Wednesday, 22 September 2010

Macro Level Trends – The Global Taxi Service – Balancing Commercial & Economic Impetus Against the Public Good in Rapidly Changing AM and EM Regions

The public service, private hire, taxi has become in indispensable part of city, suburban and rural life. As the intermediate transport mode between costly 'go anywhere' private vehicle ownership and affordable ' limited route' bus and train transport; the taxi cab provides a service that is governed by the economic market.

Where the private car sits idle for much of its life, and the bus / train runs typically well-under or well-over capacity (relative demand flow governed by non-peak and peak times), at a median utility price the cab efficiently ensures the goals of travel freedom to client and the vehicle (asset) maximisation to operator.

Beyond the pure functional and economic perspective, over the last 100 years – especially last 40 years - the city-bound (or region-bound) taxi cab has come to form an integral part of the street-scape and so local cultural character. When derived from a sensitiveness to both functional public good, the commercial needs of homeland vehicle builders and the relative surrounding city-scape, its very origins, form and aesthetic demonstrate a natural corollary and uniqueness which provide an additional socio-cultural layer. So has been the case for London's eponymous Austin & LTI Black Cab, New York's previous Marathon Yellow Cab, Mexico's Green & White Beetle Cab and Tokyo's Toyota Crown Comfort cab in Yellow & Red, Berlin's Beige E-class Mercedes, Shanghai's Silver VW Santana, Kuala Lumpur's Red & White Proton Iswara, Soeul's Hyundai's & Samsung's and Delhi's White Hindustan Ambassador.

Thus as would be expected, where a country operates an indigenous or semi-indigenous automotive manufacturing sector, the taxi trade accords to use such vehicles for nationalistic and cost reasons. And for governments and regional administrations that natural relationship between makers and operators creates a city-scape homogeneity akin to moving architecture : “carchitecture”. When governed well – balancing the public, private and entrepreneurial good - it adds both civic dynamic vibrancy and an essential form of public familiarity, faith and trust.

'Ply-for-hire services' have been part and parcel of life since before Roman times on both road and river, but the modern model grew from Victorian London's multiple needs for safe, convenient and affordable private hire – the onus as much on the 'private' as the other factors in the taxi equation.

That led to development of the 'Hackney Carriage' regulations which had been installed as part of a parliamentary decree in 1654, adding and enforcing greater regulation to improve the service, which introduced a full separation of driver and passenger(s) on the 1834 Hansom Cab – the driver sat outside, to the rear and above. The basic layout of the Motor Taxi demanded that the driver sit in-front once again, but the prominent use of semi-closed phaeton bodies meant that only the passenger enjoyed weather-protection and so accordant hierarchical symbolism – that 'in service' element not lost on the fore-lock tugging yet entrepreneurial cabbie.

Gradually the open-front sections was enclosed with the partition remaining. However, whilst operator comfort improved, Public Carriage Office regulations were critically stiffened regards both vehicle and operator. The performance demands and condition of the vehicle were set high so as to function with ease in London's tight and crowded streets, and also greater demands were placed upon incoming operators to demonstrate themselves as geographically knowledgeable and courteous gentlemen of the road. As is legendary, 'The Knowledge' has become central to the licence approval process, though the courtesy and helpfulness element has been largely set to individual's discretion, with the general view that Black Cab drivers see it in their best interests to maintain personal standards.

Thus the Hackney Carriage ideal, regulated by the PCO, become the world-wide 'gold-standard', exemplified by the retinue of cabs stationed besides the Bank of England for over a century. Thus the template was set to both colonial and ex-colonial cities, and from Boston reaching across the USA; and thereafter globally.

However, from the 1960s onwards the intersect of an increasingly services-driven UK economy, increasing private income, diverse commercial & leisure transport demands, and the trend toward increased UK auto-industry competition – including fleet sales – saw the birth and rise of the mini-cab through taxi service de-regulation; especially so in smaller towns and cities.

This era of UK change not only witnessed the expansion of personal retail services but also saw the effect of indigenous over-capacity in the indigenous auto-industry, a plethora of operationally inefficient players squeezed by Ford and GM multi-nationals, themselves under pressure from state-backed entities such as FIAT, VW, Renault, others in Europe and the threat from Japan. Driving down cost to both meet that challenge and maintain investor interest via stock markets was key, and in turn produced internal efficiencies and new products which would serve the private car owner, emerging corporate fleets and the mini-cab trade.

Exemplified by Ford of Britain's new American-influenced Cortina, the car itself set the tone of change for people – illustrated then and now by its starring role in two British comedies filmed almost 50 years apart: 'Carry On Cabbie' and 'Made in Dagenham'. The former tells the tale of an antiquated all male-driver taxi firm using old Austin FX3s upstaged by a new firm offering all female-drivers and new Ford Cortinas; showing the winds of consumer change. Whilst the latter recounts the strike action of Ford's female seat-stitching workers in southern Essex, showing the winds of social change.

Yet the message communicated by the central plot of 'Carry On Cabbie' remains pertinent to this day in the UK and elsewhere. In the capital, TfL inserted of its own taxi-service (of black Ford Galaxy MPVs) between the Black Cab and Mini Cab, much to the chagrin of both “Real London Cab” drivers and their less illustrious counterparts. Thus a 3 tier system* emerged, the then new template of the TfL idea to create a dual-aspect service which offered a mid-point in service standards and price to the customer using TfL licensed drivers & taxi-companies with standardised (or near standardised) vehicles.

