Transportation was one of the industries hardest hit by the coronavirus pandemic. Public transportation, rideshare, and car sales have felt the ripple effect as millions of Americans continue to rethink travel, even by ground. Many have even contemplated putting their car insurance on hold.
Furthermore, as millions of jobs were cut and many people transitioned to working from home, the need for commuting has dwindled. Car brands have been searching for redemption through outrageous financing offers and deep discounts. Some even claim this could be the beginning of the end of cars as we know it. So, what can we expect for the future of transportation?
IBM conducted a survey in April, polling more than 25,000 Americans about how COVID-19 has affected their lifestyles and feelings about transportation in the future. Roughly 28 percent said they wouldn’t use public transportation as much. Another 20 percent said they would quit using public transportation altogether. This is reflected in new stats from Washington DC’s Metro Rail who closed nearly 20 stations in March after ridership dropped 90 percent. Taxis and ride-sharing businesses like Lyft and Uber will be feeling the squeeze, too. More than half of those surveyed said they would either use ridesharing apps less or stop using them completely.
Roughly 28% of people surveyed said they would use public transportation less often. More than 50% said they would use rideshare apps less often or stop using them completely.Source: IBM study, April 2020
Rural areas and suburban communities, where cars are a daily necessity, have seen huge shifts in favor of telecommuting and delivery services. IBM’s survey revealed 40 percent of Northwest-based consumers are now more likely to have goods shipped to their homes. 75 percent hope to continue working remotely post-pandemic. One in four survey participants indicated that they would use their own car exclusively from now on.
Cars are becoming America’s exclusive safe place for commuting, which means we can expect some traffic congestion. With no end in sight for this change in daily transit, cities could expect increased demand for infrastructure redesign. As commuters rely on their own means for transportation, the need for new bike lanes and expanded roadways will surely rise.
The Value of a Personal Vehicle
The value of a car is complex, post-coronavirus. While more people are working from home and having items delivered to their doorstep, fewer are willing to use public transportation or ride-sharing services. Prioritizing health and safety makes owning a personal vehicle more important these days. However, with the loss of millions of jobs, Americans are less confident in their ability to buy a car.
Half of those surveyed by IBM said financial constraints and economic uncertainty will influence or prevent the purchase of a car for more than six months. This perspective is likely to compound as the country experiences a resurgence of COVID-19 cases.
J.D. Power predicts that vehicle sales will be down by three million units or more for 2020.Source: USA TODAY
Throughout the pandemic, car sales have mimicked those of the 2008 recession. Looking forward, a study by J.D. Power predicts vehicle sales will be down by three million units or more for 2020. Ford, General Motors, and Fiat Chrysler suspended production in North America from mid-March through May to help stop the spread of COVID-19.
Delivery Services Thrive
Meal kit subscription companies have had turbulent success, but in the wake stay-at-home orders, companies like Hello Fresh and Blue Apron are experiencing positive change in their finances. Hello Fresh shares have spiked since March, rising from $20 to $57, according to Google Finance. The company saw a similar hockey stick-effect in its revenues, which were up 70 percent in the first quarter.
Similar to meal subscriptions, meal delivery services including Grubhub, Uber Eats, DoorDash, and Postmates have been in high demand. Pick-up and delivery options are the only line of defense for many restaurants on the verge of closing, and patrons are paying for it. In fact, the rise in demand for delivery services has been a source of contention between restaurant owners and delivery companies. New York City recently passed a temporary bill capping commissions for delivery at 15 percent.
This might all sound somewhat dramatic, but driver demand is the positive common denominator. During a time when millions are losing jobs, anyone with a car has great potential to find work. According to the CDC, delivery drivers (including grocery stores, local retailers, and shipping companies) should expect policies and technology options that prioritize contactless deliveries such as, “no-knock, no-signature, all electronic credit card transactions, etc.” Similarly, many at-home services, including RepairSmith, have also adopted no-contact policies to ensure the safety of their workers and customers alike.
Travel and Tourism
The state of tourism is touchy. Events have been canceled and business travel is slow to non-existent. Hopefully, we’ll see a return to normal in 2021. As for 2020, 75 percent of those surveyed by IBM are not willing to attend large events or conferences. Popular destinations like beaches and national parks have begun to re-open in phases. Flying is still too risky for most, which means car rental companies and private driving services are suffering. Road-trippers will find their free-roaming days compromised by closures and capacity limitations. Toll collection stations, rest stops, and public facilities have been closing all over the country.
While these changes have been devastating, there is always a silver lining that shines through the tragedy. With less cars on the road, our environment has seen a dramatic decline in air pollution. Los Angeles, which was once ranked one of the worst cities when it comes to air quality, has seen a stark improvement in recent months, evident in these shocking before and after photos. Nevertheless, navigating all these changes in transportation will be challenging for cities, businesses, car owners, and public transportation patrons alike.