SINGAPORE — After a rollercoaster year in the ride-hailing market marked by the Grab-Uber merger, Indonesia-based firm Gojek burst onto the scene in late 2018, raising commuters’ hopes of cheaper fares and a return of the much-loved promotional codes.

Flush with cash from investors, Gojek began beta trials here in November in a much-anticipated move that is set to reignite competition in a market dominated by Grab. Following Uber’s exit in May, Grab drew the ire of commuters and drivers with its withdrawal of promotional codes for riders and lower incentives for drivers.

While 2019 is looking to be a better year for commuters, experts warned that they will need to temper their expectations, as Grab and new entrant Gojek are unlikely to engage in a bruising price war to win over customers.

Instead, they are likely to take a more “cautious approach” in vying for market share, said industry observers. Bringing value to customers and improving their services will be the key focus of their strategies, and they could offer subscription packages or discounts on services such as food and courier delivery. Both firms will also aim to speed up waiting times for rides to attract and retain customers.

On the drivers’ front, increased competition to recruit drivers would likely see Grab and Gojek dangling incentives and wage subsidies, said experts.

While the ride-hailing market is set to heat up in 2019, the bike-sharing scene has hit the skids after three operators — GBikes, oBike and ShareBikeSG — bowed out of Singapore last year. China-based firm Ofo is reportedly facing serious financial problems back home. TODAY reported that its Singapore office owes at least two vendors more than S$700,000, while former and current employees have not been paid thousands of dollars in claims.

A new licensing regime by the authorities resulted in a clamp down on fleet size and hefty operating fees for firms, and some users are complaining that it is now a hassle trying to find a bicycle.

GRABBING A PIECE OF THE PIE

While Gojek’s arrival here is expected to level the playing field, the ride-hailing industry’s two biggest companies will be adopting different strategies from the onset.

Gojek Singapore's head of operations Chua Min Han told TODAY in a recent interview that it would be dishing out “competitive prices”, and Grab has maintained that the Singapore-based company would avoid engaging in an “unsustainable” price war.

Associate Professor Lawrence Loh from the National University of Singapore Business School said that the ride-hailing scene looks set to become a “2G” market in the near future, with Grab having an advantage due to its “first-mover” status here.

While there could be “peaceful co-existence” between the “two giants” in the short term, transport expert Park Byung Joon from the Singapore University of Social Sciences (SUSS) cautioned that it is tough to predict how the competition would play out given the fast-changing nature of the ride-hailing market.

SUSS’ transport economist Walter Theseira noted that Grab may not want to engage in a price war, but it may have no choice and has to compete on price if it sees its market share eroding quickly. 

This is because the ride-hailing industry is still in a catch-22 situation, where there is “tension between doing what is sustainable in the long run versus turning in numbers to satisfy investors”, he said.

“As long as the industry is still in investor mode, both Grab and Gojek will still be under pressure to produce near-term results,” added Dr Theseira.

Instead of widespread discounts, Grab could hand out more “targeted” promo codes to woo and retain customers. Both firms will also focus on improving the commuter experience by “improving availability and wait times”, said Dr Theseira.

Grab and Gojek will likely aim to give customers better value in the form of enhanced loyalty rewards programmes or discounts for other services such as food and courier delivery, said experts.

Grab has its own ride reward scheme called GrabRewards and a courier service, GrabExpress. Its food delivery service GrabFood was integrated with the now-defunct UberEats when it acquired Uber in March.

Gojek has indicated its interest in moving into similar territories in the lead-up to its full launch, expected early this year.

Assoc Prof Loh said that it will not be “rocket science” to venture into these areas given Gojek’s experience in Indonesia, where its services include food delivery, massage and payments.

How long Grab or Gojek will last depends on how well it provides a “full spectrum” of services, as “they will have to compete beyond ride-hailing,” noted Assoc Prof Loh.

WHAT ABOUT OTHER PLAYERS?

While the bigger players gear up for the battle ahead, the smaller firms will continue to plow on after seeing some growth last year.

Since launching in July this year, blockchain-based ride-hailing application Tada now has more than 27,000 drivers and more than 170,000 users on its platform.

