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Nov 2, 2016

Transforming Commuting from Burden to Benefit

 



Living in Colorado, I get away from it all by climbing our high mountains. We all have places where we go to get away, to reduce stress—but what are we trying to get away from? What’s stressing us out? Surveys show our daily commute is the culprit, one of the most stressful parts of the average American’s day. No surprise: We spend seven days annually in traffic, 76 percent of us alone in our cars.

Americans aren’t likely to change commuting behavior unless better alternatives come along. Fortunately, better alternatives exist. We at Rocky Mountain Institute—partnering with Movability Austin and Capital Metro—recently launched our first implementation project in Austin, Texas. We developed an integrated commuting solution for employees of two downtown Austin companies, Whole Foods Market and GSD&M, which both provided financial investment. The solution includes shuttle service provided by Chariot (a first- and last-mile circulator between company offices and downtown Austin transit hubs) and on-demand mobility options (carshare, bikeshare, ride-hailing) integrated together as a single package. 

What makes this project exciting is twofold: It expands the concept of employer-subsidized commuting benefits to include multiple modes that an employee can choose from, packaged together; and it aggregates demand from multiple employers, reducing costs and boosting utilization. The project also marks the entry of Chariot into the Austin market, a boon to Austinites as Chariot will soon offer crowd-sourced public routes.

What does this mean for employees? Instead of sitting in traffic on Mopac or I-35 for an hour, commuters can spend their transit time reading, answering emails, or catching some extra sleep without stress. Commuters only have to get to their nearest MetroRail park-and-ride or MetroRapid bus stop, then once dropped off in downtown, Chariot takes them to their office. For traveling during the day or getting home in an emergency, employees can choose from carshare, bikeshare, and ride-hailing options, which are subsidized by employers. In the evening, one just opens Chariot’s app, sees where the next shuttle is, reserves a seat, and arrives in time for the next train or bus. 
 

Three Ways to Ensure Success 

A major driver for RMI with this project is to understand what it takes for multiple companies to share an integrated commuting solution, so that this approach can be scaled across Austin and to other cities. As more companies demand integrated commuting solutions, more providers will collaborate to offer them. And with more integrated bundles competing, solutions get better and cheaper, and eventually, bundles can be offered to the public, a key element of RMI’s vision of mobility as a service.

As we work with the City of Austin, we are learning three important lessons to ensure a successful commuting transformation:

1. Develop integrated commuting solutions that include on-demand mobility

Many employees drive to work because they worry they might need their car in case of emergency or the need to travel during the day. Commuters are more likely to consider alternatives and leave their car at home if they know their employer covers these situations. Plus, personal mobility is not one-size-fits-all: The mode needed can change daily. If employers are serious about improving employee commutes, it’s essential to provide integrated commuting solutions. At the same time, employers want a simple, streamlined process with prebuilt solutions and a single vendor relationship to manage. 

2. Focus on employer-subsidized solutions

An employer-based approach means reaching hundreds of commuters by working with a few companies, all while aligning incentives and creating value for both employers and employees. 

Employers want to reduce costs and retain employees. Costs to build new parking ($10,000+/space) or lease existing parking ($250+/month/space) are high and increasing. It can be more cost-effective to provide integrated commuting benefits: At $25/month per participating employee for on-demand mobility and $500/month per seat for shuttle service, integrated commuting benefits break even with monthly parking at 36 percent shuttle capacity utilization. Per-employee costs decrease further with increased utilization: Integrated benefits cost 25 percent less than parking at 50 percent utilization, with 55 percent cost reduction at full utilization. And, if cost savings from parking aren’t enough, many Americans cite their commute as why they left a previous job, directly impacting employer recruitment/retention costs.

For employees, studies suggest that to adopt a new service, consumers need a 2-4 times increase in overall value over their existing service (e.g., cost, reliability, convenience). Employer-subsidized integrated commuting benefits can provide that overall increase in value: reducing or eliminating commuting costs; guaranteeing reliability of the commute; covering just-in-case situations; and allowing employees to use their commuting time productively.

3. Aggregate demand with multiple employers

Large companies want to minimize risk of underutilization and smaller companies have limited resources to offer integrated commuting solutions. Through shared investment and aggregation of employee demand, companies mitigate risk of low ridership and reduce costs. However, working with multiple companies in parallel to develop a request for proposals, evaluate responses, negotiate a common contract, and coordinate marketing adds significant complexity. 


Building on Lessons Learned to Change the Way a City Commutes 

RMI and its partners operated as third-party brokers on behalf of the companies. To improve scalability of this resource-intensive process, RMI will build on lessons learned from this and future projects. 

 In particular, RMI will: 

  • Explore a different approach to launching integrated solutions: secure one core employer to provide initial investment and negotiate contracts. Once launched, additional employers can join without interruption or delay.

  • Work directly with mobility providers to develop integrated bundles for employers—with one contract to sign, unified messaging, and a single point of contact.

  • Develop a marketplace platform to automate the transaction process between providers and employers. Using a marketplace platform, employers could explore prebuilt integrated packages, directly connect with providers to procure integrated services, and complete transactions via standardized contracts.

Austin businesses can help to change the way the city commutes. RMI will continue to work with partners in the city to improve the commuting experience.  

 
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