Collaborative economy: evidence analysis

3 Transportation And Logistics

3.1 This section provides an overview of responses focused on the transportation and logistics sectors. Findings presented over the following pages are based on responses from six transportation/logistics business and business representative respondents (including traditional and new providers), and a number of other respondent types.

Opportunities for the collaborative economy

3.2 It is notable that the great majority of respondents focused on transportation, with few respondents making reference to logistics. This may reflect the profile of respondents; businesses and others associated with the transportation sector (traditional and new providers) accounted for a number of those providing comment.

3.3 A range of respondents made reference to the impact of the transportation and logistics sectors of the collaborative economy - in terms of the scale of the sectors, and the rate of growth over recent years. This included responses from businesses, business representatives, and public sector organisations. Some referred to the extent to which these models have become mainstream and are widely accepted by consumers, including the number of private hire drivers using a range of eHailing platforms, use of bike-sharing services, and the significance of peer-to-peer transport within the wider transportation sector. A business respondent also noted that the UK has been particularly receptive to vehicle sharing, and suggested that a survey undertaken by a bike sharing representative body has indicated widespread interest in car sharing for commuting.

3.4 Related to comments on the scale of the collaborative economy for transport and logistics, several respondents also noted the potential for the collaborative economy to significantly change how transportation services are designed, provided and paid for. This included reference to the extent to which new collaborative platforms have already diversified transport and logistics sectors.

3.5 Also related to the role of transport and logistics, a transportation/logistics business saw an opportunity for Scotland to become a leader in the collaborative economy by striking the right balance between innovation and regulation.

3.6 In terms of benefits and opportunities for transportation in the collaborative economy, respondents made the following points in relation to the private hire sector:

• Several business and other organisation respondents saw potential for the collaborative economy to extend employment opportunities for private hire drivers. This included reference to drivers having more routes to reach customers, and a suggestion that enabling drivers to work independently of booking offices can empower drivers.
• A small number of business respondents referred to the potential for reduced private hire costs to the general public as a result of increased competition within the sector - although this include specific reference to the need to ensure this competition is fair.
• A business respondent suggested that new collaborative platforms and technologies could improve the customer experience for those booking and paying for taxi and private hire services. This included broad references to the collaborative economy having changed how people choose to book and pay for services, and specific benefits such as apps enabling easier booking and paying for services. It was noted that the convenience of these new options could benefit both customers and drivers.

3.7 In terms of benefits and opportunities for transportation in the collaborative economy, respondents made the following points in relation to vehicle sharing:

• A substantial number of those making comment referred to potential benefits around supporting more sharing of resources, particularly in relation to car sharing and bike sharing. This was raised as an opportunity across respondent types. Vehicle sharing was seen as having the potential to improve sustainability of transport systems, and to reduce pressure within some systems. This included reference to the potential for reducing car use, to encourage a modal shift towards bike use, and potentially to support greater use of electric vehicles. A small number of public sector respondents also suggested that this could reduce the need to introduce demand-restraints such as workplace parking charges. Responses included reference to specific evidence on what was seen as the current under-use of cars, and the extent to which increasing average car occupancy (for example through car sharing) could help to reduce emissions and congestion. A number of public sector, business and individual respondents also referred specifically to the potential to improve efficiency of transport in rural areas where public transport may be under-used - for example the provision of community transport or lift-sharing through collaborative platforms.
• Respondents also highlighted the potential to reduce the environmental impact of transportation, and noted that reducing traffic congestion and emissions is a key strategic focus across Scotland. Environmental impact was mentioned with reference to the potential for car sharing and bike sharing to reduce car use, and to encourage more use of lower or zero emission vehicles. Respondents also noted wider benefits for local neighbourhoods and communities including for example reduced congestion, reduced on-street parking, and lower demand for car parks. The potential for car-sharing to expand social networks and potentially improve community cohesion was also noted by a business respondent.
• Car-sharing was also seen as having the potential to reduce the overall cost of car ownership for those participating, and potentially to make car use accessible to those who may otherwise be unable to sustain a car. This latter point included reference to potential for car sharing to help fund car ownership for drivers, and to providing passengers without a car with access to car use.
• A business respondent referred to the potential for car sharing to provide more flexible and convenient transport options than other modes.
• A small number of business and individual respondents referred to the potential for increased purchasing power for car-sharing groups.

3.8 In terms of delivery and logistics, the main opportunity highlighted by respondents was in relation to particular benefits to rural businesses. It was suggested that collaborative platforms may support goods provision and delivery that would not otherwise be feasible. This was noted specifically in relation to rural tourism and food/drink sectors.

