This is the third part in a series of features examining the impact of Covid-19 on the region's transport and mobility startups
Carpooling as a means of transport has usually been a product of crisis. The term carpooling was first coined at the beginning of the First World War, when the US economy was deteriorating and car owners began to offer vacant seats in their cars as a way to make money. The term rose to the surface again during the US oil crisis back in the 1970s.
In the Middle East, carpooling is not a novel concept. In Beirut in particular, hailing a taxi gives you one of two options, “service” which allows you to secure a seat and share the ride with others that come along the way or “taxi” which allows you to take the entire journey in the car alone. Prices for the former start at LBP3000 ($2) while the taxi will set you back at least LBP10,000.
Elsewhere in the region, carpooling has traditionally been a popular mode of transport for travel between cities, quicker and more comfortable than a bus, and more crucially for many, it is cheaper than hiring a taxi. In the UAE, workers between Abu Dhabi and Dubai would often share a ride to keep their expenses low. This however was illegal, until the ministry of transport launched its own service - Darb.
Prior to the Covid-19 pandemic, several startups had emerged across the region, looking to digitise the carpooling system and transform the long-standing concept into a reliable, technology-based solution.
But now, health concerns over sharing a small space with strangers has brought the future of carpooling into question. In this part of our future of mobility series, we investigate the long-term commercial viability of carpooling in the Middle East and North Africa region (Mena) and how it can fare in the post-Covid-19 world.
AN URBAN SOLUTION
According to the United Nations, approximately two thirds of the world’s population will be living in an urban area by 2050. These areas will account for 64 per cent of all travel while the total amount of urban kilometres travelled is expected to triple by 2050.
Carpooling essentially cuts the need for the number of cars on the road, which helps to alleviate levels of pollution, congestion and spaces needed for parking.
“Carpooling can provide a long-term solution for the urban design problems thanks to its low operational costs and high return,” says Ralph Khiarallh, co-founder of Beirut-based Carpolo, which offers smart carpooling solutions for businesses and individuals. Besides Lebanon, the company has operations in the Philippines and recently expanded to Jordan.
“By using fewer cars to carry more riders, smart carpooling... improves existing vehicle utilisation,” explains Khairallah. “We have more than six million unused car seats entering Beirut each day. The vehicle occupancy rate is 1.2, If we raise it to 1.4, we save more than $300,000 in mobility costs daily.”
As with so many other sectors, carpooling suffered dramatically with the lockdown. With people working from home and schools closing their doors, mobility became almost redundant. Egypt-based Hive, which provides an app-based ad hoc carpooling service for schools suspended its operations when schools shut in the country.
“We used to have good user traction. It was a safe option for many parents to go for since we provide tracking systems through our app,” says Nasser Abusitta, operations manager at Hive. “School carpooling in Egypt is still an unaffordable option for most families compared to other means of transport, primarily public transport and paratransit services.”
Algeria-based logistics and ride-hailing startup temtem has been providing B2B and B2C carpooling service “Karos” since March, but according to the company, carpooling is viewed as a non-viable means of transport amid the ongoing pandemic. In a survey conducted by temtem, only 20 per cent of the 6300 respondents said they would consider carpooling as a post-lockdown alternative means of transport.
But for others in the sector, the pandemic has presented them with a new opportunity in the B2B segment.
“With the advent of the Covid-19 crisis, we thought that our solution had become a no-go; surprisingly, the crisis allowed for a newfound interest in carpooling as a solution,” says Khairallah, adding that Carpolo has received several requests from companies asking for carpooling solutions for their employees as an alternative to public transport.
“I think there is a new interest in our service as a result of Covid-19 pandemic, but it's yet to be validated,” says Khairallah. “People became worried to travel with complete strangers. There is definitely going to be a different kind of new mentality regarding carpooling.”
For Raye7, an Egyptian app-based smart carpooling startup with 25,000 active users, Covid-19 has provided them with an unprecedented opportunity to develop and grow in popularity.
“We had our operations take a serious hit since the partial lockdown imposed by the government in March but they started to resume again as people are starting to return to offices and ditch working from home,” says Samira Negm, co-founder and CEO of Raye7. “We have come to the realisation that carpooling is the safest means of transport, especially during these times.”
Similar to Carpolo, Raye7 has seen interest grow from local companies looking to provide their employees with a carpooling solution to get to work.
“It is a win-win situation for the employee and employer as well. It helps the employer make sure that its employees limit their contact to a few people that they daily share the ride with and thereby reduce possibilities of getting infected if they use other means of transport. It also saves employees a lot of money that could be spent on ride hailing services for example if used on a daily basis,” says Negm.
Despite the benefits that carpooling has for the environment and urban areas, location is key when considering it as a viable solution.
“It has the potential to succeed, but it depends on where,” says Saif Eddin Jabarim, global network assistant professor at New York University. “I do not see it as being very successful in a country like the UAE where people here are very private and owning a car is not a big issue and that taxi services are also widely available.”
Raye7’s Negm believes that carpooling solutions cannot be adopted in suburban areas and is best suited to heavily populated cities like Cairo.
“Unless it is a city to city carpooling, it is not going to work,” he says. “In order for carpooling to work, it needs a high volume of users that could benefit from this service. It is difficult to find two people or more who can trust each other sharing a similar pickup and destination location on a regular basis in such [suburban] areas.”
With schools open for the new academic year and workers returning to offices across the region, the need for mobility solutions will continue to rise. For carpooling, one major setback is the fear of sitting in a confined space with several strangers. This fear is not new and has been one of the major challenges holding the segment back even before the pandemic.
“When the word carpooling pops up, people instantly assume that they are going to travel with complete strangers, which is not the case with app-based carpooling platforms,” says Negm. “Smart carpooling provides the rider with all the required personal information about the next person they are going to share a ride with. It is like Airbnb when it first started; everyone was weary of the concept of sharing a room with a stranger. Gradually, the concept picked up pace and started to rapidly grow worldwide. I think this applies to carpooling as well.”