Saturday, September 27, 2008

The Systematic Problems of Public Transport



A few weeks ago, I have given my first public speech at Hong Lim Park with regards to our "World Class" Transport System which is organized by TOC (The Online Citizens).

The following are the few points I raise and I have added a few thoughts thereafter. My whole speech central around the following 4 points.

1) Business Model
2) Economic Model
3) Efficiency
4) City-town planning

Business Model

1) Transport companies should not focus on getting profit from fares alone. In fact, if any transport companies thinks that it could make huge profits by charging higher fare, then the CEO should be sacked. If you have noticed, transport companies in HK, especially MTR, even the mini-bus, earns quite a bit from advertising. The business model should be similar to free software or services provided by Internet companies.



The main focus of public transport companies should be focusing to increase their customers' ridership. This is basically because advertising dollars depends on the number of commuters using their public transport services. With the prospect of increase in commuters, companies will be more willing to advertise their products with these public transport companies. This is the main reason why even Internet companies could make huge profits even without charging the massive usage of their services and software by the users. Examples are Yahoo, Google, MSN....etc. The list goes on.




Thus the priority of public transport companies should be looking into ways to increase ridership, not because they could collect more fares in return, but rather, they could increase their attractiveness as an advertising medium. This could be achieved by two main ways.



First, REDUCE fares, instead increasing fares. In my view, in Singapore's context of high cost of maintaining private cars (more ERPs, one of the highest petrol prices in the world..etc.), reducing fares may well increase ridership.

Secondly, increase efficiency and effectiveness of their public transport services. These could be achieved by increasing frequency of their services, instead of reducing their frequency in the bid to "cut cost", in the name of optimization.

I will deal with these focuses, but now, there is another macro problem we must look at before we go into efficiency and effectiveness.

Economic Model

2) To have sufficient advertisers in any economic model, competition is the paramount necessary condition. For example, you will not hear SingTel advertising back in 1980s basically because it was the only monopoly in the Telecommunications market. When more companies were allowed to compete in the market, advertising for Telecommunication services would increase substantially. In Singapore’s context, the problem with our economic model is that we have too many monopolies and oligopolies (few dominant companies dominating the whole industry) within the system.i.e. basically, GLCs dominates the whole economy.

Thus, unlike Hong Kong, there isn’t a huge group of SMEs with their own brands to put up advertising resulting in limited advertising dollars for the whole market. For example, for the Mooncake festival, Hong Kong would have quite a massive number of advertisement from the local various SMEs on MTR (train system) but in Singapore, we could hardly see any, or rather, I don’t see any.

This is a long lasting structural problem with our economy in which Government Linked Companies or companies with symbiotic relations with the ruling party are allowed to dominate and even crowd out competitors.

In Hong Kong, the Hong Kong government does not get involves in running companies or businesses within the economy as it would always be perceived as potential conflict of interests between a regulator vs those being regulated.

These Government Linked Companies are creating more structural problems than we could imagine. This leads to the following potential problems of Efficiency.

Efficiency

3) The government is the largest shareholder of local transport companies. There is basically a conflict of interests here, between the companies that they are supposed to regulate and the fact that they are the regulator themselves.

The PTC is set up to monitor fare hikes but the members of PTC includes members from the transport companies. The proper set up should include consumer representatives, opposition party members (or MPs) and business consultants. The transport companies could only be submitting their request and making their presentation on why they need a fare hike without any voting power within the PTC itself.

The PTC should be setting the service standards like timing or frequency for the transport companies during peak and off peak hours. In a small country like Singapore, it is really hard to imagine that we need to wait for more than 30 mins for a bus during off peak hours when someone just mention that we only need 20 mins to travel from any point to another point in Singapore. That is a bit ridiculous.

There is a lack of critical fundamental investment in the whole public transport system. We do not need fanciful stuff like satellite tracking system when the frequency of our bus system is comparable to third world country. While cities like Hong Kong have invested in more practical aspects of technological applications like location announcement system within the buses as well as the trains, more advanced rail track signaling system for the train that increase frequency, Singapore has not improved at all even though we pride ourselves as a technological advanced country.



Just to illustrate this point about more practical information system for the public transport. If you take a train, most likely it would be too noisy to hear the public announcement of the arrival at the various stops. In Hong Kong, you will have a visual LED system which will indicate which stop the train will be arriving and which door you should alight at. On top of that, it will show you at that stop, which train station you could alight and change to other train service lines. It is hard for you to get lost in the train system. Similarly, for the buses, right before the next stop, there will be visual LED screen indicating the stop location.