3.9 Other potential opportunities and benefits mentioned by respondents were:

• Wider benefits to the local economy through creation of new (direct and indirect) employment opportunities.
• The potential role of collaborative transport approaches for public, third sector and social enterprises. In relation to public services, a public sector respondent suggested that there may be a role for collaborative approaches to increase use of transport assets across health and social care, non-emergency patient transport, community transport, demand-responsive transport services, and socially necessary public transport. In relation to third sector and social enterprises, it was suggested that collaborative arrangements can be important to the sustainability of these organisations. A public sector respondent noted that such arrangements may be in place at a micro level, and suggested that there is potential for new platforms to expand these arrangements.
• Respondents made reference to a number of specific projects in Scotland, other parts of the UK and further afield, focused on using the collaborative economy to deliver benefits for transport systems. These included TripshareSEStran (a regional car share portal); SHARE North (focusing on Shared Mobility and looking at the development, implementation and promotion of car clubs, bike sharing and car sharing); a Green Deal Initiative (to accelerate the growth of shared mobility in Flanders); Changing Habits for Urban Mobility Solutions (demonstrating the benefits of carpooling); the SocialCar project (a single information source for travellers, integrating public transport information with carpooling and crowd-sourced data); SPTJourneyShare; NextBike; a Mobility as a Service model in the West Midlands area; and the potential for the Bramble smartcard to expand account-based ticketing across the collaborative economy.

Challenges for the collaborative economy

3.10 Key points raised by respondents in relation to challenges for transportation and logistics within the collaborative economy were:

• Some respondents saw a need for changing attitudes and behaviour across the Scottish population, if collaborative economy based transport models are to become truly mainstream. This was highlighted specifically in relation to peer-to-peer car sharing models; some questioned how many car owners would be willing to participate in these models. Concerns were also raised that media attention and support has focused on commercially focused platforms (i.e. those involving trading or renting products/services). Some suggested that this could be at the expense of models focused more on achieving efficiencies - described by some respondents as the 'pure sharing' economy.
• A number of respondents raised concerns that current regulation and enforcement is not appropriate for new business models, and that clarity is needed on how collaborative economy businesses are classified (for example whether Uber should be classified as a technology company or transport provider). This was highlighted primarily by business and business representative respondents. Concerns included some reference to ensuring appropriate consumer protections, but were most commonly related to the employment status of drivers and others contributing to collaborative transport or logistics services. This included some who suggested that drivers do not have access to appropriate protections, and may earn below the national wage. Related to these concerns, some business representative and public sector respondents suggested that new business models would have a competitive advantage over traditional operators, if new models are subject to reduced regulatory and taxation burdens (such as the minimum wage, and employer costs).
• Challenges for those wishing to introduce or join innovative business models were also mentioned by a small number of businesses. This included reference to a lack of suitable insurance products, challenges around access to funding (and a potential need for ongoing subsidy for businesses which meet a social need), and a lack of support or promotion of peer-to-peer car sharing by local government (in contrast to corporate car sharing models).
• Several public sector respondents saw a need to balance the development of collaborative economy based transport models against protection of public transport networks. These respondents noted the potential for new business models to improve access to transport, for example in rural areas and/or for those with limited mobility. The potential for vehicle sharing models to contribute to reducing car use and associated emissions was also noted. However, several public sector respondents noted a risk that these new models could be over-promoted at the expense of public and active travel options. These respondents noted the importance of retaining access to regulated transport, particularly for those who cannot afford or otherwise access collaborative options.
• A small number of respondents suggested that there is a lack of data and research to make informed judgements about new business models. This included specific reference to the need to assess the extent to which new models will increase or decrease the number of cars on the road.
• Another organisation raised specific concerns around the potential for collaborative economy transport models to lead to the widespread use of automated/driverless vehicles, and the potential impact on those working in the transport sector. This respondent noted the extent to which the growing shortage of qualified drivers, and potential for substantial savings against drivers' wages, could provide an incentive to automation.

Protection of contributors

3.11 Points raised in relation to protection of contributors to transportation and logistics services in the collaborative economy focused primarily on providers and consumers. We consider each group in turn.

