BWorld 116, Urban transport myths and the jeepney strike

* This is my article in BusinessWorld last March 01, 2017.

Traffic congestion in urban areas is an engineering problem with engineering solutions. It is a result of some market failures with market solutions and in many cases, government solutions only lead to failures in reducing the congestion.

Here are some myths in urban transportation that persist until today.

1 Big urban population means big urban congestion in traffic and housing.

WRONG.

If people refer to Metro Manila as a “prime example” of this statement, then they do not know or see other megacities in East Asia alone, like Tokyo, Shanghai, Beijing, and Osaka-Kobe. Huge urban populations are served by modern urban transport systems and expansive high-rise residential condos that cut travel times to and from work or schools.

There is net benefit for people living in congested urban areas than in far away rural areas. People try to squeeze themselves in a limited space where various amenities are available, where the distance from house to work or school is shorter.

2 Prohibitions like “number coding” of private vehicles and banning some buses to enter Metro Manila will reduce traffic congestion.

WRONG.

Prohibiting cars in Metro Manila one day a week led to more households to buy a second or third car (usually a used car) or motorcycles so they have another vehicle car to use on the “coding day” of their first car.

Many passengers of provincial buses are car- or motorcycle-owners in the province, so when government prohibits these provincial buses to enter Metro Manila and force the passengers to alight at far ends of the metropolis and take city buses that move slow because of frequent stops or take taxis that are more expensive, these people instead will drive their cars or motorcycles to the metropolis and this will further worsen traffic congestion.

3 Prohibition of multiple-destination air-con vans and allow only point-to-point (P2P) vans and buses will reduce congestion.

WRONG.

People put high priority for their convenience and safety when they travel. They avoid three to four rides one way to go to their offices, universities, other destinations (tricycle, then jeep/van, then MRT/LRT/P2P bus, then jeep/van/tricycle to final destination). These same rides are more inconvenient during bad weather. That is why many people drive their cars or motorcycles despite the heavy traffic and expensive parking.

Government should allow multiple destination air-con vans, say from Fairview to Marikina or Pasig or Navotas; or from Las Piñas to Taguig or Marikina or Manila, and so on. This will make commutes convenient and safe. Many people will leave their cars or motorcycles at home and jeepneys and tricycles will slowly die a natural death.

4 Government should regulate bus/jeepney/van fares always and disallow flexible fare setting by transport operators.

WRONG.

Airfares and shipping fares are deregulated and as a result, airlines and shipping lines can adjust their fares depending on the travel season (low/cheap during the rainy season and school days, high during Christmas, school breaks, and fiestas), and they set different fares per class of seats and passengers (ordinary, deluxe air-con, business class, etc) for the same plane or boat.

Fare deregulation will allow transport operators to field modern and convenient vans and buses that charge higher fares (but still lower than riding a taxi or any ride-sharing service) so that less modern buses and vans will be forced to charge lower.

5 Jeepneys and similar small-volume public transportation are common in some Asian countries.

WRONG.

Small-population Asian economies like Hong Kong and Singapore do not have jeepneys. Even economies that are less-developed than the Philippines like Vietnam and Cambodia do not have jeepneys. Motorcycles and buses are the common mode of transportation by the poor in these countries.

6 The jeepney strike will endear jeepneys to the public.

WRONG.

The jeepney strike in Metro Manila and other big cities in the Philippines last Feb. 27 has succeeded only in class cancellations and the public have found more ways to travel without jeepneys. Again, if multiple-destination (not just the inflexible destination P2P) air-con vans, and buses with deregulated and competitive fares are allowed, jeepneys and tricycles will die a natural death without the government creating a new law or Department/Administrative Order or LGU ordinance.

7 Jeepney drivers and operators will go hungry if jeepneys are phased out ultimately.

WRONG.

The same fear was expressed when telegrams were replaced by pagers, and when pagers were replaced by mobile phones and the Internet; or when horse-drawn calesas were replaced by jeepneys and tricycles; or when rice farms were converted to poultry farms or residential subdivisions; or when fishing villages were converted to beach resorts and hotels. People learn new skills, they move to other work or professions. Jeepney drivers can become van or bus drivers, or do other work.

Meanwhile, government should learn to step back and allow players to initiate market solutions to the traffic congestion problem.

