Admit it or not, the Philippines, especially Metro Manila, is flawed with dysfunctional transport system for quite a significant amount of time now. Although we have the long-established Taxi and Jeepney services, these have not been boon to the public who wanted to get around the metro as part of their daily commute. On top of that, major highways have been transformed into glorified parking lots. The transport system in the country has yet to be transformed.
The deficit of transport options gave way to the Transport Network Companies (TNC) like Grab and Uber. Initially, they have been embraced by the public. But the ride-hailing service has become pain in the neck today. The public eyes are always drawn to the current player, Grab, but there’s a lying reason why demands for ride-hailing services have not been met on a daily basis.
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LTRFB Intervention
On the other side of the fence, we have the government – the Land Transportation Franchising and Regulatory Board (LTFRB). We all know that TNCs are now being regulated by the government and according to Grab, LTFRB has yet to come up with effective strategy to deal with these problems.
In all fairness to LTFRB, we all believe that their intervention’s goal is to impose order on the streets. In fact, Metro Manila cannot accommodate everyone who would like to drive and do business out of driving in the streets, especially in the densest parts of the metro and at the busiest time of the day. But according to Grab’s data, LTFRB is not doing enough.
The Timeline: Why is it hard to book a ride?
Grab outlines the main reasons why the public could hardly make a successful booking in the past months. We all know that Uber has merged with Grab’s operations in the Philippines last March. To let you understand the scenario, Grab released a timeline of the important events regarding this issue.
January 18, 2018
Initially, there have been 125,000 operational TNVS vehicles (Transport Network Vehicle Service) in the metro. But LTFRB only ordered to have a “common base supply” of 45,000 vehicles – that’s roughly a third of the supply back then.
February 12, 2018
LTFRB raised the capacity from 45,000 vehicles to 65,000 vehicles. But according to Grab, LTFRB only has around 55,000 TNVS in their official masterlist.
March 26, 2018
Grab and Uber announced a merger with an estimated 50,000 operational TNVS, 43,000 of which are active daily (24,000 from Grab and 19,000 from Uber).
April 16, 2018
Uber stopped operations in the Philippines. Out of there 19,000 vehicles, only 11,000 joined Grab. Of 8,000 difference, 6,000 vehicles were not part of the LTFRB's “master list.” The remaining 2,000 opted not to continue with Grab.
April 20, 2018
LTFRB suspended Grab’s Php 2per minute time travel charge.
July 2018
Grab only covers 42,000 active vehicles and only 35,000 of which are active daily. On the other end of the spectrum, the demand for TNVS service reached 600,000. It even goes up to 850,000 on rainy days.
The Looming Crisis
To keep the story short, Grab is stating that vehicle supply for the public has been compromised due to regulatory restrictions. The original 125,000 supply last January was trimmed down by LTFRB to 45,000 as “common base supply” and adjusted to 65,000 in February. But LTFRB's official masterlist only have 55,000 vehicles.
To keep the story short, Grab is stating that vehicle supply for the public has been compromised due to regulatory restrictions. The original 125,000 supply last January was trimmed down by LTFRB to 45,000 as “common base supply” and adjusted to 65,000 in February. But LTFRB's official masterlist only have 55,000 vehicles.
Upon the merger, Grab expected to have 43,000 active vehicles - 24,000 from Grab and 19,000 from Uber. However, in the actual transition, 6,000 Uber drivers were not included in LTFRB’s masterlist and were not allowed to transfer to Grab or in any other Transport Network Companies; and 2,000 Uber drivers opted not to join Grab. In turn, there are only 35,000 active vehicles (24,000 from Grab and 11,000 from Uber) left to serve 600,000 bookings a day.
The Supply and Demand Scenario
So here’s an infographic of the daily Supply and Demand scenario. It’s a comparative chart between Pre Uber Shutdown and Post Uber Shotdown. In this transition, Grab saw 19% of reduction in available vehicles.
In Grab’s perspective, the result has been a downward spiral for them and for the riding public. In terms of vehicle allocation, the Pre Uber Shotdown scene tallies 52% allocation on peak hours (5am-9am and 5pm-8pm) and 64% on off peak hours. Now, Grab is only having 37% allocation in peak hours and 53% in off peak hours.
Grab is pointing the 6,000 deactivated cars and the voluntary abandonment of 2,000 cars as part of the reasons that we are suffering today. Grab is also firm in its statement that LTFRB needs to be more agile when it comes to regulation matters.
Grab is pointing the 6,000 deactivated cars and the voluntary abandonment of 2,000 cars as part of the reasons that we are suffering today. Grab is also firm in its statement that LTFRB needs to be more agile when it comes to regulation matters.
The Php 2 Time Travel Charge Suspension
On top of that, LTFRB suspended the Php 2 per minute time travel charge last April. According to Grab, this decision is “heavy-handed” and “did not consider the welfare of TNVS drivers.” Grab explained that this is the reason why their drivers have suffered financially which resulted to 6% decline of online drivers from April to July.
This charge has been applied for by Grab since July 2017 and Uber since their inception. Thus, Grab pointed out that the Php 2 charge was not introduced due to the Uber pull-out. The leading TNC also stressed in an official email that low income has affected driver behavior because they are left with no option but to make decisions that enables them to “make ends meet.”
On top of that, LTFRB suspended the Php 2 per minute time travel charge last April. According to Grab, this decision is “heavy-handed” and “did not consider the welfare of TNVS drivers.” Grab explained that this is the reason why their drivers have suffered financially which resulted to 6% decline of online drivers from April to July.
This charge has been applied for by Grab since July 2017 and Uber since their inception. Thus, Grab pointed out that the Php 2 charge was not introduced due to the Uber pull-out. The leading TNC also stressed in an official email that low income has affected driver behavior because they are left with no option but to make decisions that enables them to “make ends meet.”
Philippines with lowest Allocation Rate in Southest Asia
With these factors, the Philippines’ allocation rate has gone down to 40%, the lowest in Southeast Asia. This means that only 4 out of 10 passengers can have successful ride.
“The Philippine market, despite being the first country to legalize ride-sharing in Asia last 2015, is facing a big set-back because of the supply crisis. We are only able to allocate 4 out of 10 bookings, which is the lowest allocation rate in Southeast Asia. The LTFRB has not done its part to solve the supply crisis. They should immediately prioritize adding more drivers to support the demand,” Grab PH Country Head Brian Cu quoted in an official statement.
What Grab and other TNCs have been asking LTFRB to solve this case?
Collectively, Grab and other TNCs are asking LTFRB to open the remaining 10,000 slots to increase the supply of vehicles. But, according to Grab, LTFRB has opted not to take immediate action. Grab also demand LTFRB to scrub inactive and dormant drivers in the masterlist and replace them with active ones to increase capacity; pointing out the need to increase the current 35,000 drivers who serves 600,000 bookings a day.
As of this writing, LTFRB announced that they are accepting new applications for TNVS that are not in the masterlist. Grab is urging LTFRB to increase the capacity to 85,000 and constantly regulate the supply and demand situation.
The Wrap
This looming crisis in the metro’s cab-hailing scene boils down to a simple problem of supply and demand. Above all, we still believe that the transport system and the regulating body should be fairer in all aspects, especially in addressing the needs of the riding public.
Somehow, Grab’s position is quite valid, and it’s up for the LTFRB to respond quickly to the booming demand; and work with not only Grab but other TNCs to solve this issue.
Somehow, Grab’s position is quite valid, and it’s up for the LTFRB to respond quickly to the booming demand; and work with not only Grab but other TNCs to solve this issue.