3.12 Several respondents expressed concerns around a perceived lack of protections for drivers or providers within collaborative economy based transport models (including several who referred specifically to Uber). This included a suggestion that the sector includes some of the 'youngest, poorest and most desperate' workers. These respondents felt that the absence of restrictions on numbers of drivers within the sector means that there are no protections to ensure sufficient work to sustain all contributors - and that this increases the likelihood that drivers will earn below the minimum wage. Reference was also made to the potential for ratings systems to negatively impact on providers' ability to earn. Respondents also referred to a lack of control for providers in relation to how much they will be paid for a trip, and when and by how much rates of commission will increase. Several respondents suggested that providers are effectively dependent contractors, bearing risks such as substantial costs associated with finance, insurance, licence costs, maintenance and fuel, while lacking the rights of an employee. Respondents referred to several specific cases as illustrating an absence of protections for providers (such as couriers facing substantial charges if they cannot secure sick cover, and contract terms described as 'unintelligible'), and to specific research reports. ^[9]

3.13 Also in relation to protections for providers, a business respondent raised concerns around a lack of suitable insurance protection, and suggested that this may act as a barrier to those who may wish to contribute to car sharing models. This respondent also noted uncertainties where the distinction between doing business and sharing is blurred. This included reference to the introduction of a new tax framework for the sharing economy in Belgium as having provided greater clarity. ^[10]

3.14 Respondents made a range of points in relation to improving protections for providers, with the key issues being:

• Several respondents saw a potential need for stronger regulation and/or enforcement. This included reference to the disparity in protections for providers considered to be self-employed, and those classed as a 'worker' or employee. A public sector respondent also raised concerns around resourcing of enforcement to deal with an expanding sector. Several respondents noted recent examples of collaborative economy businesses changing their terms to comply with the requirements for self-employed status.
• Specific regulatory changes suggested by respondents included restricting numbers of licences issued to collaborative economy businesses, a 10 per cent upper limit on commission charged by platform operators, and a requirement for all drivers to use meters to ensure they are paid correctly for each trip.

3.15 Respondents raised a range of concerns around a lack of consumer protections. A public sector respondent suggested that current legislation should be sufficient to protect users of collaborative economy services. However, it was also suggested that the sharing economy does not currently provide a consumer standard (similar to the Kitemark model), nor an independent regulatory or resolution process. A business respondent referred to the Code of Conduct developed by Sharing Economy UK, but suggested that this is not a substitute for formal consumer protections.

3.16 Respondents also suggested that there is a lack of consumer protections around pricing of collaborative economy transport services. This included reference to providers not being required to use meters, such that the price paid for a journey can vary depending on the provider used and the time of the trip. Some also expressed concerns around the potential for collaborative economy providers to develop a monopoly through use of artificially low pricing supported by investors' funds, which could ultimately lead to substantial price increases for consumers.

3.17 In terms of improving protections for consumers, respondents made a range of specific suggestions:

• A potential role for a consumer promise or independent issue resolution process;
• Enhancing background checks for drivers/providers;
• Improving provision for consumers with mobility impairments;
• Recognising the important role that taxis play for those with visual impairment, and the extent to which visually impaired taxi users could require additional protections;
• Enhanced training for drivers, including disability awareness training - although it was noted that mandatory training could affect drivers' status as self-employed; and
• A public sector respondent highlighted proposals for a Consumer Scotland taskforce as a potential opportunity to consider setting performance outcomes for the sector to enhance consumer experience.

Balancing regulation with competition and innovation

3.18 Comments made in relation to transportation and logistics indicate that a range of respondents see a need for change to or extension of regulation. Some suggested that collaborative economy business models can be accommodated within existing regulations, while others expressed concerns that regulation is not keeping up with the development and growth of collaborative platforms - and indeed that organisations may be exploiting this to grow their business. However, most of those addressing transportation and logistics indicated a need for some degree of regulatory change.

3.19 In terms of the specific regulatory issues raised by respondents, the key points were:

• A small number of respondents explicitly referred to the need for protection of workers' rights within the collaborative economy. This included concerns around the extent to which a small number of platforms and providers are able to control access to the sector, and the implications of this for workers' rights.
• Several business, business representative and individual respondents referred to larger international platforms having access to investor funds. These respondents suggested that traditional businesses and other local providers struggle to compete against the scale and resources of these platforms. Some also raised concerns that this differential in scale could also be reflected in the ability of larger collaborative platforms to influence policy direction, and ultimately regulation.
• A small number of business respondents raised concerns around perceived inequality of regulatory and tax burden between collaborative and traditional providers, and between different collaborative providers. These respondents referred to the well-developed regulatory framework for the taxi sector - including the extent to which regulations have been designed with a focus on consumer and driver protections. This was contrasted with what were seen as more limited regulations applying to private hire operators working within the collaborative economy. A transport provider also suggested that, within the collaborative economy, international platforms do not face the same tax burden as local providers.
• Several respondents suggested that the practices of some collaborative platforms raise the risk of monopolies being created. This included reference to under-pricing of services supported by investor funds, and was seen as an area potentially requiring further regulation. The trend towards automation and self-driving vehicles within the private hire sector was also referenced by some respondents, and was also seen as an area where additional regulation may be required.
• A business respondent drew a distinction between ehailing models and peer-to-peer sharing. This respondent suggested that the former do not represent a fundamental change to current business models and can be accommodated within existing legislation, while the latter may require additional regulation.
• Several respondents referred to the importance of data and research to improve understanding of new collaborative economy models, and their impact on traditional providers. These respondents suggested a need for better understanding of these issues. A business respondent also noted the value of data on use of collaborative platforms for regulation and enforcement, and noted the extent to which this is controlled by a small number of larger platforms.

