Ride hailing service in vietnam market and its impacts on travel behavior of local people002

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY NGUYEN DANH MINH RIDE-HAILING SERVICE IN VIETNAM MARKET AND ITS IMPACTS ON TRAVEL BEHAVIOR OF LOCAL PEOPLE MASTER'S THESIS Hanoi, 2019 VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY NGUYEN DANH MINH RIDE-HAILING SERVICE IN VIETNAM MARKET AND ITS IMPACTS ON TRAVEL BEHAVIOR OF LOCAL PEOPLE MAJOR: INFRASTRUCTURE ENGINEERING CODE: PILOT RESEARCH SUPERVISOR: Prof HIRONORI KATO Dr PHAN LE BINH Hanoi, 2019 ACKNOWLEDGMENT After years at the Vietnam-Japan university, I had many great experiences, new friends, helpful knowledge, and above all, I learned at the international study environment of the top university in Vietnam First of all, I would like to express my endless thanks and gratefulness to my research supervisor Professor Hironori Kato and Doctor Phan Le Binh for his kind support and continuous advice during research time Their encouragement and comments had significantly enriched and improved my research process Without their motivation and instructions, my research would have been impossible to be done Furthermore, from bottom of my heart, I would like to thanks Program Director of Infrastructure Engineering Program of Vietnam-Japan University (VJU), Prof Nguyen Dinh Duc who always has encouraged and deeply care about me; As of last, my deepest thanks come to the rest of the teachers and staff of Vietnam Japan University Their kindly help and guidance has inspired me and helped me to overcome the challenges which I faced during the period of study at Vietnam Japan University Although I tried to complete this research by all my effort, however, there are still many errors and shortcomings for many reasons I look forward to receiving comments and suggestions which could present me with new sources of inspiration as I develop in my ability to research and learn Thank you sincerely! Nguyen Danh Minh i TABLE OF CONTENTS ACKNOWLEDGMENT i TABLE OF CONTENTS ii LIST OF FIGURES iv LIST OF TABLES v LIST OF ABBREVIATIONS vi ABSTRACT CHAPTER INTRODUCTION CHAPTER LITERATURE REVIEW 2.1 Grab company 2.2 Some key fnding from studies about ride‐hailing service in South East Asia countries .6 2.3 Some key fnding from studies about ride‐hailing service in developed countries CHAPTER METHODOLOGY CHAPTER INTRODUCING OF RHS, LEGAL MECHANISM AND CONTROVERSY IN OPERATION OF GRABCAR IN VIETNAM 10 4.1 The history of introducing RHS in Vietnam 10 4.2 Legal mechanism for operation of GrabCar service in Vietnam 11 4.3 Controversy among stakeholders regarding operation of GrabCar service 12 4.3.1 Lawsuit between traditional taxi and Grab 12 4.3.2 Opinions of stakeholders relating operation of GrabCar service in Vietnam 15 4.4 Conclusion 18 CHAPTER THE IMPACT OF RHS ON LOCAL PEOPLE AND DYNAMIC MOVEMENTS OF RIDE‐ HAILING CAR 19 5.1 Survey description 19 5.1.1 Data collection by group discussion (qualitative interviews) 19 5.1.2 Data collection by Grab app 21 5.2 Group discussion (qualitative interviews) 25 5.2.1 Group discussion record 25 5.2.2 Key fnding 33 5.3 Dynamic characteristic of RHS car 34 5.3.1 The fluctuation of the price over time 34 5.3.2 The relationship between the availability and the waiting time 49 5.3.3 The surge pricing 52 CHAPTER DISCUSSION AND CONCLUSION 54 ii REFERENCES 56 iii LIST OF FIGURES Page Figure Traditional taxi usage change in last 12 month Figure History of introducing RHS in Vietnam 11 Figure Allegation of Vinasun about operation of Grab 13 Figure Image of the interview at VJU 19 Figure The availability of ride-hailing car 21 Figure The waiting time and the price of trip 21 Figure The location of districts in the city 23 Figure The fluctuation of the price on weekdays in zone 35 Figure The fluctuation of the price on Saturday in zone 35 Figure 10 The fluctuation of the price on Sunday in zone 36 Figure 11 The fluctuation of the price on Monday and Wednesday in zone 40 Figure 12 The fluctuation of the price on Friday in zone 41 Figure 13 The fluctuation of the price on Saturday in zone 41 Figure 14 The fluctuation of the price on Sunday in zone 42 Figure 15 The fluctuation of the price in zone 48 Figure 16 The frequency of the availability in weekdays in zone 50 Figure 17 The frequency of the waiting time in weekdays in zone 50 Figure 18 The frequency of the availability in days of the week in zone 51 Figure 19 The frequency of the waiting time in days of