[NB the TfL service also offers a taxi-sharing service for separate clients seeking the same destination, similar to the system used in Japan and less wealthy EM regions, in the TfL case undertaken to offer slight price reduction and CO2 footprint reduction].

The TfL case is but one example of renewed social good being installed by a government agency in a mature market. But driven by cultural, social and personal needs/wants, on the back of growing global wealth - especially so in near advanced and EM countries - there has been an ongoing evolution (indeed possibly revolution) of city taxi-services in recent times. Various cases of which which, although seemingly set apart, serendipitously marry the central plots of 'Made in Dagenham' [women's rights] and 'Carry On Cabby' [female operated cabs]. These in Pueblo Mexico and the Middle East (eg Tehran, Beirut, Hebron, Cairo, Kuwait, Bangladesh).

Unlike the humorous Carry On plot which had 'dolly bird' female drivers as the prime attraction for male customers, the female-only pink-coloured taxi serves a serious end. It has grown in popularity to solve the harassment concerns of female passengers (and indeed female drivers). As state sanctioned enterprises the Mexican vs Mid-East initiatives serve an apparent social demand.

[NB. Whether that demand is purely social or religiously ascribed is a matter of very separate debate].

The Pueblo, Mexico example came into folk-lore in 2007. Though initially the effort stumbled commercially it appears to have renewed social backing and so funding. Given that the city offers separate woman-only sections on trains and buses to avoid the problem of sexual harassment, so it seems only natural that a publicly available private-hire service offer a similar public good.

Comparatively, the Mid-East examples whilst no doubt satisfying the desire for female security, also (rightly or wrongly) satisfies the social norm that a wife traveling alone not be left alone with another male. Thus seemingly meeting both individual and social preferences.

Nevertheless, whilst the profit motive behind serving an identified market segment accords to the very core of Adam Smith's philosophy, it also seems a great shame that such separatist (sub-segment) initiatives are seen as necessary, since they fly in the face of the original ideals set by the Hackney Carriage system and London's Public Carriage Office, which orchestrated a method by which to both separate driver and passenger and to have the driver hold himself-up as to the standards of 'a gentleman of the road'. Indeed the same thing said of female Black Cab drivers .

[NB let it be noted that sexual harassment is not a one-way-street of men over women, and that much of it is typically not about sex but power, and that such behavior also exists between similar sexes].

However, given the fact that 99% of the global taxi trade is undertaken in standard saloon cars, which to a large extent have an FDI economic connection to the specific country (eg the Iranian Samand derived from France's Peugeot) the idea of creating country or city dedicated new taxi vehicles – which allow for innately safely separated client transportation - may presently seem an anathema.

But will this always be the case?

In an era when the associated yields and spreads of Sovereign Debt Bond markets clearly demonstrate that the pejorative title of 'Emerging Market' is a misnomer compared to the supposedly 'Advanced Markets', the time has surely come for such regions and their prime cities to demonstrate their own identity. Effort that moves beyond the normative self-proclaiming 'iconic' infrastructure projects as seen in the past from Brasilia to Shanghai, with projects that tie the geographic with the social and the economic. Projects such as dedicated and differentiated taxi-services that form part of the city-scape, street-scape and national identity – as London is, Tokyo is and New York was.

This is no doubt the message that the UK's Manganese Bronze has been touting, now with Chinese affiliation to Geely, manufacturing in China via the Shanghai LTI Auto Co. As investment-auto-motives stated before the set-up of this initiative, the LTI London Black Cab is perhaps the only modern and truly unique and idiosyncratic taxi vehicle available to an international market; and Chinese manufacture will have taken brought the base manufacturing cost down massively.

But if any notionally progressive city/region is to consider its own dedicated, national championing taxi fleet - beyond the immediate idea of buying-in the “Chinese London Cab” presented by any logical investment banking adviser - would it not also consider the notion of self-manufacture tied to self-regulation? So effectively creating a barrier to entry. Though against the grain of open-trade interests and heavily discouraged, unfortunately the answer may well be a "yes". This is something that Manganese Bronze & Geely should prepare for and so tailor their own specific entry strategy: whether full vehicle import, CKD import for local assembly or indeed project assistance with portions of technology transfer and accordant licensing.

Much of course depends upon the country in question's level of industrial self-sufficiency,issues relating to import policy and FDI perspectives.

But such a stance would in effect follow the original London model step by step. This is of course an option perhaps especially attractive to low-order EM countries that wish to build the very foundations of an indigenous auto-industry and aspects of its retail sector.

This grander option sought instead of the norm of buying-in the modern product which normally involves partner reliance (as with say Iran & Rootes/PSA or Malaysia & Mitsubishi) which typically leads to latter-day operational isolation when the relationship has run its course. The alternative is to effectively develop a singular taxi based entity using foreign involvement in design and/or manufacture and/or sales.

Thus today, as we see within the shifting sands of the global economic order, and the re-orientation of the social milieu, the taxi fleet continues to play a central role; both regards the upstream aspect of national economic and industrial ambition and from downstream pressures regards questions regards such a service being fit-for-use, and if not, its reactive re-alignment via sub-segmentation.

However, at the end of the day, the commercial profit-driven enterprises that obtain the rights to private hire mobility must hold themselves to the highest standards of social conduct, and the associated regulatory bodies that must be seen to act when required.

Such highly visible issued licence plates adorning taxis from Shanghai to London must act as badges of decency, resting upon well constructed, socially sensitive, regulatory powers. When their lamps shine they must be seen to be the essence of the honourable 'coupe de ville'.