As of press time, Boston’s Massachusetts Bay Transportation Authority (MBTA) was set to put out RFPs to privatize some of its services, with the reported driver behind the decision being the savings it could realize in vehicle maintenance.
“Typically, maintenance for agency-provided services has remained in house. However, as budgets become strained, the pension legacy costs continue to grow and present a huge drain on available budget dollars,” says Gary Coles, chief sales officer for MV Transportation about the agency’s decision to further explore contracting for maintenance. “In addition to that, the way the private industry makes money in contracting is through increasing efficiency, which can really benefit the agency.”
METRO spoke to contractors about this and other trends in the industry, including the move toward building more robust multimodal systems and the integration of new technologies to increase efficiencies and opportunities to better solve the first mile, last mile issue.
Growth and expansion
While it is atypical that a large number of transit agencies, cities, or municipalities will decide to privatize their fixed-route services in a given year, the contracting industry is still seeing growth in several areas, explains Dick Alexander, executive VP, business development, for Transdev.
“The traditional forms of business are continuing to grow, but it really is the non-traditional forms of business where we are seeing the fastest growth, which includes last-mile solutions such as shuttle services, on-demand transportation, and autonomous vehicles,” he says.
Blaine Rigler, president McDonald Transit and VP, bus services, for RATP Dev North America, agrees and adds that there is also growth as the comfort level with contracting services grows in the public transit industry.
“What we are seeing is that you have agencies that have outsourced pieces of their fixed-route or paratransit businesses already continue to go down that path as they move forward to being 100 percent outsourced at some point,” he says. “So, while fixed-route and paratransit growth isn’t nearly as rapid as in other areas, it is moving forward in a step-by-step process.”
Sharad Agarwal, sr. VP, strategy and innovation, at First Transit, says that so-called “unbundled” maintenance contracts are appearing on the market more often and are at least being explored more and more by public transit providers around the nation. He adds that First Transit also continues to see growth in the university market.
“We are seeing more conversions, but that isn’t abnormal,” he says. “We typically see two or three new universities a year going from either an in-house model or switching from a transit agency operation to the private sector. Typically, they are looking for a new approach to delivering service.”
Agarwal adds that with the large number of colleges and universities around the nation combined with the fact that only about 10% currently contract their transportation services, he sees the trend continuing to grow in that market.
Coles adds that MV is also seeing growth in the university market, particularly in on-demand late-night services on campuses where typical transit or shuttle services may be unavailable or waiting at a stop late at night could be unsafe.
“At Loyola University in Chicago, for instance, a few students had run into issues while waiting on a bus, so there was a demand for the university to offer a safer alternative that operated like Uber or Lyft,” he says. “We were able to provide a customer-facing app that allowed students to see when their ride was arriving, while they remained in a safe environment until that happened.”
In addition, corporate shuttle contracts in, around, and to corporate campuses, and on demand, continues to grow as well, as companies look to add incentives to attract more talent.
Benefits of contracting
“The main reason contracting is a trend worldwide is the pressure on the public finances and the understanding by voters that they want to have the best value for their tax dollars,” says Clement Michel, president/CEO of Keolis North America. “There is also competition for those public dollars, therefore, you really want to do the best for the community and make it the most efficient system possible, which is something contracting can allow public transit providers to do.”
One big way contractors are able to increase efficiencies for public transit is through their vast experiences around the nation, and throughout the world.
“What the outsourcer brings to the equation is a variety of different customers that we work with, which gives us the ability to learn and gather insights from across different agencies and apply those to other locations as needed,” says Rigler.
Agarwal says that experience at other agencies and the contractor’s ability to keep its eye on all the latest trends taking place across the market is a huge benefit.
“Overall, keeping up with the industry is a full-time job, so many of our agency partners may not have access to new technologies or alternative operating models and would benefit from our operating experience in implementing them in other systems,” he says. “Also, while we always jump to talk about the latest whiz-bang items, our operating experience allows us to be up-to-date with the latest in training programs, safety initiatives, and maintenance practices — items that might be overlooked.”
“Lowering costs used to be primarily about service efficiency and labor management. With the increasing reliance on deeply integrating high-quality advanced technologies with service, large contractors are able to share the costs of research, development, and implementation knowledge across transit agencies,” adds MV’s Coles. “No transit agency should be left to bear the full cost or risk of building or figuring out how to apply specific technologies on their own if they don’t have to. They can leverage the fact that there are large contractors like MV piloting different types of technology enabled service in many places at once to lower innovation risks and cost.”
Alexander says that with so many contracts under their belts, contractors like Transdev can also provide cost savings and efficiencies through economies of scale when purchasing parts and capital.
