Mobility and Transportation in 2024 - What’s next?
For the last six incredible years since Autofleet came to life, we've been blessed with the opportunity to collaborate with many different partners in the mobility sector. We're on quite a ride! The transportation industry is going through multiple changes and disruptions, all converging simultaneously—from the transition to shared mobility to the progression towards zero emissions, from the digital transformation of fleet management to the evolution of autonomous driving.
Optimization, automation and digital integration are crucial. The correct set of optimizations and automation can make all the difference between a failed and a successful operation.
As 2023 is drawing to a close, I wanted to take this chance to look back at what happened in the transportation industry. Looking at changes in areas like taxi and ride-sharing, car rentals and carsharing, delivery, logistics, and commercial fleets. I'll also examine major trends like the shift to electric fleets, advancements in autonomous vehicles, and the growth of micromobility usage. Additionally, I'll share some forecasts and insights for what we might expect in 2024.
Electrification continues as EVs are making headway
The two widest disruptions in the mobility industry - autonomy and electrification - were already well on their way when 2023 began. But in 2023 both saw some major developments that are affecting multiple verticals within the mobility industry and transportation as a whole.
EV continues to move ahead of the curve, with more cars being sold and more large government fleets electrifying ahead of schedule (like the city of New York, which is almost 3 years ahead of schedule in electrifying its vehicle fleet). Reports claim 16% of the global light vehicle market in H1 of 2023 are electric, and these figures continue to grow, bringing EVs close to the tipping point of becoming an early majority technology (typically considered to be between 15% and 18% of market share).
As EVs make headway in the general market, 2024 will see more and more fleets going electric for their better Total Cost of Ownership (TCO) and to enjoy the tax benefits still provided in many markets. This growth is also driven by the genuine environmental concerns of fleet operators. Many of whom continue to promote other ways to reduce carbon emissions as well through better fleet operations and more efficient utilization of existing assets.
However, EVs still face many challenges. Tesla’s continued price cuts negatively impact the resale value of its EVs, and high usage vehicles (such as those rented out to gig drivers) result in higher than expected repair costs leading Hertz, for example, to slow down its electrification rates.
Charging infrastructure also limits electrification rates. The current network of public chargers may not be enough to support high-mileage vehicle fleets. Such considerations brought about the UK’s decision to roll back its ICE ban deadline by 5 years, to 2035.
Public charging also needs to continue to evolve as the industry strives to adopt unified standards for DC fast charges. However, this growth may not be enough to support professional fleets, many of whom will resort to building or expanding and refurbishing car depots to accommodate the charging requirement of their fleet.
AV’s big year
For Autonomous Vehicles (AVs), 2023 presented a big leap forward with the creation and implementation of legal frameworks that allow self-driving vehicles to operate “in the wild”. Free from the limitations imposed on previous operations.
The most notable development was the license given by the California Public Utilities Commission (CPUC) to allow Waymo and Cruise to run a fully-fledged taxi service in San Francisco. But Cruise had dropped the ball on that one and has since lost its license to operate in San Francisco. It had to suspend operations elsewhere due to safety concerns. Leading to increased regulatory scrutiny of the entire robotaxi industry.
On the private vehicle front, the end of 2023 saw the release of Tesla's Full Self-Driving (FSD) v.12 to company employees. Even though drivers are still intervening from time to time, the rate of improvement of FSD is staggering and presents a big step forward in the availability of autonomous driving to the general public.
So the jury is still out on the future of AVs. Although at first it seemed like robotaxis jumped to the forefront of the AV industry. Hitting the market sooner than fixed-route AV aimed at mass transit, or autonomous delivery robots.
With Tesla’s new FSD rollout, and companies like Keolis being certified to deploy level 4 autonomous shuttles (100% full autonomy with no driver on board) AV seems to be moving in the right direction. However, the future of autonomous taxis will depend on Cruises’s ability to re-enter the market, and Amazon’s Zoox success in Las Vegas, as well as Waymo’s continued track record. But even at a slower pace, more cities will probably allow AV taxi services. Uber already announced it will collaborate with Waymo allowing Uber customers to hail AVs as an option in Phoenix.
The taxi industry future proofs by adopting specialty services
Robotaxis or not, some of the old rivalry between taxi companies and the gig-driving ride-hailing giants like Uber and Lyft seems to have turned a corner in 2023. After last year’s presumably successful pilot working with taxi companies in New York and San Francisco, more taxi companies have signed partnership agreements with Uber. A win-win proposition - leveraging Uber’s brand and install base to generate demand, and providing a ride-ready fleet and drivers in return.
