[ad_1]
The driver shortage underscores the challenge of grappling with pandemic-induced swings in demand and reveals the fragility of a labor model ill-equipped to address them.
By hiring drivers as independent contractors, ride-hailing companies were historically able to offer lower prices than traditional taxis. But the pandemic destabilized this workforce after demand for ride-share cratered and many found other jobs, were better off collecting unemployment benefits, or were more concerned about the risk of infection from being in close quarters with passengers.
Unlike the speed at which customer demand has rebounded, luring back drivers and onboarding new ones to meet demand is taking more time and money than investors expected. After spending hundreds of millions last year to entice drivers back to the platform, a spike in gas prices when the war in Ukraine broke out dealt a blow to efforts, just as companies were scaling back bonuses.
Uber and Lyft, which reached profitability for the first time as public companies last year, are faced with balancing a post-pandemic recovery and profits after years of losses.
The intensifying competition for labor is also revealing the different ways in which ride-hailing giants are tackling the issue.
Uber said it has been making tweaks to the driver app, like unlocking the ability to see upfront fares before accepting a ride, improving maps and removing bugs. Rather than increase incentives, Uber plans to instead focus on its “holistic product experience as a way to attract, engage and retain earners,” Khosrowshahi said.
Unlike Lyft, Uber was able to rely on its food-delivery business Uber Eats, which boomed during the pandemic just as ride share demand plunged. The delivery segment, which includes orders across restaurant, grocery and alcohol, has continued to grow despite indoor dining resuming, with bookings up 12 percent from a year ago to an all-time high of $13.9 billion.
Growth at Uber Eats has also helped funnel more drivers into its ride-hailing business.
The ability to toggle between ferrying meals and people to make money has enticed drivers, many of whom shifted to food-delivery during the pandemic.
“The success there has been very very significant,” Khosrowshahi said on a call with analysts on Wednesday. Active drivers in the U.S. and Canada increased 70 percent in April compared with last year, with new drivers jumping 121 percent, Khosrowshahi added.
“Having a multi-product marketplace really does provide tangible benefits in terms of driver retention, engagement and overall better marketplace liquidity,” said D.A. Davidson analyst Tom White.
In the three months ended Mar. 31, Uber reported $26.4 billion in gross bookings, which encompass ride-hailing, food delivery and freight, a 35 percent increase from the same period last year. Monthly active platform users reached 115 million, just below the 116.6 million analysts expected.
Uber recorded a net loss of $5.9 billion due to unrealized losses from stakes in Didi Global Inc., Grab Holdings Ltd. and Aurora Innovation Inc.
Source link