Government should instead focus on securing road right of way (ROW) for important infrastructure projects like MRT/LRT, skyways and interchanges. Transporting people and goods to various destinations is not a crime that must require lots of government permits, taxes, and expensive franchises.

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See also:

BWorld 113, Peace talks with CPP-NDF for another 30 years? March 04, 2017 

BWorld 114, Brownouts, ancillary services and transmission charge, March 23, 2017 

BWorld 115, Centralization and federalism, March 23, 2017

BWorld 5, Transportation Bureaucracy and Uber

(This is my article last week  in BW Weekender)

AMONG the major complaints of passengers of regular taxis are (a) drivers who are choosy about faraway or traffic-congested destinations, (b) the risk of being mugged or molested by the driver as well as the general lack of safety, and (c) dirty or foul-smelling taxi units.

Uber, a technology-based system of ride-sharing, was introduced in the United States in 2009 and soon enough adopted in other countries. In February 2014, the company and its services came to Manila. What are the features, advantages, and disadvantages of this mode of transportation?

One, transparency and security -- as passengers themselves would attest to. Both passengers and drivers have accounts with Uber, somehow they know each other before the driver picks up the passenger. The passenger knows beforehand the model and plate number of the vehicle that will pick him/her up.

A passenger’s Uber account has the following information: the passenger’s full name, mobile number, email address, and credit card number. If the passenger doesn’t have a credit card, a debit card is also accepted. Partner drivers also have Uber accounts with information like full name, mobile number, email address, and bank account number, as well as vehicle information (brand and model, plate and registration numbers, etc.).

This disclosure of information should serve to discourage criminality either on the part of the driver or the passenger. There is also the system wherein the driver rates the passenger, among whom those reported to be prone to verbal abuse eventually lose access to the system. So only well-behaved passengers can avail themselves of the system and get a ride.

Uber’s system also serves to ease traffic and enhance mobility. A passenger need not bring his/her car, brave the heavy traffic, and worry about parking. Uber is a ride-sharing scheme wherein the motorist picks up a passenger going in the same direction.

From passenger observations, private-owned cars are generally cleaner than taxis, and their drivers, who are also subject to a rating system, are said to be friendlier. Another now-common compliment about Uber is that no passenger is turned down all because of the remote or traffic-heavy destination.

Yet the same service that encourages passengers to leave their cars at home may also aggravate traffic congestion with its network of vehicles, and this in turn prompts taxi operators keeping up with Uber’s service to expand their fleet. Moreover, cab operators are subject to stringent and costly regulations from which Uber so far has been spared. Also, there’s a premium to passenger safety and convenience, thus the perception that Uber somewhat more expensive compared with a regular taxi.

On May 10, the DoTC enacted a new order on “Promoting Mobility” that aims to modernize and improve transport services to the commuting public. Among the order’s guidelines and accreditation requirements for Uber and other ride-sharing services: passenger personal accident insurance; maximum vehicle age limit of seven years from the date of manufacture; one-year validity of accreditation; registration with the Bureau of Internal Revenue and provision of receipts to passengers; and an accreditation fee of P10,000 and application fee of P510 for the first two cars.

Meanwhile, a technical working group of the House committee on transportation wants these ride-sharing services suspended, amid the still-unresolved legalities over whether such services fall under “colorum” transport, among other concerns such as passenger safety and tax liability.

On the other hand, Uber’s patrons themselves have been critical of the many requirements by the Land Transportation Franchising and Regulatory Board for ride-sharing operations to be validated by transport authorities. But the government should step back from its customary bureaucratism and recognize this development in public transportation as filling in the sorry gaps in this very component of public service.

Bienvenido S. Oplas, Jr. heads a free-market think tank in Manila, Minimal Government Thinkers, Inc.

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See also: 

BWorld 1, PH Economy and Politics, Is there a Disconnection? April 24, 2015 
BWorld 2, Benefits of Trade Liberalization for the Philippines, May 16, 2015 

BWorld 3, UHC via Health Voucher System, May 23, 2015

BWorld 4, Public Transport, Colorum Vans and MAPSA, May 29, 2015

Transport Econ 11: On Fare-Contracting Taxi Drivers, December 13, 2013
Transport Econ 12: Bus Rapid Transit (BRT) and Tricycles, April 21, 2014 
Transport Econ 13: On Prohibiting S. Luzon Provincial Buses to Enter M.Manila, August 30, 2014 Transport Econ 14: On the MRT and LRT Fare Hike, January 06, 2015

Transport Econ 4: Tricycles

A group of public transportation in the Philippines that has the high tendency to disrespect and violate many traffic rules -- no counter-flow, no U-turn, no left turn on certain streets, no parking, etc. -- are the tricycles. These are motorcycles with a "sidecar". Tricycles are regulated by the local governments (cities and municipalities), not the national government.

