How do you make money in the people transportation industry? You probably want to transport as many people as possible. This is harder than it sounds. Like all other businesses we see that transport operators are constrained by two forces: demand and supply. There are limited amounts of customers demanding transport and operators have a limited number vehicles available that can supply rides. This should be obvious to everyone, but we can follow this abstract train of thought to some weird, useful places.
Companies work every day to overcome demand and supply constraints. Usually they purchase more vehicles and then try to “get” more customers. In the NEMT sector, getting more customers means getting more contracts with hospitals, clinics or brokerages. You can apply the same formula to most people transport operations. This path is laudable, but if it was easy then there would be huge transportation companies everywhere. This is not the case. These days transportation companies have some of the highest failure rates in the American business world. Things are tough out there, growth and traction are elusive, the economy still sucks, competition is everywhere, while technology and market trends keep changing.
In the face of challenging conditions the savvy operator tries a roundabout way to transport more people. All you have to do is push the equilibrium of transport supply and demand upwards. How can you simultaneously push up demand for transportation while also increasing supply? It is simple actually, you multi load your vehicles.
Multi loading is, first of all, not always possible. In instances where you are transporting people in need of intensive care, who are in stretchers, or customers who are naturally reluctant to share a service which can sometimes cost them hundreds of dollars. The government adds further complications to multi loading. Some states have recently enacted regulations that do not allow for multi loading of trips paid for by medicaid. This is not a deal-breaker for multi loading but transportation companies must give people a clear choice to share their rides. People like options, and they like options even more if they provide value. Where is the value of multi loading? Well, you can hear our resident expert, Daniel Kain, explain the value of a vehicle to transportation operation here. But there is a simpler value, if you can multi load your vehicles you can make trips economical for people who would otherwise never consider using your service.
A company might have to charge a rider $30-$40 , or even more, depending on the service, just to break even on every trip. Not everyone will pay that regularly. But if you can divide that fare between three people, the trip becomes much more affordable for all those people. Suddenly you have cut the price of transportation. The ability to multi load increases a business’s potential market size and it does it cheaply. Normally vehicles in a people transportation fleet are driving around with unused capacity, the average capacity for NEMT can be also low as 20%. The bigger the vehicles and fleet, the more wasted capacity. If you listen carefully to your vehicles driving around with only one paying customer you can actually hear the sound of money burning.
Obviously the ride sharing experience must be smooth and easy for both the business and the riders. This is where operators do have to spend money, organizing multi loading on a day-to-day basis requires software that can route and dispatch quickly. The direct user experience can be facilitated via smartphone apps, aided by professional drivers, and a small staff of dispatchers who only have to handle customer service and system exceptions. This is not impossible, already lots of companies do these types of transactions every day.
Multi loading done correctly is a licence to print money. Either you have fewer vehicles on the road making the same number of trips or you have more vehicles and more trips. It is hard to do but there are tools out there that make it possible, even for large complicated fleets and operators. For more information on how you can multi load your fleet, reach us at firstname.lastname@example.org.
Photos: Top: Oleg Zaytsev | Flickr Center: Thibaud Furst | Flickr