Home » SCMAP Perspective » Will We Learn to Share?

Some call it a “battle”—a battle to save ride-sharing services Uber and Grab from the clutches of government.

 

It sounds dramatic, and deliberately so. The recent discussion over the place of such services in Philippine streets (or at least those in urban areas) has been passionate, to say the least. While some have been measured, most have reacted with fury at what they perceive as an insensitive bureaucracy protecting vested interests by taking away the one thing that has worked for them. Social media is filled with posts mocking pronouncements made by the Land Transportation Franchising and Regulatory Board proclaiming taxis and jeepneys as safer than Uber or Grab vehicles. Some have even resorted to outright trolling, peppering the regulator’s online presence with expletives. (I wish I was making this up.)

 

At the root of this “battle” is a lack of trust between the regulators and the regulated. Perhaps it’s the disruptive nature of Uber and Grab —two tech-based solutions to the perennial problem of transportation in an urban setting. To its credit, the Philippine government is one of the first anywhere in the world to have adapted to the newcomers, putting them under a new category, transport network vehicle services (TNVS).

 

However, the LTFRB then required TNVS drivers to apply for a franchise, a requirement they also impose on drivers of taxis, jeepneys and buses. Lingering questions led to the suspension of applications, although Uber and Grab continued getting new drivers. Demand was high. People did see it as a good way of earning extra income—own time, own efforts. Some have even entered the “Uber business”, operating fleets of vehicles and employing drivers—like taxi operators through the back door.

 

Last week, the LTFRB finally granted both services their licenses to operate, but not after a P5 million fine each for violations, notably having unregistered drivers, which account for over 70% of their total fleet. Only those with Certificates of Public Convenience or Provisional Authority papers will be allowed to travel after this Wednesday, meaning, in theory, lesser vehicles on the roads. Thus, panic, passion, and a few choice expletives.

 

Uber and Grab are just some of the leading proponents of what we call the “sharing economy”. Simply said, it’s some sort of marketplace where we, using online tools, offer up unutilized assets for others to use, if only for a limited period of time. In Uber’s case, it’s cars. In Airbnb’s case, it’s houses. Applied broadly, the sharing economy can be seen in co-working spaces, Bitcoin exchanges and people soliciting recommended restaurants on social media.

 

As with everything, the sharing economy banks on trust—but here, it is more important. By bypassing the usual intermediaries, it is up to the supplier to demonstrate to the customer that he can deliver what is asked of him. It is also up to the customer to ensure that he can be a reliable customer—no wrecked living rooms, to cite a typical Airbnb horror story.

 

Technology has allowed the supply chains within the sharing economy to prosper. To take the Uber example, it allows a driver to present himself to a potential passenger. It allows the passenger to pick him among many available vehicles in the vicinity. It allows both parties to facilitate the transaction and, more importantly, to provide each other feedback. The sharing economy is a social one. It’s why Uber drivers and passengers alike pay a lot of attention to their ratings.

 

In this case, it seems trust has been forged between passenger—at least those who have smartphones, disposable income, and a wide-ranging itinerary – and ride-sharing services. Their terrible experiences with other forms of public transportation have been confirmed, even amplified by how smooth Uber and Grab can be. So here we are: panic, passion, and those expletives.

 

One clear takeaway: government regulators have a lot of work to do to regain the trust of the commuting public. It’s not right to say all they do is deprive everyone of proper public transportation—although they do have to be more responsive and transparent. Everyone should also recognize that our traffic woes—one that Uber and Grab claim to be able to solve—is not just because of one thing, but an intricate web of cause and effect. It’s a collaborative effort, and it will take time.

 

This situation offers takeaways for us in the supply chain industry, too. In a way, we’re moving towards something similar to a sharing economy. Manufacturers, retailers and logistics providers are coordinating more closely than ever before to ensure that costs are optimized, customers are satisfied, and the bottom line is happy —think of cross-docking and logistics hubs. Technology is also enabling this in different ways, from the greater accessibility to data (and analytics tools), to the new burdens provided by evolving customer demands. (Take Zalora’s cash-on-delivery system, for example, one now emulated by other e-commerce outfits.)

 

But in other respects, not all of us are still open to “sharing”, whether it be because of data confidentiality, apprehensions over collaboration, or just an iffy feeling around “letting the competition in”. We still hear manufacturers not comfortable with having to share trucks with their direct competitors. Will we in supply chain ever trust each other enough to learn to share? Yes, it sounds dramatic, and deliberately so. After all, the challenges we face now are of a scale never seen before.

 

Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.

 

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