I remember the day ride-hailing failed me. It was a Monday, the first day at my current job.
I had been frantically toggling between Grab and Ryde for a car (Uber had just ditched South-east Asia, RIP Uber), but there was none. After 40 minutes of stress and rejection, I gave up, after a friend offered me a lift.
While they can be cheaper than taxis, ride-hailing platforms do not promise you the cheapest ride. Instead, their unique selling proposition is an available car.
But what happened that morning – hours after the 2018 World Cup final between France and Croatia – I learnt that even the smartest algorithms can’t force drivers to wake up for work after an adrenaline-filled game.
Dynamic pricing, or surge pricing, uses a complex algorithm to balance supply and demand. When demand exceeds supply, such as during rush hours, fares surge so that those who need a ride urgently – and who are willing to pay the premium – can get a car.
While hotels and airlines have been using dynamic pricing for years, the pill seems harder to swallow in ride-hailing.
Maybe it is because we have been spoilt by promo codes since the early days of Uber and Grab. Or that most rides in Singapore are relatively short – there is a psychological barrier to paying $50 to get to the other side of town.
Or maybe because the reasons for a jump in the fare, especially for our regular commute, are not exactly clear.
Even the rich are not immune to feeling shortchanged. In 2013, during a particularly dark and snow-stormy night, American comedian Jerry Seinfeld’s wife Jessica paid Uber US$415 ($563) to chauffeur her children to a bar mitzvah and a sleepover. She ended her Instagram post with #OMG #neverforget #neveragain #real.
Psychologist and senior consultant Praveen Nair of Raven Counselling and Consultancy attributes the feeling of indignation to a perceived sense of injustice. “Such feelings of injustice and anger may eventually lead to displaced aggression – when a person can’t vent on an original source, so he or she takes it out on an available outlet. This may lead to a host of conflicts.”
It does not help that many Singaporeans believe the cost of living here is high.
“As such, people may be predisposed to feeling more sensitive to price changes within dynamic pricing,” says Mr Nair. “Such price changes may trigger negative emotions leading to behaviour that may be less pro-social.”
What drivers want: Time is money
There is inherent friction between what drivers and riders want.
For drivers, time is money. They want the most bucks for the number of hours they spend on the road. Their earnings help defray the cost of fuel, car rental, insurance and other expenses, which could be around 60 per cent of their driving income. Most ride-hailing platforms in Singapore take a 20 per cent commission from fares.
A platform that provides a consistent stream of bookings, at fares that allow them to make a living, is essential.
Gracie Lin, Head of Economics at Grab, says: “Drivers drive more when prices are higher. Surge helps to bring more drivers onto the road, especially during the busiest times, when they are most needed. Surge makes up 17 to 25 per cent of drivers’ post-commission earnings on average, which is substantial.”
Some drivers devise strategies that allow them to maximise earnings.
A 38-year-old private-hire driver who wanted to be known only as Mr Teoh, said driving is like a game. He constantly optimises his strategy, taking into account the latest incentive structure, tips he receives via his Whatsapp driver chat groups, and his own instincts.
He tries to be at high-demand places at the right time. Late last year, he upgraded to a premium six-seater so that he could get in higher-ticket bookings. He now pockets $2,000 per week in fares alone, before adding on any peak-hour perks.
Similar incentives kept driver Tan Kian Lye, 53, on the road during the first day of Chinese New Year. He ferried a passenger from Woodlands checkpoint to Pasir Ris for $41.
The passenger, who had missed his bus into Johor Baru, told Mr Tan: “I normally wouldn’t take a ride at this price, but no choice, I forgot my passport.”
There are also drivers who keep screenshots of their highest fares – precious reminders that luck favours the conscientious driver.
Mr Zainol Shaik Fareed, 50, showed me a screenshot he has kept from 2016: a memorable journey from Upper Circular Road to the Night Safari at 5.30pm on a weekday, which netted him $61. The tourists from China had no qualms about paying the fare.
But not all private-hire drivers have experienced high surge fares. The most expensive ride Ms Loh Soon Sum, 56, encountered in almost four years with Grab was $33, from High Street to Choa Chu Kang during the evening rush hour.
But the ex-cabbie also finds joy in the little things. Passengers often exclaim, “Wow, you’re my first female driver!”, which always puts a smile on her face.
What riders want: Safe, fast, cheap
Riders, on the other hand, want to reach their destinations safe, fast and at the lowest price – which is not always possible.
Ms Hayati Haron, 37, found herself facing a train breakdown during the fasting month last year. She managed to hail a ride from Somerset to Yishun for $35. “I was willing to pay that much only because I was with my niece, and we wanted to break fast with our family. I was too exhausted to figure out the bus route home.”
For Nanyang Technological University student Tan Aik, 22, he couldn’t get a ride to the West Coast area to be with his friend whose father had died. Desperate, he forked out $50 for a premium car. “I was annoyed at having to pay that much but I was glad that I was on my way. I wanted to be there for my friend, who was going through a difficult time.”
Without a mechanism to prioritise allocation, the likelihood of getting a car in times of urgent need diminishes. However, riders can get riled up as they might feel arm-twisted.
“Most people in Singapore are working long hours, within rigid schedules, in a fast-paced city. So the demand for transportation can be immediate and riders may not be able to circumvent price hikes,” says Mr Nair.
“Furthermore, riders may not want to arrive at their destination earlier or later just to save some money, and feel like they’ve wasted time. This sense of having their choices impinged upon during surge pricing may cause them to feel as though they are being unfairly disempowered.”
For those who do not need a car urgently, one way to mitigate fare surges is through better travel planning.
Recent improvements to Grab’s app are explanations of why fares are low or high, and a widget that shows half-hourly fare trends from a chosen pick-up point on any given day, based on data over the past two months.
And there are always other options.
Mr Ryan Lewis used to work at Changi Airport. On days he didn’t want to take the MRT to work, the 41-year-old would arrange for a GrabHitch the night before. If he did not manage to secure a ride by the time he woke up for work, he would book a GrabShare ride.
“A ride to the airport would cost me more than $20, and could be double that with surge pricing during peak hours,” he said. “But if I were to take a GrabHitch or GrabShare, I’d pay less than $20."