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Taxis: Drive till you drop?

November 26th, 2012 | Author: Contributions

I refer to the article “Benchmarks set for taxis to meet demand” (Straits Times, Nov 24).

It states that “From January, they must ensure that at least 70 per cent of their fleets are on the road during the peak hours of 7 am to 11 am 5 pm to 11 pm. The level will go up t0 80 per cent in 2014 and 85 per cent in 2015.”

What is probably the root of the problem?

Decline in two-shift drivers

Well, the article “Will new taxi rules boost availability?” (Straits Times, Nov 24) may give a clue, as it says that “In the last five years, the proportion of two-shift cabs has fallen from 60 per cent to 50 per cent.”

Why is the trend towards single-shift drivers?

One-shift drivers earn more

The primary reason as I have been told is that a two-shift driver may not earn enough to make a decent living.

So, more drivers may have to resort to driving 12 to 14 hours a day as a one-shift driver, in order to earn more.

For example, one would drive say from 7 am to 9 pm to try to earn more as this timing would include the major peak hours in the morning and evening.

The problem with the LTA’s new benchmarks is that the peak hours that need to be covered are from 7 am to 11 am and 5 pm to 11 pm.

Hence, it may be almost impossible for a single-shift driver to cover both the full peak hour periods, unless he or she takes a break in between the two peak hour periods.

I understand that hardly anyone would want to do this, as it would still amount to a 16-hour work day (7 am to 11 pm) with a break in between. If a single-shift driver converts to two-shift, he or she may have to forgo one of the major peak hours, and thus earn much less.

The LTA’s contribution in this regard is to give a “discount on the licence renewal fee and a waiver of certain refresher modules in the taxi test”.

LTA wants to have its cake, & eat it too?

These measures in monetary terms are but a pittance, as the licence renewal fee discount is only $20 for every three years and the refresher course fee for all modules is only $53.50 once every six years.. What may really incentivise drivers during peak hours particularly to enter the CBD, is to redce or remove the ERP charges, which may be the main reason why drivers may not be entering the CBD.

This is supported by the remarks “The taxi association welcomes the move, but also wants the LTA to review electronic road pricing (ERP) rates and lower them to encourage more cabs to enter the CBD and pick up passengers” and “Cabby Wong Chong Hock, 62, noted that at times taxis have to pass through two or three ERP gantries bedore picking up a passenger. This additional cost deters many drivers from entering the CBD, he said.”

LTA can solve the problem?

Therefore, the LTA may hold the key to solving the problem, But, it has so far refused to budge on this ERP issue.

Allow more taxis?

Another obvious solution may be to allow more taxis.

But instead, the LTA will penalise taxi companies that do not meet the new benchmarks, by not allowing them to grow.

Problem caused by LTA in the 1^st place?

Arguably, the LTA’s implementation in 2008 of the “pick-up/drop-off rule was met with unhappiness from both passengers abd cabbies”, may be one of the reasons why the availability standard is so low today? So, now that the LTA is relaxing this rule, why not wait a while to see whether things will improve, instead of implementating yet another draconian rule on taxi drivers now?

More stress?

As to “To get all the way to 85 per cent, they will need to work “eight-plus hours” for six days a week, said LTA chief executive Chew Hock Yong”, are we not putting more stress on drivers?

Can you imagine driving more than eight hours a day for six days a week, without regard to the times when you fall sick, take a vacation, growing older and physically weaker, attend to urgent family matters, etc.

Low availability standards?

Why is it that despite “there are more than five taxis for every 1,000 people here C possibly the highest among cities in the developed world”, our taxi availability standards are so low relative to cities like Dubai, New York and Perth?

Less happy taxi drivers?

Could it be because our taxi drivers are less happy, as they have to work harder for longer hours in order to make a decent income?

So, will taxi drivers be even less happy with the new benchmarks?

After all, isn’t the flexiility of time one of the greatest benefits in being a taxi driver?

Malaysian vs Singaporean drivers?

When Singapore separated from Malaysia.in 1965, presumably, taxi drivers then on both sides of the Causeway, were about the same C with the currency on par, similar cost of living, taxi driving costs and conditions, etc.

Fast -forward to today, and it would seem anecdotally, that there is quite a world of difference between the lives of taxi drivers in Malaysia and Singapore.

The bottom line, as I understand it is that a one-shift full-time taxi driver in Malaysia typically only needs about two hours of driving to break-even and cover his or her total costs. For Singapore, it would take about four hours.

Two-shift drivers in Singapore, which is generally about eight hours of driving a day, because of their ability to split the daily rental cost between the hirer and the relief driver, generally need about three hours of driving to cover their costs. A part-time driver in Kuala Lumpur renting five hours for about RM25 can break-even after about one hour plus.

I understand that about 90 per cent of taxi drivers in Malaysia are one-shift full-timers, whereas only about 50 per cent in Singapore are. About 30 per cent of drivers in Kuala Lumpur, own their own taxis, whereas no Singaporean drivers are owners anymore as individual taxi ownership was gradually phased out over the years. Owner taxi drivers in Malaysia can transfer their taxi ownership to their child, when they die or retire.

In other words, many taxi drivers in Malaysia are entrepreneurs, but none are in Singapore.

With a taxi costing about RM55,000 which is about RM 500 monthly instalment for about seven years, most drivers in Kuala Lumpur may be relatively more relaxed than Singapore drivers, as I understand most drive around eight to ten hours a day, to earn a net monthly income of about RM2,500 plus.

In contrast, Singapore drivers drive about twelve to fourteen hours a day to earn about S$3,500 plus of net disposable income. Two-shift drivers in Singapore typically work about eight hours, to earn about S$2,000 plus.

Given the fact that the cost of living in Singapore is much higher than Malaysia, I would surmise that the life of a taxi driver in Malaysia is arguably better than that in Singapore.

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Leong Sze Hian

Leong Sze Hian is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, Wharton Fellow, SEACeM Fellow and an author of 4 books. He is frequently quoted in the media. He has also been invited to speak more than 100 times in 25 countries on 5 continents. He has served as Honorary Consul of Jamaica, Chairman of the Institute of Administrative Management, and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and 13 professional qualifications. He blogs at http://www.leongszehian.com.