In many towns and cities in the country, tricycles dominate as the main form of public transportation for short distance travels, like within the city proper, or from the barangays to the cities and towns. They indeed provide public service to the poor, as otherwise less- or non-accessible areas can be reached by tricycles. Farm products are also brought to the market and consumers via tricycles.

But when there are too many of them in a particular area, it can result to a sometimes chaotic situation. And that is where large-scale violation of many traffic rules by these small-scale public transpo occur. Certain intersections that should be clear of vehicles are now filled with so many tricycles waiting for passengers.

Tricycle fares are also not exactly cheap. Because they carry only a few people, up to 5 squeezely-seated and passengers, they have to charge fares higher than the minimum fare charged by jeepneys and buses. It is discomforting for passengers to ride in tricycles, especially when it rains. The tricycle drivers will insist that the 5 seats (3 in the sidecar, 2 at the back of the driver) should be taken to pay the regular fare, say at P10 per passenger. If a passneger wants some "comfort", he will have to hire the tricycle for himself and pay P50 for the "special" trip. This is more expensive than an air-conditioned taxi ride for trips below 2 kms.

But what is dangerous, and sometimes annoying, is when tricycles are taking the national or provincial roads and highways. These slow vehicles, especially if they are heavily loaded, compete for road space with cars, trucks and buses. A number of accidents on highways can be attributed to tricycles as some impatient motorists overtake a long queue of other cars and buses, "held up" by a slow tricycle. When another fast moving vehicle would come from the other direction, that's when accidents or near accidents happen.

Local governments make a lot of money from tricycles, that is why they allow these to proliferate. Tricycle drivers and operators can also constitute a strong political and lobby force during elections.

Certain national rules like prohibiting tricycles on highways should be implemented. National transport rules like franchising should be relaxed to allow jeepneys and air-conditioned vans to enter certain routes to compete with tricycles. Competition will reduce the demand of passengers for tricycles. No government coercion, national or local government, will be needed. Just give the passengers more options, and many of them will take the alternative public transportation and the tricycle transpo will slowly die a natural death.
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I wrote this on May 20, 2010:

On tricycles

(This is my article for www.thelobbyist.biz last May 7, 2010, "Tricycles and Elections")

Tricycle and jeepney drivers and operators are among the target “beneficiaries” of some party-list groups that are running in the coming elections. They say that this sector is highly marginalized and hence, must get more state subsidies and protection. I beg to disagree.

Tricycles are part of supply-demand dynamics in public transportation. A new subdivision is suddenly created/developed out of grassland, no public transpo to bring the construction workers and new residents to the site. Tricycles suddenly pop up. They are quick and useful.

Many years or decades after, tricycles still monopolize that route even if the subdivision has become so large, because tricycle operators have lobbied hard and succeeded in convincing the city or municipal officials and the LTFRB that jeepneys and air-con vans should be banned from serving "their" route.

If local government units and the LTFRB -- the transport route franchise issuers -- are absent, and any road is free for all who will provide public transpo, the government’s role is only to control traffic gridlock and apprehend traffic violators, tricycles and old jeepneys will die a natural death. No one will ride a tricycle when a jeepney that charges the same fare, even lower, is available. And few will ride old jeepneys when air-con vans and buses will offer the same route at a small fare difference, say only P1 or P2 difference.

What makes public transportation operation somehow expensive, is the expensive franchise fee and unwritten fees to expenditure the process that the LTFRB charges per unit. Also the huge cost of LGU lobbying in the case of tricycles.

Many subdivisions in Metro Manila and the provinces are dominated by tricycle monopolies for the past few decades. Tricycles are "untouchables" in terms of route monopoly. They may look "kawawa" but they can be arrogant in bullying competition by other public transportation -- jeepney, vans and buses.