Furthermore, I do no think our train system is designed to cope with 4.5 million population, least 6.5 million. We have only 6 cabins in the train while Hong Kong MTR has 8 cabins. And the frequency of our train service is lower than Hong Kong, be it peak or off-peak hours.




On top of that, in order to cope with the huge massive number of commuters, Hong Kong train stations usually have more than one exit from the station building. This is to disperse human traffic flows. They have far more escalators in some of the busiest stations than ours. Sometimes, they would have two to three gate entrances and exits.




The most interesting part of the train system is that Hong Kongers are very practical and conscious about efficiency. Even small things like the Octopus Card (equivalent to our EZ-link card) top up machines, they do not need you to press buttons here and there before you could apply the right procedures like using Nets or paying cash. They would immediately wait for you either to swap your bank cards or insert your cash into the machine. Very straight forward. After you have finished with it, just press a button to retrieve your card. On the other hand, they will have a dedicate machine for you to check your balance card values as well as the charges you paid for the last 3 trips. Machines solely for that purpose so that you don't crowd out the other machines for such simple tasks.

All these designs have allowed the train system to cope with huge human traffic flows and increase in its overall efficiency for the consumers.


City-Town Planning

4) The city -planning model of Singapore affects the efficiency and effective use of public transport. You don’t find many high rise flats in town centres in Singapore which are also transportation nodal points. Instead, they like to plan so much that they have spread out the HDB flats but the Town Centre, ironically, nearest to transport services, were lack of residential flats. You can observe in HK that at every each main MTR stations, there will be many flats built above or just next to the stations, along with shopping malls and such. That is why it is very convenient for commuters and in return, it helps to secure high ridership. But here, we are made to stay far away from the transportation points, forced to take those inefficient feeder buses or worse, the light rail. Besides all these, MTR in HK have income from some of the building and managing estates right near their various stations.

The most typical failures of our town planning are demonstrated by the Punggol-Sengkang estates as well as the Ang Mo Kio Hub situated right next to the AMK MTR station.

In spite of launching the Punggol 21 vision one decade ago, land right next to Punggol MRT station has been left vacant until recently. Almost all the prime lands next to MRT stations are being monopolize or dominated by other GLCs. The SMRT, though a GLC itself, should have the first priority to develop the land near its stations basically because if it integrates the land use with its strategic needs to increase the efficiency of the public transport model, it could well be positioned to do so. In effect, it could cross subsidize the public transport commuters by having more income sources to cover the operation costs of the public transport system.

This is the kind of model that we should seriously consider to implement. There would be a need to reinvent and revamp the whole strategic thinking for the public transport system. Instead of focusing on increasing fares, cost cutting by reducing frequency and such, they should be focusing on how to increase utilization of the system and increasing revenues by virtue of the massive crowds they command. They are in the business of Mass public transport but they should be earning more from the MASS part instead of the fares collected from the TRANSPORT part.

We have a self proclaimed a highly paid First World Government who keeps boasting about building a World Class Public Transport System. However, for those of us who are well traveled to gain enough foreign exposures, I would say that our present Public Transport System is far from being World Class. Maybe not Third world standards, but it is definitely not World Class. There are much rooms for improvement, from city planning to realignment to the new business model.

In time to come, we will be facing a critical strain, overcrowding and crunch on our present public transport system if the relevant authorities do not act pro-actively to face the increase of population size due to huge influx of foreign workers. There is an urgent need to rebuild or re-evaluate the present structural deficiency to increase efficiency and capacity.

I do not think the fare increase in the coming month of October is justifiable if we do not see any moves or efforts by the public transport companies to come up with a solid blueprint on how they are going to improve their overall service efficiency.

Well, this is just life in Singapore as the masses will just suffer in silence.

Goh Meng Seng

4 comments:

Anonymous said...

On your business model, you say that transport companies should increase ridership. Why is it so when commuters are already squeezed in buses/trains?

Goh Meng Seng said...

To Increase ridership, you will have to expand capacity, instead of lowering it.

This is already explained in terms of efficiency management.

As I have mentioned, Singapore's train system is not well designed to accommodate to 5 million people, least 6.5 million. This is because we only have 6 cabins, instead of 8 which HK has.

To increase capacity will have to depend on increasing frequency.

Goh Meng Seng

Anonymous said...

During peak hours, I thought trains coming at every 2 min is already pretty optimum. Maybe, what need to be answered is the shortest possible inter-arrival time for SG MRT system (not HK) without affecting the travelling speed.

Anonymous said...

i agree. 2 mins is the max our signalling systme can support. Also, don't the new trains have the LED lights to tell u the next stop and which side to get out from?