Another marked trend for taxi companies is the attempt to secure more reliable and stable income sources by securing long-term contracts. Aside from the traditional corporate contracts that play a major role in some companies' revenue streams, more and more taxi companies are turning their eyes to specialty ride contracts. These include student and school transport, Non-Emergency Medical Transport (NEMT), paratransit services, and more.
This transition requires taxi companies to adopt new solutions that focus on sophisticated optimizations, dispatching and routing technologies. Especially those capable of scheduling and planning pre-booked rides to ensure arrival times while being able to handle last-minute changes or ASAP ride requests.
Rental, leasing and car sharing are bouncing back
After facing the challenges of recovering from the pandemic and restocking their vehicle fleets due to global shortages, the rental, leasing, and car-sharing industry is back in force. In Germany for example, car sharing users number grew from 3.39 million to around 4.47 million in 2023.
The growth comes from both the rise in global travel and the adoption of digital channels by the rental industry that makes hiring cars much easier. Moreover, younger audiences seem to adopt rental subscription models over car ownership (and showing a preference for EV and hybrid cars as well).
Additionally, leasing out vehicles to gig drivers continues to be a growing trend, with an estimated 300,000 to 500,000 vehicles used by gig drivers in the US. This seems to be especially true for EVs, which are expensive to buy but encouraged by ride-hailing companies.
Sustainability concerns around car ownership (especially when a car-sharing option is viable), coupled with ever improving services and higher initial vehicle costs (for EVs especially) seem to promise continued growth in the rental, leasing and car sharing sector. Those players stepping up their digital game - implementing automations and optimization to lower costs and improve efficiency and service level - stand to gain the most.
Micromobility still struggling to find its place
Micromobility continues to go through its lean phase, with key players like Bird trading at 1% of their IPO value, low utilization rates, and setbacks caused by limitations and bans in various cities around the world.
New business models like subscriptions, leasing and attempts at data monetization are yet to bear fruit. However the number of rides is growing consistently, and the many mergers in the industry may allow companies to reach better utilization rates as competition shrinks.
One bright spot for micromobility seems to be around last-mile delivery services, with Amazon continuing to expand its micromobility hubs in Europe and the US, relying on cargo bikes and other less traditional means of transportation to lower its carbon emissions.
Route and operational optimizations as the key to delivery success
As online shopping and e-commerce continue to grow, so does the demand for efficient delivery operations. As 2023 drew to a close, and despite worries about inflation, Black Friday 2023 witnessed a staggering $9.8 billion in sales, with online sales growing by a whopping 8% YoY.
Companies and consumers alike are not only looking for a solution to deliver packages, but also for quick turn-around, cost savings, sustainability and great customer service, which can also be a brand-strengthening move.
Aside from Amazon's urban distribution centers and use of micromobility, some companies are also experimenting with using autonomous dedicated vehicles, drones and other means of delivery.
But the biggest most immediate impact on the industry comes from adapting advanced optimization technologies to overcome the many operational challenges that last-mile delivery presents. As delivery is becoming a core component in many business offerings, companies need to handle the logistics of getting goods to end consumers efficiently. Often this is done by relying on third party providers that need to be controlled and verified.
Be it in-house or third party logistics providers, couriers and last-mile delivery providers are all facing the need to enhance transparency, improve control, and strengthen communication with both recipients and senders.
2024 will see more and more delivery providers moving away from traditional dispatching systems to new real-time solutions that provide much better control over the delivery process and real-time tracking with accurate ETAs. This will also enable delivery companies to incorporate on-demand delivery and same-day changes, and provide much more operational flexibility and better customer service.
As we look towards 2024, the mobility and transportation sectors seem poised for transformative growth. This is the culmination of the processes that unfolded over the past few years, especially the advancements in electric and autonomous vehicles, the evolving dynamics of the taxi industry, the resurgence of rental, leasing, and car-sharing services and the continued growth of last mile delivery.
For companies to make the most out of these opportunities - optimization, automation and digital integration are crucial. The correct set of optimizations and automation can make all the difference between a failed and a successful operation.
Implementing advanced analytics for route optimization and fleet management can significantly enhance efficiency. And across the entire industry issues such as the adoption of electric vehicles require accurate planning to support growth. Setting a course for a more efficient, sustainable, and customer-centric transportation landscape.
On a personal level, one can’t summarize 2023 and look into the future without thinking about the atrocities that the people of Israel suffered on October 7th. While I am writing these words, there are still 137 hostages, including women and children being held by Hamas in unthinkable conditions. We pray for their safe and quick return to their families and send Godspeed to our brothers and sisters in the IDF fighting a war for freedom on behalf of Israel and the free world.