Southern US metro areas present the biggest opportunity for Uber and Lyft to change your life. In a big report out Tuesday morning, Morgan Stanley analysts Michael Zezas and Adam Jonas look at the impact the proliferation of services like Uber and Lyft could eventually have on municipalities — and municipal financing — across the US.
Among many arguments the report makes, the most interesting is that Southern US cities are ripe for the biggest disruption amid increasing adoption of ride-sharing services like Uber and Lyft. So instead of getting in your car and driving to work, or replicating the Northeast commuting experience of driving or walking to a train and heading into the city, more sprawling metros could enact large-scale, commuter-targeted versions of what is basically Uber Pool — Uber’s “carpool” option where you set a pick-up and destination and your driver is able to make pick-ups and drop-offs along the way.
The potential candidates for this kind of investment and experiment, according to Morgan Stanley’s list, include Southern metros like Birmingham, Alabama; Nashville, Tennessee; Houston, and Atlanta:
These cities, the firm writes, are more likely to see benefits from increasing investment in developing networks of ride-sharing services rather than more common infrastructure investments like commuter rail lines. They possess the right density and a relative lack of methods of commuting other than driving.
Morgan Stanley notes that for each dollar spent on highways, governments at the federal, state, and local levels spend about 40 cents on mass transit projects (read: railways), totaling about $65 billion each year.
But 75% of Americans drive themselves to work, meaning there’s a clear gap between infrastructure funding and infrastructure use.
Not only is investing in infrastructure that improves the ride-sharing experience within a metro area likely more beneficial to existing resident habits than building commuter rail lines, there’s also a chance for more economically efficient investments given the relatively lower cost of maintenance for roads compared to railways and airports:
Here’s Morgan Stanley’s hypothetical:
In this scenario, autonomous vehicles provided by shared mobility companies increase the usage of other transportation methods. Travelers, no longer having to worry about the ‘last mile’ after arriving at a major transportation hub, embrace ‘just in time’ pick-ups as shared mobility companies analyze demand and adjusted resources real time to transportation hubs for fast, cheap, and almost always there availability just as you arrive.
Cities that currently have little tangible mass transit infrastructure provide subsidized accounts for shared services to low income and disabled travelers, saving significant costs over running their own local systems but maintaining the positive social externalities that come with public transit.
With less need to fund traditional mass transit, capital is diverted to roadways, as states and cities revamp old roads or build new ones to keep up with the increase in autonomous vehicles and, over time, the need to integrate vehicle to infrastructure communication. Artery roads with automated intersections lead to less foot traffic, leading to fewer stops and storefronts along roads. Residential, shopping, and commercial districts become segregated and strategically placed destinations dictated by zoning.
So imagine a future metro area with hubs of walkable, dense residential and shopping districts connected by easily-traversed spokes full of on-demand, self-driving cars to bring you “off campus.”
Another upshot is that Southern cities have the right weather for this kind of driving-intensive investment as snowfall is relatively rare compared to cities like New York, Boston, and Chicago (which all have fairly robust rail options).
“Our SHED metric suggests the urban south may be more conducive to integration of shared mobility into public transportation policy,” the firm writes.
Morgan Stanley adds (emphasis mine):
Southern metropolitan areas tend to be dense enough to support the economics, but not too dense to the point that mass transit (i.e., rail) is a better option. An added benefit that is not captured in our metric is that the weather in these areas is conducive to shared mobility development. This is because of limited testing in snow and ice conditions. Commuters in these regions are also more reliant on cars, and cities offer expansive road networks.
In contrast, the New York-Newark-Jersey City, NY-NJ-PA MSA presents a more challenging case. In terms of size, density, and public transit utilization, no other area comes close. The region accounts for nearly two-thirds of the planned public transit infrastructure spending over the next five years. In that sense, we see traditional transit continuing to play a major role in New York City and northern New Jersey, regardless of how shared mobility develops there.
And thinking through this intuitively, the conclusion makes complete sense.
In New York, for example taking the train to work in many areas of the region is effectively theonly viable option for commuting transportation.
But in most other regions you get in a car and drive by yourself. Morgan Stanley illustrated this with a chart breaking out the counts of metro areas by number of people who drive to work alone: