Grab Singapore grapples with driver shortages

RIDE-HAILING operator Grab has been finding ways to recruit more drivers and improve productivity in Singapore as it attempts to ramp up a supply that is only at 70 to 80 per cent of pre-pandemic days.

A wave of drivers across South-east Asia left the ride-hailing industry from 2020 onwards, after Covid-19 restrictions caused a sharp drop in ridership and earnings.

While ridership in Singapore across all platforms has returned to 80 per cent of pre-pandemic levels, higher than 74 per cent in 2021, the supply of drivers has not been able to meet demand.

“Increasing the supply of rides is the top problem we’re trying to solve,” said Grab Singapore managing director Yee Wee Tang on Wednesday (Feb 1), addressing over 700 participants of a Chinese New Year lunch event for drivers and delivery riders.

Member of Parliament Tin Pei Ling made an appearance at the event, following her appointment as Grab Singapore director of public affairs and policy in January. Tin, who is MP for MacPherson, was chief executive of non-profit organisation Business China till Dec 2.

“Pei Ling has deep on-ground understanding of digital economy and Smart Nation policy, and close ties with the local community. She will build partnerships and programmes to harness the positive potential of technology to create impact in Singapore,” said Grab in a statement.

Grab’s local operations were hard-hit by the pandemic, though food delivery helped prop up business. To increase driver productivity, Grab has been experimenting with a new feature that navigates drivers to high demand areas, and matches them with passengers more efficiently. Yee said about 80 per cent of drivers who tried the feature in beta mode received a booking within minutes.

The company has also reintroduced its carpooling option GrabShare in a bid to maximise the value of each ride. GrabShare, which was suspended during the pandemic, now includes a cancellation fee and matches riders to drivers upfront.

In the past, drivers could accept rider requests while in transit, which meant some passengers already on the ride experienced surprise detours.

Grab’s data from the first two weeks of the small-scale pilot showed drivers who completed a full GrabShare ride had better earnings, as compared to two JustGrab rides within the same period.

The company’s attempts to scale up its supply comes as commuters face longer waiting times and fare surges due to the driver shortage. There are currently about 57,000 active drivers in Singapore across all platforms, lower than the 59,000 in 2021.

But ride-hailing operators’ efforts at increasing the driver supply has been complicated by a multitude of factors. Rising fuel and vehicle costs eating into drivers’ net income mean the job might not be as attractive as it was before the pandemic.

With rising inflation and interest rates, platforms also have to strike a tricky balance between ensuring fares are high enough for drivers to make a living, but also still affordable for passengers.

Yee noted that transport fares are higher now compared to pre-pandemic days. “This may seem good now, but it can also cause demand to drop over time, which will not be beneficial for you or Grab in the long run,” he said.

Grab’s management said during a Q3 earnings call in November that driver supply across its South-east Asia markets has seen positive signs of recovery. Segment-adjusted Ebitda margins have recovered to the steady state of 12 per cent as of Q2 2022.

Still, driver supply remains tight in certain markets. In the Philippines, Grab is working with the authorities to improve processes around the issuing of licences, said chief operating officer Alex Hungate during the earnings call.

In Singapore, “we (actually) have a backlog of drivers who want to drive,” said Hungate in November.

He said then that the issue lies in the supply of vehicles in Singapore, which is strictly capped. “That has resulted in an imbalance between supply and demand… (there’s) a barrier to the drivers being able to afford their own cars or even being able to rent cars as well,” said Hungate.