Assessment of Capacity and Earnings in Point-to-Point Transport Sector

Ms See Jinli Jean asked the Minister for Transport (a) whether the Government monitors the trend in the number of drivers in the Point-to-Point (P2P) sector on the road in the past year; and (b) if so, what is its assessment on how the supply of P2P drivers compares with the demand for their services.

Ms Yeo Wan Ling asked the Minister for Transport (a) whether the Ministry monitors the earnings of point-to-point (P2P) taxi and private hire car drivers; (b) if so, what is the average trip fare earned by such drivers in the second quarter of 2024; and (c) how does this compare to previous quarters in 2023.

Thank you. The point-to-point transport, or P2P, sector complements our public transport network, with an average of 606,000 daily trips made by some 67,000 taxis and chauffeured private hire cars, or PHCs, in 2023. We watch developments in this sector closely, but the Government does not set fares for the P2P sector, as these are determined by the P2P operators, based on market competition.

We also do not cap the number of P2P drivers, but instead allow the supply of P2P drivers to move in tandem with commuter demand and price signals. The appropriate level of supply for the sector depends on the level of commuter demand and the fares that they are willing to pay. When demand is higher and fares increase, we can expect more drivers to enter the market. Conversely, when there is an excess supply of drivers, fares will drop and some drivers may decide to exit the market.

Following the easing of COVID-19 measures in March and April 2022, demand for P2P services rose along with other transport services, which led to higher fares from surge pricing. In the past two years, P2P operators had also adjusted fares to help drivers cope with higher operating and fuel costs, such as the temporary driver's fee implemented by ride-hail operators and the increase in taxi fares and surcharges by street-hail operators.

In response to higher fares, more drivers entered the market. Between the second quarter of 2023 and the second quarter of 2024, the number of active PHCs and taxis increased by 8%. However, the average daily number of P2P trips increased by only 1% during the same period.

As a result, P2P fares and consequently drivers' earnings have moderated. From a peak at the start of 2023, average surge prices and net ride-hail fares had declined in the first half of 2023, back to levels we saw in the first half of 2022.

P2P fares are also subject to seasonal fluctuations in demand. In months where there are major events, such as the Taylor Swift and Coldplay concerts in the first quarter of 2024, or during festive seasons, such as Chinese New Year, there tends to be an increase in travel among locals and visitors, which leads to higher P2P demand and higher fares. Conversely, demand tends to decline during the school holidays where many Singaporeans are abroad. These seasonal effects are another source of fluctuations in drivers' income.

The Land Transport Authority (LTA) understands the concerns of the affected P2P drivers. As part of the ongoing P2P review, we will continue to look at ways to support the smooth and efficient functioning of the market. These include measures to reduce operating costs, such as the extension of the statutory lifespan for taxis, which we announced earlier this year. The operators should pass through these cost savings to drivers via lower rentals. Some drivers have also voiced concerns about foreign vehicles providing illegal P2P services which affect demand. LTA has stepped up enforcement against these errant drivers in recent months and will continue to do so.

For drivers who are considering alternative forms of employment, we will also work with the operators and the Labour Movement to assist them. These drivers can tap on various Government programmes to support their career transition, such as the SkillsFuture Career Transition Programme.

Mr Speaker, I thank the Senior Minister of State for her very comprehensive reply. I have two supplementary questions.

The first is on the feedback from taxi and PHC drivers. They have told the Labour Movement that over the last six months especially, their earnings and bookings have dropped by more than 30%. They certainly understand that market forces are at work, but they also hope to have the Ministry's view on how it can support the P2P drivers during times of protracted low fares. How do we balance between adequate supply and the livelihoods of these drivers? And secondly, in establishing the optimal capacity for P2P vis-a-vis other public transportation modes, what are the key considerations by the Ministry?

I thank the Member for his supplementary questions. On the first question, as I have said earlier in my reply, the supply of drivers has increased much faster than the increase in the number of trips over the last one year till the second quarter of this year. That obviously means that some drivers will see a decline in earnings.

