Gig economy drivers took a big hit when the nation shut down because of COVID-19 in early 2020, but many have bounced back, and some have even thrived, according to a report from Gridwise, a rideshare and delivery assistance company.
Ryan Green, co-founder and CEO of Gridwise, told Modern Shipper that the supply of gig drivers is still about 40% below where it needs to be at this point.
“From the supply of drivers as soon as the pandemic came in March, by April we saw a 65% decline in drivers for ride-hailing services,” he said. Some, he said, switched over to delivery services, especially as demand for food delivery skyrocketed. Food delivery, though, was paying as much as $2 less per hour than rideshare, Green added.
“The ride-hailing drivers that continued to drive were making a median of up to $18 an hour while the food service drivers were making $16 an hour,” he noted. Food delivery has continued to be lower-paying than rideshare, Green added.
“I think you’re seeing demand exceed supply in ride-hailing, and you’re seeing supply exceed demand in food delivery,” he said.
Green added that during the height of the pandemic, many drivers may have chosen between the two — with ride hailing seen as higher risk. The flip side, though, is that many restaurants try to “batch” their food deliveries to reduce costs, so while it is safer, a driver is performing multiple stops at a lower overall rate.
Gridwise recently published a report, “Insights into the Ride-Hailing Industry in 2020,” that said both ride-hail supply and demand declined rapidly at the outset of the pandemic, driving down driver wages, and while demand started to pick back up in April 2020, supply did not follow as quickly. This forced ride-hailing services to implement surge pricing to attract drivers.
According to the report, which anonymized trip data from Gridwise’s network of more than 200,000 ride-hail drivers in the U.S., median driver earnings per hour fell from $18.52 the week of Feb. 24 to $10.96 per hour the week of March 16 before rebounding. By the June-July time period, the rate reached $18 per hour again, before dropping yet again through the remainder of the year as second and third waves of the pandemic started spreading across the country.
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Green said that the supply of drivers that rideshare companies built up heading into the summer suddenly was too great for the demand in the second half, depressing rates.
“What you did see was a big boost in driver earnings per hour [early] so those drivers that were out on the road in the summer [did well],” he said. The peak was in summer, but that “just continued to decline … correlating directly to a decline in [driver] incentives. As the second wave came around, there was a decrease in demand, and service providers had built up supply, so now there was no [reason for incentives].”
In its full-year earnings announced on Feb. 9, Lyft (NASDAQ: LYFT) reported a revenue decline of $1.2 billion to $2.4 billion in 2020. It also said Q4 ridership dropped to 12.5 million, down 45% from Q4 2019. For all of 2020, Lyft saw 54.9 million riders, a drop from 87.5 million in 2019.
Uber (NYSE: UBER) also posted declines, with mobility-related bookings at $6.79 billion in Q4, off 47% year-over-year. Uber offset some of the decline thanks to its Uber Eats and Uber Freight divisions. Uber’s Delivery business, which includes Eats, saw a 66% year-over-year increase in merchants on its platform and posted 128% growth in gross bookings in Q4, reaching a $44 billion run rate by December. Uber Freight posted year-over-year growth with revenue of $288 million in Q4, up 8.6% over Q3.
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Lyft is looking to expand its B2B business, hoping to provide options for retailers looking for on-demand delivery services, and diversify its revenue streams.
Gridwise allows rideshare and delivery drivers to track their operational performance, including mileage. The company’s app will analyze earnings across rideshare and delivery service platforms and allows drivers to quickly switch between app services. Community comparisons allow drivers to compare their individual performance against other drivers in the area, and for tax purposes, the Gridwise app can help prepare the necessary tax reports.
Detailed airport information, including the number of passengers coming and going, and airport queue times, are also available, and local area events such as large sporting events or concerts that may drive up rideshare need are accessible through the app. Traffic and weather alerts are also available.
The Gridwise report also found that tips declined in 2020. In January 2020, tips were slightly above 25% but fell to 15% in April. Like per-hour wages, they rebounded in the summer to above 20%, but by the end of 2020 had dropped to 20%.
2021 outlook
Green touched on the outlook for 2021, noting that he thinks the industry will exceed “pre-COVID levels, and that could be as early as Q4. He pointed to Uber’s global footprint as a blueprint. In countries such as Australia, Uber is seeing activity above pre-pandemic levels.
“Those countries are exceeding pre-COVID levels, and why [I think] we are going to exceed pre-COVID levels is it’s going to take a long time to get people back into [public transportation],” he said.
While more companies shifting to remote work permanently could hurt rideshare, Green believes people will venture out more for entertainment purposes once vaccines are widespread.
Click for more FreightWaves articles by Brian Straight.
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