Tricycles should not be in highways but they are allowed to go there. Only tollways disallow tricycles. Cars and other fast vehicles are sometimes "trapped" by slow tricycles in highways but the cars cannot easily overtake those tricycles because some roads can be narrow, dilapidated, winding, or there are plenty of in-coming vehicles on the other side of the road. As more vehicles are trapped, some drivers become impatient, they overtake even in the curves, causing near- or actual accidents. Those tricycles, tractors and other slow vehicles in highways are road hazards but they are given government protection to ply the highways.

More developed Asian countries, big and small, do not have low-passenger capacity vehicles like tricycles. They only have buses and trains. Like Singapore, Hong Kong, Malaysia and Thailand (a few tricycle-type “tuktok” vehicles can be seen in Bangkok).

Ultimately, tricycles should go away. Not by government coercion but by commuters’ choice. Just give the commuters more choices and they will chosse the one that gives them comfort, safety and inexpensive fares. Tricycles will die a natural death.

The problem are the government agencies that collect lots of fees and taxes from tricycles, and give those bureaucrats the power to grant route monopolies. Route A is a tricycle monopoly. Route B is a jeepney monopoly. Route C is bus monopoly. Route D is open for jeepneys, vans and buses. This is the kind of administrative power that some government transport bureaucracies enjoy and would not wish that such power be taken away from them.

Voters’ attention is focused on the politicians running for elections and whose term will end after three years or six-years. They sometimes fail to see that a big part of their disappointment with government rests with the non-elected and entrenched bureaucrats at the local and national government levels. These are the bureaucrats who have been in government for 10, 20, 30 or more years. They have some power to set policies by issuing administrative orders and ordinances. These are different from laws created by the local and national legislatures, different from Executive Orders issued by the President.

The continued persistence of small and dangerous but government-protected public vehicles like tricycles is somehow a reflection of the government’s preoccupation with something small even when bigger alternatives are available.

See also:

Transport Econ 1: Public Transpo Regulation, December 19, 2007

Transport Econ 2: Small-Scale Monopolies, April 22, 2010

Transport Econ 3: Brand Competition Among Jeepneys and Buses, August 20, 2010

Transport Econ 3: Brand Competition Among Jeepneys and Buses

A friend, Benson Te, posted a good article today, Can Government Prevent Disasters? It's about his reaction to new government moves to further regulate buslines and bus drivers in order to "prevent future accidents."

Benson observed that

regulators are obsessed with rules and NOT with pleasing the consumers. Yet rules don’t and won’t incorporate everything that is known for the benefit of society. The fundamental premise of which anew is the Knowledge problem and of the interest of diverse groups involved in shaping the laws.


So instead of looking for the welfare of their clients or the consumers, industry providers will be forced to pay attention FIRST to comply with the web of laws.

And he made this concluding statement,

you don’t need more government intervention, what you need is more competition and judicious facilitation of tort laws.

I agree with many points that Benson wrote, especially on the role of allowing more competition among more industry players. But I will suggest that we specify and qualify the term competition: that there will be brand competition.

Jeepneys, tens of thousands of them in the Philippines, compete with each other on various routes, but they have no corporate brand, they compete as individual units. Thus, they can be reckless and discourteous (like stopping in the middle of the road) and they risk not losing any credibility or brand reputation.

Bus lines compete on brand: Victory, Five Star, Philtranco, Penafrancia, Dagupan, Ceres, Jam, other local bus lines. When just one bus of any of those bus lines meet an accident, especially involving death to many passengers, the whole brand or the entire bus company is affected. Passengers would shy away from that busline, thinking that drivers of that bus company maybe over-worked and over-fatigued, or underpaid and have low morale, or the company hires undertrained and underqualified drivers, and so on.

With competition among buslines that keep their brand reputation, internal control among bus companies become strict. The pressure to bus drivers not to be involved in any accident -- zero accident goal -- is high. And this protects passengers.

Zero government regulation will be needed there as self-regulation is strict and efficient.

Back to jeepneys. I think either we abolish the Land Transport Franchising Regulatory Board (LTFRB), or we change its mandate to promotional, not regulatory, of transpo franchises. All jeepneys should belong to a jeepney corporation or cooperative, they should belong to a particular jeepney brand. A jeepney brand, say brand A, will have a distinct corporate or coop entity, will have one design, and can field jeepneys in various routes. Operators and owners of individual jeepney units will pay to the jeepney corporation or cooperative, the brand, and the brand will provide various services to the jeepney operators. Like continuing driver education and training, good maintenance of units, advertising the brand to attract more passenger loyalty, etc.

