Dockless Bikes as an alternative to Capital Bikeshare, 3/10/2019

After analyzing the data and writing extensively on Capital Bikeshare — a bike sharing system using dedicated bike “docks” — I decided to take a quick look at dockless bike rental alternatives.

In a nutshell, dockless systems — where the bikes can be parked anywhere, and you can rent them using an app on your smart phone — have some huge advantages over docked systems like Capital Bikeshare.  I summarize those advantages below.  But they can cause a mess if people park them willy-nilly.  Most of the cities that have allowed dockless bike rental have ended up passing significant laws to regulate them — particularly, to regulate where you can leave them parked.

Detail follows.  Drop down to the paragraph in red to see my summary.

For anyone interested in dockless bike rental, this Washington Post article on bike sharing alternatives is a must-read.  (Among other things, it reveals that the Capital Bikeshare bikes weigh 48 pounds!).  Another Washington Post review can be found at this link.  And a nice first-person account of using dockless bikes in DC for a week can be found here.

For those who have never used a dockless bike (as I have not), the process is along the same lines as Uber.  Each brand of bike has its own smartphone app.  You give it your credit card information.  You use the app to locate an available bike.  You walk to the bike, use the app to pay for the rental.  Paying unlocks the bike, and re-locking the bike ends the rental.

There are a lot of advantages to a dockless bike system. First, the various dockless bike-rental alternatives reviewed in the first article cited above are almost all cheaper for the user, for a half-hour ride, than Capital Bikeshare.  Many match or come close to matching the Capital Bikeshare annual membership price.  Second, they allow the ride to go to any location as the end point of the ride instead of restricting rides to end at a designated bike rack.  Along with that, dockless systems avoid the problem of no place to park the bike, which occurs when all the docks get filled at popular destinations in docked systems.  Third, most appear to require no government subsidy, and requires no large up-front capital investment in dedicated bike racks.  (But that has to be caveated by:  … in those areas where the companies think they can make a profit.  You won’t see these, without subsidy, in areas where they aren’t profitable.)  Fourth, there is no monopoly supplier of rental bikes, and no specialized racks usable by only one type of rental bike.  Fifth, going along with that, there is no need to guess where to install dedicated bike racks.  To the contrary,  where these have worked well, the GPS data gathered by the bikes has helped cities decide where to locate additional bike infrastructure.  In effect, smart cities figure out where people want to use such bikes, first, and allow investments in bike infrastructure match the observed demand.  And they can be implemented vastly faster than docked bike systems.  The article cited just above notes that Seattle implemented dockless bikes and already has 5000 of them in use.  (I believe that’s more than the entire Capital Bikeshare network.)

The main drawback is that these can parked where they are a nuisance.  The fact that you don’t have to leave them in a rack means people will leave them anywhere they find convenient.  That appears to be the major public policy issue.

There is a secondary issue of theft and vandalism, but that’s primarily a problem for the companies themselves to deal with — that one cuts into profits.  Here’s another Washington Post writeup of the theft and vandalism issue for DC dockless bikeshare companies.

Various cities have addressed this in different ways.

Chicago requires that these bikes be locked to some fixed object when they are parked. They required that over the protests of the dockless bike share companies.

Coronado, CA simply impounds any dockless bikes they find in any public right-of-way, then fines the rental company.

South Bend and Seattle determine where people want to leave their bikes, then make those areas well-marked rental bike parking areas.  It is not clear how well that solves the problem of stray bikes clogging the public sidewalk outside of those designated areas.

Dallas did a near-total crash-and-burn, going from a city with no bike rental, to the largest bike rental fleet in the US, to … a city with some residual bike rental.  Apparently, the good people of Dallas made a sport of creatively vandalizing rental bicycles.  Dallas responded, quite reasonably, by making any stray bike a problem for the bike rental company, and requiring them to remove any reported mis-parked bike within two hours.  That tough stance chased all but two bike rental companies out of the market.

In San Diego, merchants asked for a temporary ban on dockless bikes while the city formulates some rules.  San Diego’s trouble were due, in part, to entering into a monopoly agreement with a docked bicycle provider.  Because they had granted a monopoly, they couldn’t enter into a detailed formal agreement with other, dockless providers.

Austin appears to be proactive in regulating dockless bikes, in response to earlier issues with electric scooters.  They already had laws, in place, regulating where and how dockless bikes could be parked, before they allowed the first dockless bike provider to be licensed.  Their rules are here (.pdf).  They too adopted a two-hour rule similar to Dallas — the bike provider has two hours to retrieve any improperly parked bike that is reported to the city.  And in the same vein as Chicago, they will require that all such bikes are capable of being locked to a fixed object.  And they got advice from cities that has significant problems before they proceeded.

Overland Park, Kansas has an interesting set of rules in place.  They are going to have designated bike-drop-off areas.  You don’t have to leave a dockless bike in one of those areas, but if you don’t, it will cost extra.  In a sense, they are using a small economic penalty to “herd” the dockless bikes into a few concentrated areas instead of having them strewn about at random.