the week in zone 51 Figure 20 The frequency of the waiting time at the peak-hour in zone 53 iv LIST OF TABLES Page Table Information of plaintiff and defendant in lawsuit 12 Table The detailed information of survey days 22 Table The characteristic of zone 22 Table The O-D pair 23 Table The fluctuation of price between time group (21h-22h) and (19h-21h) 36 Table The fluctuation of price between time group (22h-23h10) and (23h1024h) 38 Table The fluctuation of price between time group (7h-14h) and (14h-22h) .39 Table The fluctuation of price in zone 42 Table The fluctuation of price between time group (16h30-19h30) and (15h3016h30) 43 Table 10 The fluctuation of price between time group (18h-19h) and (15h3018h) 44 Table 11 The fluctuation of price between time group (22h-22h30) and (22h3024h) 45 Table 12 The fluctuation of price between time group (21h-22h10) and (19h1021h) 46 Table 13 The fluctuation of price in zone 48 Table 14 The regression statistics table displays the relationship between the availability and the waiting time of zone and zone 49 Table 15 The regression statistics table displays the relationship between the availability and the waiting time of zone 52 v LIST OF ABBREVIATIONS RHS Ride-hailing service RHCs Ride-hailing companies RHAs Ride-hailing apps ICT Information&Communication Technology AI Artificial intelligence MOT Ministry of Transport CBD Central business district vi ABSTRACT Ride-hailing service (RHS) is a new travel mode in urban transport system, it is called as the technology taxi service in Vietnam Ride-hailing is the act of requesting a ride from a private passenger vehicle by an app on a smartphone RHS has appeared in Vietnam from 2014, however, it has spread rapidly and affect significantly to Vietnam transport market and travel habit of people Until now, there has been still no completed regulation for the operation of RHS in Vietnam RHS has caused big controversy with the domestic taxi industry, traditional taxi companies claim that RHS is no different from taxis, and that ride-hailing companies (RHCs) should be held to the same operating requirements and regulations as taxi companies, including licensing, fare regulation, and vehicle and driver safety standards in order to maintain an equal and fair playing field The research has also evaluated qualitatively impacts of RHS on local people The results show that people usually use Grab for picking up/sending off their children Some people use Grab to replace their private vehicle to go to work or use it as a paratransit mode After examining the dynamic characteristic of the RHS car, some interesting findings have been revealed The fluctuation of the price of Grab depends on the demand of the market When the demand is high, the price of the trip will high and vice versa The great fluctuation of price frequently happens at the morning peak – hour (6h-9h) on weekdays when people have a high demand for going to work On the weekend, the price frequently fluctuates widely in the afternoon (16h30-19h), in the evening (19h-22h) and at night (22h-23h) when people have a high demand for leisure purpose and going back their home The waiting time for a RHS car does not only depend on the number of the available car around but also depends on the distance between the vehicle and the customer A potential assumption also has been proposed that the algorithm of Grab app automatically raises prices to balance between demand and supply because when bad conditions happen CHAPTER INTRODUCTION Ride-hailing also is known as technology taxi in Vietnam – is the act of requesting a ride from a private passenger vehicle by an app on a smartphone This type of system is built, managed, and operated by ride-hailing companies (RHCs), Grab (Malaysia), Uber (United States of American), or Gojek (Indonesia) are some well-known RHCs in South East Asia countries area These RHCs serve as the broker between the customer who has ride demand and the driver who possesses and operates his/her own private vehicle After launch, Ride-hailing service (RHS) has immediately redefined the individual public transport industry (taxi or motorcycletaxi in some South East Asia countries such as Vietnam, Indonesia, Thailand, and Cambodia) with its user-friendly platform, which includes extra convenience, variety payment method, completed door-to-door service, maximal reduced waiting time RHS has appeared in Vietnam transport market in 2014 with RHCs – Uber and Grab Until 4/2018, Uber