But we need to take this in context in terms of the P2P market trends since the end of the COVID-19 pandemic. In fact, in the middle of 2022, the situation was reversed. That was a time when the demand for P2P services increased significantly, when many of the P2P drivers had not returned back to the market. So, we saw higher fares and hence, higher drivers' earnings, and commuters actually faced difficulties in getting a ride. But as more drivers enter the market, the mismatch between demand and supply has moderated. P2P is fundamentally a demand-responsive transport mode and changes in fares are a reflection of the market forces at work.

While average fares have declined in recent months, there are fluctuations across the year. So, there are times when fares do peak, as I have said, when there are major events or during festive seasons. Even during the day itself, there are periods when demand is high and drivers see higher surge prices. Hence, it is important to look at total earnings across time instead of just lower fare periods.

Having said that, as I have noted, we understand the concerns of the drivers. So, what the Ministry of Transport (MOT) and LTA do are to make sure that we enable the drivers to be able to make informed decisions, decide on when to drive and what rides to take. And to do that, our regulations on the operators in terms of transparency for commission as well as fares charged on the drivers and commuters, that is important. Also, our rules regarding multi-homing are to ensure that the drivers are not locked into any operators' platform. Therefore, they can then decide which platform to use to maximise their earnings, based on their driving preferences. That is the way we ensure that fares really reflect the value of P2P services and that the drivers are paid fairly for their efforts.

In our ongoing P2P review, we will continue to look at ways to see how we can ensure the smooth and efficient functioning of the market and reduce friction, so that existing as well as new drivers can stay in the sector to match evolving demand.

With regard to optimal supply, as I have said, we do not limit the supply of drivers or the number of drivers that come into the market. So, the optimal supply will depend on evolving demand. In our case, when there is an ageing population, because P2P actually complements the mass public transport sector, one of the options or demands that P2P can meet is, like taking the elderly patients for medical check-ups and so on. We think that demand could rise from seniors and caregivers for P2P services as the population ages.

But at the same time, because we will continue to improve and expand on our public transport system, and if more households are within a shorter distance from an Mass Rapid Transit station, that could negatively impact on P2P demand within that area. So, instead of pre-determining supply, again, what we want to do is to ensure that the P2P sector remains open and dynamic so that the market remains contestable for new and innovative players so that there is competition.

Also, if drivers wish to enter the market, they will be subjected to very reasonable vocational licensing requirements as well as access to vehicles. And as I have said, coupled with our regulations about transparent commissions and fares as well as multi-homing rules, that will help to ensure that supply will adjust to demand.

I just wanted to touch on the point on the projection of demand. One of the things which is quite challenging is relating to projected demand. As drivers tend to rent vehicles and for the vehicle rental contracts, for these to be sustainable, it is typically for a six-month period or longer. I have two supplementary questions.

One, what measures can MOT introduce to help P2P drivers have better visibility of projected demand?

The second is relating to the vehicle leasing contracts, they are sometimes crafted in a way that makes it difficult for the drivers to exit the contracts. So, would the Government consider providing affordable mediation to assist drivers who are locked into such unfair leasing contracts?

I thank the Member for her supplementary questions. As I have said earlier in my reply, we do not pre-determine supply. It is a market-based approach. What we do is to help the market function, as much as possible, efficiently and smoothly, so that supply responds to demand based on price signals.

For the drivers, we have constant dialogue with the associations, the Labour Movement as well as the operators, and also look into information that is provided by the P2P operators to see how we can help to ensure that supply will match evolving demand.

As I have said, we are undertaking a P2P review and one of the things that we are looking at is how to ensure that supply will continue to match evolving demand, including, for instance, looking even at our regulations and rules about how operators can make sure that their commissions and fares are transparent, and how we can ensure that the drivers are not locked into any platform of the operators, whether these rules and regulations need to be refined, as well as those that we have already announced earlier at the Committee of Supply.

With regard to vehicle contracts, indeed, we have also been talking to the associations and operators to look at how we can assist, educate and enlighten prospective drivers to be aware of the contracts that they take up with the car rental companies, for instance,. And we will continue the conversation and see how we can assist.