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Is bike sharing worth the bumps?

Once hailed as a new option in the nation's push to reduce reliance on cars, the huge number of yellow and orange bikes is now a bane as well as boon. Why should operators get a free ride on infrastructure, for example?

The rise of bike-sharing companies has given Singapore commuters a new, convenient and affordable option, but problems have also ridden into the picture.

These range from indiscriminate parking of the distinctive orange and yellow two-wheelers to questions over who should pay for the increase in parking spaces to accommodate the sudden influx of bicycles. And as examples elsewhere suggest, the bike companies' business models might not be sustainable.

Since January, the number of shared bicycles brought in by the three bike-share operators - oBike, ofo and MoBike - has exploded to between 29,000 and 30,000. Their growth has led the Government to shelve its plans for a state-backed bike-sharing programme, for which it had called a tender in July last year.

As the bicycles work on a dockless system, operators do not have to invest in infrastructure such as self-service rent-and- return stations. But the result has been that shared bikes have been left strewn everywhere, from bus stops to footpaths, to grass patches and outside Housing Board flats and corridors.

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The Government said on Monday that it will work with the three operators to moderate the growth, as it ramps up the number of parking spaces. A fine of up to $500 has also been introduced if operators fail to remove an indiscriminately parked bicycle.

With their convenience and low cost of implementation, dockless shared-bicycles can be another key step in the nation's push to reduce the populace's reliance on cars.

But even amid the latest measures, do they contribute more problems than they create solutions to?

WHO PAYS FOR INFRASTRUCTURE?

Since March, the Land Transport Authority (LTA) has designated 34 new bicycle-parking zones at MRT stations, which can accommodate 1,400 bicycles. And within the next two years, it also plans to build 6,000 more bicycle racks and add 500 spots in the city area.

ST ILLUSTRATION : MIEL

Some have questioned if the Government should fund these parking spaces. After all, the bike-share operators - themselves business entities earning rental revenues - are getting a "free ride" by injecting tens of thousands of bicycles onto the footpaths and roads, without paying a dime for the spaces to park them.

Economist Walter Theseira from the Singapore University of Social Sciences said the Government gets involved because of the "negative externality" - the competition between bike-share operators has led to each excessively contributing to the bicycle population, creating a problem of insufficient parking.

The Government creates bicycle parking for the same reason it provides parking for cars, said the senior lecturer. The latter is done either directly - such as through Housing Board- and Urban Redevelopment Authority-run public parking lots - or indirectly, by requiring developers to build sufficient parking.

While car parking pays for itself through user fees, it is not customary to charge bicycle users for parking in many countries, perhaps because charging small amounts is impractical, he added.

Dr Theseira said: "I am of the view that a charge should be levied on fleet bicycle operators to cover such parking investments, because without their entry into the market, growth of the bicycle stock would have been quite gradual and the marginal costs of dealing with the problem of parking would have been much lower."

Dr Elliot Fishman, director of Transport Innovation at the Melbourne-based Institute for Sensible Transport, said it is "inevitable that public resources will be used to provide bike parking". Dr Fishman said the new parking lots will have to come from public spaces, such as footpaths or existing kerb-side space used for car parking.

He said city planners must decide if investing the funds to create more parking spaces is consistent with the wider strategic goals. "For most cities, reducing reliance on car use and enhancing the attractiveness of cycling and sustainable mobility is a key objective. Therefore, it is quite reasonable for cities to provide more bike parking to accommodate the growth in dockless bike-share."

CHANGING THE URBAN LANDSCAPE

The question also arises how effective the increase in parking spaces will be in tackling the problem of indiscriminate parking. This is especially so because of the nature of bikes' appeal as first- and last-mile transport for commuters on extended journeys.

What if a user chooses to park his bicycle at a bus stop, where there are no designated parking spaces? Assuming he leaves the bicycle in an unobstructive manner, this could be convenient for the next potential user, who may be an alighting bus commuter requiring a bike for the next leg of his commute.

While sticklers will vehemently disagree, the user's parking behaviour is perhaps far from being indiscriminate and, on the contrary, helps to maximise the bike's usage.