sold the whole market share for Grab, stopped providing all services of Uber in Vietnam After Uber was taken over, Grab has occupied a large share of the passenger transport market Within years, Grab almost has dominated the individual public transport market in Vietnam, it has supplied service to a majority of metropolitan regions spanning throughout 36 provinces/cities across the country with 175.000 partners (drivers), has become a important portion of urban transport and affect significantly to operation of other types of transport business, especially type of traditional taxi business as well as travel behavior of people According to Vietnam Parliament Television, by the end of 2017, in Hanoi and Ho Chi Minh City, the number of traditional taxi car is only 23.000, reduced 8000 vehicles compared with transportation planning, meanwhile number of Grab car, from vehicles, increased up to 37000 vehicles The frequency of riding traditional taxi also goes down, 61% of users confirmed that they used  Zone The price (VND) 60 0 120 240 360 480 600 720 840 960 1080120013201440 Time (minutes) Figure 15 The fluctuation of the price in zone Diagram shows that, in zone 3, the price does not change too abruptly over time in the day Table 13 The fluctuation of price in zone The period of time 0h-6h 6h-22h 22h-24h 48 5.3.2 The relationship between the availability and the waiting time A linear regression model is applied to determine the relationship between the availability and the waiting time, in which the availability is the independent variable and the change of the waiting time will depend on the change of the availability over time in the day  Zone and Zone Table 14 The regression statistics table displays the relationship between the availability and the waiting time of zone and zone The period of time Monday Wednesday Friday Saturday Sunday In zone and zone 3, there is no relationship between the availability and the the waiting time (R-square < 0.5) However, at the weekend in zone 1, the waiting time depends on the availability (R-square > 0.5), when the availability is low, the waiting time will be longer, and vice versa 49 Frequency The availability (the number of car) Figure 16 The frequency of the availability in weekdays in zone 700 600 500 Frequency 400 300 200 100 The waiting time (minutes) Figure 17 The frequency of the waiting time in weekdays in zone 50 1000 900 800 700 Frequency 600 500 400 300 200 100 The availability (the number of car) Figure 18 The frequency of the availability in days of the week in zone 500 450 400 350 Frequency 300 250 200 150 100 50 The waiting time (minutes) Figure 19 The frequency of the waiting time in days of the week in zone Based on Figure.16;17;18;19, we can realize that in zone1 and zone 3, the available car which is 10 cars occupies the high frequency (78,89% in zone and 61.87% in zone 2) However, while in zone 1, the time which the customer must wait for a car is about minutes, the waiting time in zone is about 10.5 minutes In zone 3, the distance between GrabCar and the location of the customer is quite far, while the distance in zone is much shorter than Therefore, the waiting time 51 does not only depend on availability, but also depends on the distance between the vehicle and the customer  Zone Table 15 The regression statistics table displays the relationship between the availability and the waiting time of zone The Table.17 shows result: In zone 2, the waiting time depends on the availability (R-square > 0.5) When the availability is low, the waiting time will be longer, and vice versa 5.3.3 The surge pricing According to the opinion of respondents in the qualitative interview, the surge pricing always happens at the peak-hour Aim to find out the reason of this problem, based on the data of the waiting time in zone 2, the writer built a diagram of the frequency of the waiting time at the morning peak-hour in all the day of the week (except Saturday because the surge pricing does not happen at the morning peak-hour on Saturday) The result are shown below 52 40 Frequency 35 30 25 20 15 10 The waiting time (minutes) Figure 20 The frequency of the waiting time at the peak-hour in zone At the peak-hour, the wait time always be from to minutes When bad conditions happen, demand for using GrabCar is higher, maybe demand will be greater than supply, and waiting time become longer Therefore, a potential assumption is given that algorithm of Grab application will automaticaly