“We buy parts and material on a very large scale worldwide, and some of those economics can be applied to a local agency that might not have the buying power that a large contractor organization can bring,” he says.
Another benefit Alexander adds is the contractor’s ability to respond to an issue with more agility than a typical public transit agency could. Part of that agility includes transportation experience in a number of different modes, which may enable a company to provide its agency partners with innovative solutions for tackling challenges, according to Keolis’ Michel.
“With our experience operating systems around the world, we can look at the demand for mobility in a territory and community, and then, propose the best solution to that problem, whether it be mass transit, on-demand transport shuttles, or bike- or car-sharing,” he says. “We always say we are ‘mode-agnostic and passenger-centric,’ so whatever is the best solution to a transportation issue is fine with us.”
The contractor industry’s expertise in various modes of transportation is currently enabling innovation that has never been seen in the public transportation industry before.
At Transdev, for instance, the company helped implement a solution for Tampa, Fla.’s Hillsborough Area Regional Transit Authority, which extends the reach of the transit system through the critical first and last legs of each trip. The app-based, on-demand service is the first transit agency-operated rideshare program in the nation.
The company also helped launch an innovative program at the Kansas City Area Transportation Authority — RideKC Freedom On-Demand — that enables paratransit customers to schedule TNC-like, on-demand trips via an app or by calling the agency’s service center, allowing ADA passengers more freedom of mobility.
“The advent of the smartphone has really made it possible for us to do things differently, because it’s much easier to track requests from customers and dynamically schedule that service,” says Alexander.
At Keolis, the company is creating new models around the world, including in Dijon, France, where they currently operate the light rail, tram, BRT, fixed-route buses, and on-demand systems, and are in the process of implementing autonomous shuttle and bikesharing, as well as taking over car park and on-street parking systems. Keolis has also created a unique app for the area that helps riders figure out how to get from point A to point B across all modes of transit most efficiently and affordably, while also providing information on the health benefits of various transit options.
“We do public transport at Keolis because we want to make a better world and we want more sustainable communities, because we want to enable growth of the communities we serve,” says Michel. “And, we do that better when we are incentivized to grow ridership.” Michel adds Keolis is close to completing its first contract in the U.S. that will incentivize the company to grow ridership, similar to contracts it operates in France and throughout Europe.
Travel innovation doesn’t end at public transportation, however. MV recently formed a partnership with Amazon where they are running their commuter, campus, and on-demand shuttle systems. The system utilizes data and analytics to not only optimize employee travel to and within campus, but also to determine the most cost-effective mix of options.
“Amazon employees use an MV-developed app to book their on-demand rides during the day, eliminating some of the costly and inefficient fixed routes that were in place prior to MV’s solution,” explains Coles. “The net effect is a service that is built around passengers and their needs, which must, by nature, be as dynamic as the passengers themselves.”
One solution all contractors are bullish on is autonomous shuttles, with each being part of the demonstration and implementation of the technology throughout the world, as well as in the U.S., where they are currently in demonstration mode of the technology.
“There really is a tremendous amount of interest,” says Rigler. “We are seeing more and more expressions of interest and RFPs to learn more about the technology in progressive cities, like Austin, Texas and Bloomington, Ind., where they are really on the front-end of trying to understand how they might deploy these vehicles sooner than later.”
While much has been made in the news regarding autonomous cars and even autonomous buses, what contractors are looking at implementing in the short-term are low-speed electric autonomous shuttles capable of circulating people in closed environments.
“At this point, it’s not necessarily a replacement of traditional bus service,” says Rigler. “Instead, it may be ideal for universities to shuttle students around campus or in office complex environments or hospitals, where you have large parking lots with a long walking distance from the lot to the building.”
Agarwal adds that such shuttle-type applications, which are already being piloted, are very close to actual implementation.
“From a technology and manufacturing level, autonomous vehicles are ready to be commercialized, so I’d say in the next 12 months you will start to see a lot more actual revenue service in closed-type environments,” he says. “The technology is there, it’s now about the regulation and if they will have a driver onboard or not.”
Looking at autonomous shuttle vehicles as a way to solve the first mile, last mile issue, First Transit recently signed an agreement as the exclusive transit operator partner at GoMentum Station, which will foster research and innovation in the field of shared autonomous vehicle application and technology research.
Part of the GoMentum program is to deploy up to 150 autonomous vehicles that will be used on feeder routes in hopes of doubling ridership on Calif.’s Bay Area Rapid Transit rail system, while eliminating the need to drive to and from a station.
“California is working with the various partners to figure out testing and timing, with projections being that we are about 18 to 24 months away from implementation,” Agarwal says. He adds that the industry is also a few years away from implementation of large autonomous buses on fixed-route environments, which will be at much higher speeds with more traffic.