After Kakao Mobility launched Kakao T Carpool, taxi drivers went on strike on October 18. In Gyeonggi Province, over 33 thousand drivers, who account for 79 percent of licensed drivers, participated in the walkout. The opposition of the taxi industry towards the introduction of the carpool service seems to foreshadow the untitled future of social conflicts. However, the fast development of technologies in the new era makes the industrial change in the mobility market inevitable. In this situation, systematic improvement and cooperation are needed to give a better title to the future.
Korea rejected Uber-X, one of the pioneers in the field of online carpool platforms where drivers can pick up passengers and charge them fees without a taxi driver’s license. Introduced in 2013 in Korea, the service ceased in 2015 due to the opposition of the taxi industry and the controversy concerning its illegality. Another company, Poolus, was accused of violating the Passenger Transport Service Act by the Seoul government immediately after it launched the carpool service in 2017. However, the dispute over legality leaves room for further controversy because the law has an exceptional clause: the Act prohibits charged transportation by unlicensed drivers, but carpooling when commuting remains as an exception.
Carpool Platforms: Why Significant in Korea?
The current unfavorable circumstance for both the drivers and customers of the taxi industry makes the new platform more prospective in Korea. Currently, taxi drivers have to pay a fixed amount of money to the taxi company. According to the Seoul Taxi Information System (STIS), about 80 percent of the Seoul taxi drivers’ daily earnings were handed over to their firms during the first half of 2018. In such a system, customers who travel short distances mean a loss for the drivers, thereby the tendency of refusing such passengers intensifies, which in turn provokes dissatisfaction of the customers.
The development of the carpool market is also perceived positively in the industrial aspect, as the service provides a platform for the concept of the sharing economy, in which people borrow daily necessities from each other rather than owning them. In the fourth industrial revolution era, the development of Information and Communications Technologies (ICT) is accelerating the growth of the online platform that expedites the sharing economy. With the combination of technological and economic change, the sharing economy market is expected to be profitable. According to Pricewaterhouse Coopers (PwC), the market size of the sharing economy is estimated to rise up to 335 trillion dollars in 2025, from 15 trillion in 2013.
It is the diverse advantages of the sharing economy owing to its effectiveness that attract the investment of a number of large companies such as Google and General Motors (GM). The sharing economy can provide convenience for moving during rush hour and reduce the total number of cars on the road. Furthermore, ICT is expected to enable the instant match between drivers and commuters that may ameliorate the situation in which clients who wish to go short distances are often denied. According to Kakao Mobility, on September 20, from 8:00 A.M. to 9:00 A.M., 205 thousand calls were made while the allocated taxis were 37 thousand, which leaves a gap of demand to be filled.
In order to develop the carpool platform, one may claim that it is important to pursue coexistence with the taxi industry, because focusing on only one field can harm the meaning of sharing economy. Thus, a mediatory force between the carpool platform companies and the taxi industry is required. Fortunately, the government is now carrying out this role. On October 26, the Ministry of Land, Infrastructure and Transport (MOLIT) stated that it submitted a plan to develop the taxi industry to the Democratic Party of Korea and that discussion of the details would continue.
There are two major agendas on the table: introducing the monthly payment system and purchasing the licenses of the old drivers to reduce the number of the taxis. Regarding the salary system, the taxi drivers would be relatively better off compared to the current system in which they are required to pay a fixed amount of money to the enterprise regardless of their daily earnings. Furthermore, the local governments would be able to compensate for the earnings of the old drivers by purchasing their taxi licenses. Speedy procedures to enforce the suggestions would be needed to settle any possible confusion this change might cause for the public.
Additionally, a clear statement in the law about the carpool platform would be needed to legally regulate and secure the industry. One of the most urgent issues is to decide the operating periods or times that a provider can use the carpool services in order to balance the transportation market. On the other hand, measures for the safety of the customers are also necessary. For instance, one may raise the concern that the carpool companies are in a relatively difficult position to check the criminal history of their applicants compared to the taxi companies which are supervised by the Korea Transportation Safety Authority (TS). Comprehensive discussions of these weak points would be the cornerstone for developing the new platform.
To the Future
▲ Professor Kim Pil-soo, Photographed by Oh Ju Shin
Ultimately, the destination of the transportation market seems to be the commercialization of autonomous vehicles. Based on car-sharing and ICT, they are regarded as the natural next step of the carpool service. The two industries are closely related in that they both use the online platform for sharing the existing materials and utilizing accumulated data. Professor Kim Pil-soo (Department of Automotive Engineering, Daelim University College) stressed, “The paradigm of mobility is undergoing transformation globally, so Korea would not be able to refuse the change, unless it wants to lag behind.”
Although it would be difficult for every member of society to willingly accept the waves of change , acknowledging the inevitability and making provisions for it would guarantee the strength and competitiveness of Korean industry in the future. It is time to break from the old and agonize over how to embrace the fourth revolution era. By figuring out the flaws in the laws and mediating between the taxi industry and carpool companies, the nation can advance to a well-prepared future where people can move without constraints in vehicles shared via online platforms for common use.