raise prices to balance between demand and supply (when the surge pricing happens, the customer will not choose GrabCar service for their trip and the demand for using service will reduce significantly), ensure the waiting time not to be too long 53 CHAPTER DISCUSSION AND CONCLUSION Ride-hailing service is a new travel mode in urban transport system in Vietnam However, it has spread rapidly and affect significantly to Vietnam transport market, especially the traditional taxi The appearance of RHS has redefined the taxi industry, Grab has transported tens of millions of passengers while the Government has not lost money to finance for development of this type of service, because it uses socialization source The relationship between Grab and the car driver is a partnership, it is not the relationship between boss and employee Grab does not possess and manage any car The success of RHS in transport market has implied that RHS conforms to the trend of the consumer in the technology era, as well as, indicated that some current business conditions of the traditional taxi service have been too old, too complicated and need to be removed Ride-hailing service also has impacted significantly on the travel habit of local people After the launch of Grab, it make accompanying trips of parents with their children are less than before, people usually use Grab for sending off/picking up their children due to its outstanding features such as tracking journey on the app, cashless payment method, knowing price in advance, knowing car driver information Some people have used Grab replace the private vehicle to go to work because they prefer to be driven by someone rather than driving by themselves and the cheap expense People also have used it as a paratransit vehicle to take them to the bus/BRT station From here, people will use bus, BRT to come to their destination In this case, RHS has encouraged people using the public transportation vehicle The fluctuation of the price of Grab depends on the demand of the market When the demand is high, the price of the trip will high and vice versa The great fluctuation of price frequently happens at the morning peak – hour (6h-9h) on weekdays when people have a high demand for going to work On the weekend, the price frequently fluctuates widely in the afternoon (16h30-19h), in the evening 54 (19h-22h) and at night (22h-23h) when people have a high demand for leisure purpose and going back their home The research has shown that the waiting time for a GrabCar does not only depend on the number of the available car around but also depends on the distance between the vehicle and the customer Finding for the reason of the surge pricing at the bad conditions such as the peak-hour, the research proved that, at the peak-hour, the waiting time always be very short (about 2-4 minutes) Therefore, a potential assumption is given that the algorithm of Grab app automatically raises prices to balance between demand and supply because when bad conditions happen, demand for using GrabCar is higher, maybe demand will be greater than supply, and waiting time become longer If the demand and the supply are balanced, the short waiting time always be ensured From all findings of this research, Grab is supplying an extremely useful RHS to the customer, has efficiently addressed the inadequacies of the current urban transportation system Besides that, the launch of Grab in Vietnam has forced the traditional taxi to change their business strategy, offer a better quality service to customer Grab also contribute to encouraging people using the public transportation vehicle and decreasing demand for using the private vehicle The fluctuation of price over time or the surge pricing does not affect negatively to the transport market and local people because Grab is not an only RHS supplier in the Vietnam market Besides the traditional taxi, there are also other RHS suppliers such as Be, GoViet, Fast-Go, etc People have many other options for their trip if the surge pricing happens, Grab cannot manipulate the Vietnam transport market However, there have been still no regulations for the operation of Grab or RHS in Vietnam, therefore building an appropriate legal mechanism for its operation is an urgent mission at now to manage and control efficiently this new type of service 55 REFERENCES Ackaradejruangsri, P (2015) Insights on GrabTaxi: An Alternative Ride Service in 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