Passengers will remember the brand -- more courteous drivers, they don't over-charge, they follow traffic rules, they don't stop in the middle of the road, more comfortable units, drivers don't overload their jeepneys, etc. Those brands that have ugly record and have no reputation will go bankrupt. Or they will be forced to improve their services to regain passenger loyalty.

There is practically zero government role to improve the services of jeepneys. Government comes in only in disputes like accidents and there are casualties. Government enforces the rule of law -- laws to protect passengers' right to life, right to safe travel.
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* See also:

Transport Econ 1: Public Transpo Regulation, December 19, 2007

Transport Econ 2: Small-Scale Monopolies, April 22, 2010

Transport Econ 2: Small-Scale Monopolies

(Note: this is my article for "People's Brigada News", last week of March 2010)

When we talk of monopolies and oligopolies, people often think of the large ones, like power and energy monopoly, airline and shipping monopoly, telecommunications and water monopoly, and so on. People seldom talk, even "forgive", small-scale monopolies. Like jeepneys, tricycles, and pedicabs or "trisikad".

It is true that there is no single jeepney (or tricycle and trisikad) operator that monopolizes the industry. But they as a group monopolize a particular route. That is, jeepneys from various owners/operators and drivers monopolize a particular route, buses and vans are banned there. Tricycles from various owners/operators and drivers also monopolize a particular route (usually from village gates to the main road), jeepneys, vans and buses are banned in that route.

When a route is granted by the government to be monopolized by buses or jeepneys or tricycles (ie, only one of them can take that route, all other public transportation except taxis are banned), commuters have no other choice except to bring their own cars, or take the cab. Both options are expensive considering the high prices of fuel products, traffic congestions, high parking fees, and dangers of carnapping or towing by some local governments, if one brings his/her own car.

The monopolists almost always do not strive to improve their vehicles anymore. Even if their units are old and dilapidated, smelly and mutilated, they often do not care. They know that non-rich riders and commuters have no other option but take their dilapidated and/or over-loaded vehicles, so why bother and spend money to improve their vehicles? Better use the money to bribe government officials so they will keep the route monopoly and keep away competition from more modern, more comfortable public transpo like air-con vans, new and more modern bus lines.

Take the Ayala-Washington route in Makati, for instance. Ayala Avenue is the country's prime financial district. While there are buses and air-con vans from the northern part of the metropolis that pass this road, there are none coming from the southern part. So passengers from the south get off from the MRT Ayala station and take the jeepneys that ply the Ayala-Washington route. There are no alternative air-con vans, only taxis and the often rickety and smoke-belching jeepeneys.

So you can see in the country's prime and famous financial district, sometimes dilapidated side by wide with new model and expensive cars, competing for road space. What is worse is that jeepney drivers overload their vehicles. A jeepney that can comfortably seat 8 passengers on one side is being packed with 9 passengers, otherwise the driver will not move the vehicle. Again, jeepney owners and drivers do not bother if their jeepneys are smelly and ugly, they are aware that passengers who have no cars and cannot afford to take taxis, have no other alternative but ride their jeepneys.

Some people propose that government should phase out jeepneys and tricycles in many areas of Metro Manila. I do not agree with this proposal because this will involve coercion and charges of government “favoritism”. A better option is that the government will (a) not grant or create monopoly franchises to jeepneys and tricycles in particular routes, (b) allow various options of public transpo, the air-con vans and buses in particular, to compete with jeepneys and tricycles, and (c) deregulate fares. This way, it will not be the government that will phase out -- or at least force the improvement -- of those jeepneys and tricycles, but the passengers themselves. When many people will not ride jeepneys and tricycles, the latter will be forced to either improve their units, or bring down their fares to attract passengers, or abandon the route and bring their jeepneys and tricycles to areas and routes where the vans and buses are either absent or have weak presence yet.

Many countries with big population do not have jeepneys and tricycles, only buses and trains. Even for rich countries with small population, like Singapore, Hong Kong and Malaysia, they do not have small-passenger public transpo like jeepneys and tricycles. They only have buses and trains.

The Philippines need not jump into the extensive and expensive train system. The government needs only to step back a little and de-monopolize certain routes to allow the entry of more comfortable vehicles to serve passengers who do not have cars and are poor enough to take the taxi everyday. Competition among various public transpo providers will empower passengers.

* See also Transport Econ 1: Public Transpo Regulation, December 19, 2007