Mr Kay Woo, founder and chief executive of MVL, the company behind Tada, told TODAY that he sees the firm as a “stabiliser” in the industry.

Tada’s goal is to provide drivers with a “sustainable” livelihood via its zero-commission model, which Mr Woo believes will give Tada “comparative advantage”.

Another ride-hailing outfit, Ryde, said that it has grown “ten fold” in the last year. Its head of operations Shaun Wu said that its new courier service — RydeSend — has also chalked up more than 1,000 deliveries since it was launched in August last year.

However, observers are not optimistic about the smaller players making a significant dent in the market as they lack scale and have “little financial backing”.

“Unless a small app is able to make ends meet on the share of the market it does have, I don't think the smaller apps are going to be here for long,” said Dr Theseira.

He added that the bigger firms would be able to “indefinitely tolerate small players with insignificant market shares that show little signs of growth”.

BIKE-SHARING HITS ROAD BUMP

Once touted as investors' darlings, bike-sharing firms saw an unprecedented boom in Singapore in 2017. But the surge in the number of bikes littered on the streets prompted the Government to tighten regulations by clamping down on fleet sizes and making firms fork out operational fees.

The sudden exit of three bike-sharing companies cast a spotlight on the viability of the industry’s business model, which is costly operations-wise and relies heavily on investments.

The new licensing regime has also caused inconvenience to some users, who complained that it is now a challenge trying to find a shared bike.

Mr Nicholas Tan, 27, who uses shared bikes regularly, said that it is almost impossible to find one around his estate in Tampines now, compared with earlier in the year when they were “everywhere”.

“In the past, I would be able to see many bikes in the immediate vicinity once I exited the (Tampines West) station, said Mr Tan, who works in the creative industry. “But now I really cannot find any. I am now thinking of deleting my Ofo app, since the company seems to be in trouble in China.”

Dr Theseira said: “While many shared-bike operators have blamed licensing for their reasons to withdraw, the reality is that investors are taking a hard look at the industry and have realised that the road to profitability is uncertain, and utilisation of shared-bikes is poor.”

The New York Times reported earlier this month that Ofo has had trouble raising money from investors, based on a letter its founder Dai Wei wrote to employees. The company pulled out from several overseas markets, including the United States, this year just months after making its entry.

WHAT’S UP FOR 2019:

Rail reliability expected to improve in 2019

• Commuters can expect “vast improvements” in rail reliability in 2019, with Transport Minister Khaw Boon Wan saying that trains are on track to meet rail reliability targets in 2020. Mr Khaw had set the goal of ensuring trains travel one million train-kilometres before there is a delay of more than five minutes, a measurement known as the Mean Kilometres Between Failure (MKBF).

Renewal works on aging train lines

• All 25 trains plying the North-East Line will undergo major enhancement and renewal works beginning 2019. Upgrading work will include installing a new condition monitoring system to track train performance more closely, upgrading the trains’ air-conditioning and replacing interior fittings such as seats and flooring. To facilitate the works on the 15-year-old train line, there will be early station closures starting January 2019.

Rail network expansion

• The first stage of the Thomson East Coast Line will be opened in 2019. The 31-station line, which stretches from Woodlands North to Sungei Bedok, will connect commuters in the eastern region to the city centre, as well as those living in the Woodlands and Thomson areas. The Canberra Station on the North South Line is also set to be opened.

E-scooter registration to begin January 2

• Electric-scooter owners must register their devices by the end of June under new stipulations by the Land Transport Authority (LTA). Registration begins on Jan 2, and those who fail to register their e-scooters by the deadline may face a fine or jail. The registration fee of S$20 is waived until March.

Land Transport Master Plan 2040

• The advisory panel for the Land Transport Master Plan 2040 are expected to present their recommendations in early 2019. Chaired by Senior Minister of State for Transport, Dr Janil Puthucheary, and 14 other representatives, the panel began gathering feedback in August last year. For a start, it sought feedback on how to make land transport more sustainable through promoting walking, cycling and riding as the preferred travel modes.