Uber's Post-Pandemic Struggles

By Alexander Lee


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Following a recent driver crisis, Uber has been struggling to meet rider demands as it faces competition from other companies and driver shortages. As a result, hailing a ride has become near-impossible during peak hours in the UK. This has resulted in customers, mostly business clientele, being late for meetings or being stranded on late nights out. Those who do manage to hail a cab lament the extortionate ‘surge-pricing’ that drastically raises the prices of rides when there is a shortage of drivers. This mostly happens during weekends or late evenings – exactly the time when customers need to hail drivers. It was estimated that Uber had to tackle a shortfall of 20,000 drivers over the December holiday period, prompting CEO Dara Khosrowshahi to make a personal appeal to drivers to advertise their services to friends and relatives.


This isn’t the first time that Uber has been involved in controversy. A recent Supreme Court decision in the employment sphere saw a ruling against the company that refused to bestow legal employee status on their drivers. Since then, Uber has increased the pay of its drivers by 10% and has agreed to hand out £500 for every referral made by drivers to their friends. However, this may not be enough to offset the unhappiness from the consumer end of the spectrum, with complaints that Uber rides actually cost more, experience greater delays and suffer from more last-minute cancellations than the cabs which they were meant to replace. This has resulted in the company losing its unique selling point.


The underlying core issue can be somewhat attributed to the aftermath of the pandemic. Consumers are cautious about public transport due to a lack of social distancing. Together with Brexit, EU nationals working for Uber in the UK have been pushed to return to their home countries, resulting in a supply shortage. Coupled with the recent UK fuel shortages and gas price surges, entrance costs for becoming an Uber driver have drastically been raised. It is currently doubtful whether the incentives offered to placate drivers facing a lack of regular income (who regard driving as their main source of income) will be enough to offset the possibility of Uber losing its long-standing dominant market share.





References:

[1] Sam Shead, ‘Brits using Uber and other taxi apps face long waits and fare hikes amid driver shortage’ (CNBC, September 2021), https://www.cnbc.com/2021/09/27/uber-and-bolt-struggle-to-meet-demand-in-the-uk.html#:~:text=Tech-,Brits%20using%20Uber%20and%20other%20taxi%20apps%20face%20long,fare%20hikes%20amid%20driver%20shortage&text=Multiple%20customers%20told%20CNBC%20that,end%20of%20a%20night%20out

[2] Reuters, ‘EU targets Uber, Deliveroo model with gig workers' rights plan’ (The Business Times, December 2021), https://www.businesstimes.com.sg/garage/eu-targets-uber-deliveroo-model-with-gig-workers-rights-plan#:~:text=Internet%20firms%20that%20set%20pay,according%20to%20the%20draft%20rule