Should this be allowed, then?

There is no easy answer.

As dockless shared-bikes grow in number and encroach into the urban landscape, they will no doubt be an eyesore to some, while being a welcome amenity for others.

Dr Fishman said: "With dockless bike-share, there will, of course, always be instances in which there is a desire to park in a place that does not have a bike-parking facility."

Besides encouraging users to do so in a considerate manner, Dr Fishman said city planners should also monitor where parking "hot spots" are, and try to convert spaces - such as for parking cars - for bicycle parking.

HOW SUSTAINABLE IS IT?

As they flood the market with shared-bicycles - which can be rented for as little as 50 cents for half an hour - there are also concerns about the sustainability of the bike-share operators.

According to a column published on Chinese consultancy iResearch's website - which was also cited by Forbes magazine - each shared-bicycle costs about 3,000 yuan (S$610) to manufacture. There are other overheads, such as for staff and vehicles to redistribute the bicycles evenly across a locale, so as to ensure a good rate of utilisation.

As the bicycles have to be traceable by GPS, there are also telco charges. Adding on to this are damaged bikes, which have been vandalised, such as being stripped of parts, or stolen.

Professor Wong Poh Kam, director of the National University of Singapore's Entrepreneurship Centre, said: "The business model isn't about making profit, but to grow as fast as possible in the hope of becoming the dominant player with the largest user base, then use its monopoly power to perhaps raise prices later or figure out how to monetise from the large user base."

He added: "The only way to succeed in this model is to raise the most money and grow the fastest."

According to CrunchBase website, China-based ofo has raised about US$580 million (S$800 million) in funding, and MoBike, US$925 million. It is not known how much Singapore- founded oBike has raised. The generous funding comes in part from the competition between two rival Chinese tech giants, Alibaba and Tencent, which are backers of ofo and MoBike respectively.

For them, it is more than the potential profits to be made from bike-sharing. For example, through ofo, Alibaba-affiliate Ant Financial can promote its payment service, Alipay, and its Sesame Credit credit scoring system, as users who have good scores can rent bikes without deposits. Tencent, on the other hand, has brought MoBike's bike-sharing to its WeChat app and wallet payment system.

Mr Li Jianggan, founder of the Singapore-based Momentum Works, a start-up accelerator, thinks that bike-share operators can be profitable in Singapore, but the question is to what degree.

He estimates that with economies of scale, shared- bicycles can be manufactured for around $200 a piece. Compared to the business in China, where rental is around one yuan (20 Singapore cents) for an hour, operators here can charge slightly higher.

Despite the cases of shared-bikes being thrown into canals and off buildings in Singapore, Mr Li also believes that the ratio of damaged bicycles to functioning ones should be "much smaller", compared to markets such as China. "Demand and usage is key. If a bicycle is used six times a day, the companies can recover the investment within three months," he added.

Mr Li said the biggest uncertainty is usage in Singapore. In China, there is a culture of cycling, he noted. "Also, cities such as Beijing are more dense, and during rush hour, commuters struggle to get into the metro, bus and to catch a taxi. The bicycle is an attractive alternative," he added.

PEDALLING AHEAD

Bike-sharing programmes which use docking systems, such as those in Paris and London, require substantial funding from corporate sponsors and government support.

Under a 2015 deal, the Santander bank pumps in £6.25 million (S$11.2 million) annually over a seven-year period to sponsor the bike-share in London.

With the entrance of ofo, oBike and MoBike, Singapore has been able to kick off bike-sharing, without the financial burden.

As more Singaporeans hop onto the shared-bicycles and change their commuting patterns, it is key that the bike-share operators stay in business, offer affordable prices, and do their part to reduce the problem of illegal parking.

In exchange for allowing bike-share operators to do business here, Dr Fishman said the Government can play a role in setting up a regulatory framework. This can include minimum standards, such as in relation to price, parking policy and enforcement, and bicycle hardware specifications, such as having puncture-proof tyres and safety lights.

A version of this article appeared in the print edition of The Straits Times on July 06, 2017, with the headline 'Is bike sharing worth the bumps?'. Print Edition | Subscribe