3.20 Several respondents made specific suggestions for regulation and/or changes to support enforcement action:

• In terms of specific areas where change to existing regulation may be required, respondents referred to consumer safety (including specifically for those with visual impairment), use of data, and Disclosure Scotland.
• A business respondent suggested that, in addition to ensuring the welfare and safety of participants, regulation should also seek to reduce the risk of monopolies and to encourage collaborative economy businesses into markets that benefit society. This included reference to the potential for car sharing models to deliver benefits on cost and environmental impact.
• The likelihood of increasing automation within the private hire sector was also highlighted as an area requiring the guidance of legislation and regulation. This included reference to potential loss of jobs and earning potential.
• An individual recommended the development of a national licensing regime across transport sectors to ensure consistency for all providers, and to support enforcement activity.
• A public sector respondent referred to examples of engagement between the collaborative economy transport sector and insurance providers. It was suggested that this engagement may be providing a level of regulation across the sector. Some elements of self-regulation were also highlighted, such as Sharing Economy UK's development of a Code of Conduct and a Kitemark equivalent.

Barriers to growth of the collaborative economy

3.21 Respondents highlighted a broad range of potential barriers to growth of the transportation and logistics sectors, including reference to finance, regulation and the distinction between non-collaborative and pure sharing models:

• The most commonly noted barriers related to finance. This included several respondents (including businesses and public sector organisations) suggesting that a lack of subsidies or inward investment for transportation businesses is preventing growth and experimentation. This included reference to start-up funding being particularly difficult to access, and a suggestion that access to subsidy is a particular issue for models focused on social innovation.
• A small number of respondents referred to a distinction between what were described as pure sharing models, and collaborative economy businesses which were seen as replicating established commercial activity. This included a suggestion that there is a need for a greater focus on pure sharing activity.
• Social and behavioural barriers to growth were referenced by a small number of public sector respondents. This included a suggestion that there remains some resistance to use of peer-to-peer transport models for commuting or business use, and a suggestion that policy development has been somewhat slow to support new business models.
• Limitations on access to high speed broadband and 3G/4G was also highlighted as a barrier to growth. This was seen as a particular barrier to growth of the collaborative economy in rural and remote areas.

• A small number of respondents referred to the role of regulation in managing development of new sectors, and in ensuring growth is sustainable and delivers the desired outcomes. This included a suggestion that a lack of effective regulation may have enabled sectors to grow too quickly, potentially to the detriment of levels of pay and workers' rights.
• A public sector respondent suggested that some review websites are not doing enough to deal with unfair or bogus reviews, and noted the significant negative impact that these reviews can have on the reputation of legitimate traders.

The role of government

3.22 Respondents highlighted a range of points on the role of government in relation to transportation and logistics sectors, including a number of suggestions for government intervention around regulation and the creation of appropriate structures to support growth. The main issues raised were:

• Implementation of effective and appropriate regulation was seen as an important role for government, and was referenced by several business, public sector and individual respondents. This included a perceived need for a clear strategic vision that places the collaborative economy within a wider public transport framework, and for steps to prevent the dominance of large multinational providers. A public sector respondent noted that regulation could be an international issue given the extent to which multinational platforms are domiciled overseas, and suggested that international links and agreements would be important. However, a business respondent cautioned that Scotland should not follow other parts of the UK, where the influence of large providers was seen as having led to deregulation.
• A business respondent also suggested that the government could play a stronger strategic role, for example in setting car occupancy targets and supporting workplaces through passenger allowances and parking space schemes. This respondent referred to events such as Liftshare Week as potentially useful promotional tools.
• Several respondents saw a need to stimulate research and innovation in these sectors. This included reference to the potential for additional funding and incentives, particularly for collaborative platforms and models with the potential to deliver social benefits. A public sector respondent saw this as a potentially significant step towards ensuring greater balance between commercial and pure sharing models, and reducing the risk of monopolies.

• Taxation was raised as a particular issue for transportation and logistics sectors. However, respondents made quite different suggestions here - one business respondent wished to see tax relief for individuals participating in the collaborative economy, while another business saw a need for taxation to be brought in line with traditional providers.
• A small number of public sector respondents suggested that government should provide frameworks for collaboration and innovation at a national and regional level.
• A business respondent suggested that the government should seek to achieve a more equitable balance of risk between employers and workers. This was linked to concerns that workers or providers currently bear a substantial share of the risk.