and others, it has been in forcing providers in this once unheralded sector of business travel to up their game – particularly in the technology they offer.

So what can buyers expect over the next 12 months? Groundscope’s McCallion says the big development will be online booking tools enabling the integration of ground transport with flight and hotel bookings.

“These tools will be better at prompting travellers to book ground transport when they book a flight, and the technology will remember their preferences in the same way that retail systems remember,” he adds.

“Taxi booking and payment solutions will be more fully integrated to make expense reclaim easy for travellers, and tracking travellers’ location for security reasons will become more prevalent.” 

This technology will perhaps be the game-changer that enables buyers to fully manage the “door-to-door” travel experience. It’s been tantalisingly promised for many years, but the trick is making sure it can deliver.

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