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Japan-Update

Three-hour delay mars launch day of Tokyo taxi-sharing trial

New app services need much improvement if they are to gain popularity

Daiwa Motor's taxi-sharing app helps users find fellow riders leaving from the same departure point.

TOKYO -- A trial of Japan's first taxi-sharing apps has got off to a rather clumsy start, revealing a range of issues the services will need to overcome if they are to gain widespread popularity.

Two major taxi companies in Tokyo, Nihon Kotsu and Daiwa Motor Transportation, last week launched seven-week trials of their smartphone apps that allow customers to find other riders to share the cost of taxi trips.

Even before the tests began, some obstacles were beginning to materialize, including potentially long waiting times to find other passengers heading in the same direction and psychological barriers, with many people uncomfortable with the idea of sitting next to a stranger in a cab.

When this reporter decided to try out the apps, the first setback was the weather. I had installed the Nihon Kotsu app on Monday, when the trial was originally scheduled to start. But unusually heavy snowfall over the capital pushed the launch back by two days.

So, at 9 a.m. on Wednesday, ready for my commute to work, I booted up the app to see its benefits and shortcomings for myself.

Nihon Kotsu's app works in a similar way to UberPOOL, the sharing function offered in other parts of the world by Uber Technologies. Customers will specify a pick-up and a drop-off point on the map, and the app will automatically find another rider going in a similar direction.

My location appeared on Google Maps. I selected a place near my home as the departure point and my workplace in central Tokyo as the destination.

The app estimated the ride would cost about 2,890-4,100 yen ($26-$37). I requested a shared cab ride, while choosing not to use a toll expressway or any of the other options available, such as traveling with a suitcase.

Slow progress

A notice appeared on the screen saying I would be told by 9.45 a.m. whether I would get a shared ride on my terms. If there was a would-be fellow passenger the app would tell me so, show the fare and other terms and ask me to confirm my request.

However, by the time 9:45 a.m. had rolled along, the screen flagged up the disappointing news, "no sharing arrangement has been made."

I tried changing my destination to make the journey shorter, but to no avail. There were apparently not many people using the service on the first day -- perhaps partly because of the launch delay earlier in the week.

I decided to cut my losses and switch to Daiwa Motor's app.

For those familiar with Southeast Asian ride-hailing app Grab, Daiwa Motor's app works like car-pooling service GrabHitch, but instead of private car-owners, taxi drivers will pick you up.

It operates more like a classified ad for people looking for co-riders, with the app allowing customers to either post their ride schedules, with their pick-up point chosen from pre-designated locations, or choose from a list of rides already posted by other riders.

Users are notified when there are others willing to share a cab with them. Co-rider requests must be posted at least an hour before the departure time, and can be made up to seven days in advance.

I posted my ride request shortly before 10 a.m., designating the pick-up location closest to my home and 11 a.m. as the departure time. But nobody responded.

Instead, requests for co-riders on late-night trips to Tokyo's Haneda airport started appearing on the screen. It appeared that Daiwa Motor's app might be more useful for pre-scheduled rides.

Giving up on the idea of sharing a taxi to work, I was heading for the subway when I spotted a post for a ride from a bus station not far off to a park near Shiba departing at 11:45 a.m. This seemed like a convenient enough route for me, so I responded, but my request was rejected apparently because our directions of travel were slightly different. I changed my destination to another centrally-located station and finally made a match.

As I was waiting for my co-rider, a man approached me asking if I was a news reporter. It turned out my co-passenger was a writer for another newspaper, presumably also trying to report on his experience of taxi-sharing.

I paid 1,150 yen for the shared ride, for which I did not receive a printed receipt. Although rides are recorded on the app, the lack of hard-copy receipt could be troublesome for business users when claiming expenses if their company only accepts printed ones.

To check how much cheaper my shared ride was, I returned to my departure point and took a cab to the same destination, this time on my own. The ride cost me 1,290 yen -- only 140 yen, or less than a dollar, more than the shared ride.

While the operator claims the service will offer savings of up to 40% on shared taxi rides, my experience showed the discount might not be much on short-distance trips.

Lack of users

By 5 p.m. on the first day, only a few customers managed to find co-riders for trips on Daiwa Motor's app, according to the company. This might suggest there is not much demand for the service during mid-week daytimes.

But what is clear is that, for now, these taxi-sharing apps lack riders -- a critical component for their success.

In other countries, competitors like Uber and Grab have offered substantial discounts to draw more riders to new services, such as when they first launched ride-sharing functions on their apps. On Grab's website, for example, the company is offering a discount of 7 Singapore dollars ($5.35) for the first two rides on their GrabShare service. These discounts make shared rides even cheaper, helping app operators attract the critical mass to match riders and shortening waiting times for users.

The seven-week trial in Japan is a way for the country's taxi industry to revamp in response to international competitors like Uber, Grab and Lyft, which are becoming increasingly popular overseas with their wide array of ride options.

"To be honest, we do feel worried that the popular opinion in Japan will push to bring private car-hailing apps [like Uber] in the country," said Ichiro Kawanabe, chairman of Nihon Kotsu and the Japan Federation of Hire-Taxi Associations, at a press conference last week.

Unlike China and the U.S., private car-hailing services like Uber and Lyft are essentially banned in Japan. Kawanabe cited a number of issues with these ride-hailing apps, including a lack of clarity on who is accountable for accidents and battles with local authorities over tax duties. "These services seem attractive for their convenience and their cheap fares, but I believe they are not the best option in Japan, where taxis are known for their high-quality services," said Kawanabe.

The industry has traditionally been heavily regulated in terms of its fares and the number of cars on the road. But there are signs of change. In 2017, taxis in selected areas of Tokyo lowered their minimum fare from 730 yen to 410 yen. The ongoing taxi-sharing trial is among many other attempts at reforming the industry to suit the demands of customers today.

But it seems there is still a long way to go before taxi-sharing apps come in to widespread use here. The service may not be suited for rushing commuters due to their uncertain, and often long, waiting times. And while taxi-sharing could be better suited to elderly people, many of them are not familiar with smartphone apps.

Perhaps for now, the service should target late-night riders who missed their last train home, or visitors to large-scale events that result in many people traveling in the same direction.

Nikkei staff writer Tomomi Kikuchi in Tokyo contributed to this report.

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