Finally, Seattle probably merits its own writeup, as it was the first in the US, it went with dockless bikes only after its own monopoly docked-bike provider failed, they put rules in place proactively, and yet they still had problems.  Oddly, when I read the Seattle rules, I finally saw some use for the otherwise useless broad sidewalks mandated by MAC zoning — that’s where Seattle directs people to park these bikes.  And like several other cities, Seattle has a two-hour rule:  Bike rental companies have two hours to pick up any bike reported as mis-parked.

A brief guide to planning for dockless bikes can be found here.  The consultants offering that guide wrote one of the Bikeshare feasibility studies cited at the bottom of my previous post.

For what it’s worth, I’ll give my summary here.  As an economist, I would far rather have five companies competing for my business, using the most modern technology, offering me a good price without government subsidy, whose customer information will allow me to locate additional bike infrastructure where demand dictated it, and who stand ready to provide more-or-less as many bikes as the market will bear, right now.  Rather than the alternative, which would be to continue to grant a monopoly to a single high-cost supplier of docked rental bikes, using an old, inconvenient, and inflexible technology (and a 48 pound bike!), requiring government subsidy to stay in business, and requiring me to guess where to install expensive bike docks in order to meet demand.

Particularly when that docked system has extremely high cost per bike trip in a lightly-used area such as Tysons (as I showed in my prior post on Capital Bikeshare).

To me, it’s like being asked whether you would rather install phone booths at government expense, or just allow people to use cell phones.  For better or worse, dockless bikes are cell phones to Capital Bikeshare’s phone booths.

There is one obvious downside, in that these bikes could become a public nuisance.  But as noted above, a lot of cities have dealt with this, in various ways.  I would like to think that Fairfax County could be as smart as any of the cities noted above.

There is a second downside that should be noted, in that for-profit companies are not going to enter markets where they can’t make money.  It is entirely possible that they would scoff at offering dockless bikes in a market like Reston, Tysons, or Vienna.  In that case, we would be back into the situation we have now — we’d have to offer government subsidies to get those dockless rental bikes provided in these low-density situations.

Where is the market for bike sharing going?

The one thing I would want to know is whether, in 2019, there are any other local governments who are working hard to expand their docked-bike systems.  Or, has the advent of dockless bike rental brought that more-or-less to a halt?  Duly noted, Arlington blames the loss of Bikeshare membership and plateauing of use on availability of some dockless alternatives (.pdf).

The answer (details below) seems to be that many urban areas are expanding docked-bike bike sharing systems.  Almost all of them are paying for it with either Federal grants or (in two cases) sponsorship by the local Blue Cross/Blue Shield plan.  In only one case — New York City — is the expansion occurring purely as a matter of private investment (i.e., for profit alone).  And, locally, some dockless providers found they could not profit in suburban Montgomery County.

Locally, Capital Bikeshare is expanding  modestly in all of its current regions.  A few more stations will be added in DCReston will expand their system using what appears to be Federal money.  Falls Church will join the Capital Bikeshare system this year.  They have a detailed financial analysis and appear do be using mostly federal grand money.   Alexandria is making a modest expansion.

Docked bikeshare expansions are occurring all over the US.  New York will expand its system, thanks to the Lyft’s purchase of Motivate, the same entity that runs the Capital Bikeshare system.  That planned New York expansion appears to be the only one that is driven by private investment (i.e., profit motive).   Indianapolis will use a combination of federal grant and charitable donations to expand their docked-bike system in their downtown.  Memphis is expanding its program, funding not specified.   It appears that Los Angeles is continuing modest expansion.  Boston will expand using private corporate sponsorship to cover the costs (Blue Cross/Blue Shield).  Pittsburgh is expanding its system, funding not specified.  Columbia, SC will start a system, Federally funded.  Detroit is expanding its small docked system.  Houston is expanding its docked system using Federal funds.  Omaha is expanding, another network sponsored by the local Blue Cross/Blue Shield plan.

By contrast, Baltimore threw in the towel on its docked system and instead is looking for expansion of dockless bikes.  So Baltimore joins Seattle as cities that have shut down municipally-run docked systems.   Richmond (VA) is reported to be reconsidering expansion of its new docked system, in light of dockless alternatives.

Montgomery County MD is an interesting example because they are mixing the docked Capital Bikeshare bikes with dockless bikes and scooters.  The have a pilot program for Silver Spring and (of course) Takoma Park.  Interestingly, it appears that dockless bikeshare companies have a hard time making a profit in the suburbs.

I think that the range of apparent profitability across urban and suburban settings brings this back to the question of the value these systems provide in the suburbs.  These are classed in with public transit, and public transit rarely breaks even anywhere.  That said, it certainly appears that as you move from dense urban areas (New York) to the suburbs (Montgomery County), ridership per bike or bike slot falls, and the amount of subsidy needed to keep the system running rises. In that context, the low ridership and high cost per trip found in my analysis of Tysons is really just one end of the spectrum.   But at some point, we really should ask what we are willing to pay, to provide bicycle access to a relative handful of users in the suburbs.