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Yale Wong: a smarter future

Yale Wong

Yale Wong, of the Institute of Transport and Logistic Studies at the University of Sydney, is a theme speaker at iMOVE’s inaugural Transport of Tomorrow Symposium, to be held on 26 & 27 March 2019, at the Melbourne Cricket Ground. His topic is Digital public transport in an era of shared and collaborative mobility. Visit the event page for more information.

Hello, Yale. First up, can you tell us where you’re working now and what it is that you do?

I’m attached to the Institute of Transport and Logistic Studies (ITLS), located within the University of Sydney Business School. Our centre was established almost 30 years ago by Professor David Hensher and has remained a global centre for thought leadership in transportation, logistics, infrastructure and supply chain management.

I wear two different hats at ITLS. One is as Doctoral Candidate where I’m about three years in and wrapping up in the next few months. The other is as Research Analyst. In that role I do a lot of consultancy and advisory projects for clients ranging from bus operators to industry bodies, vehicle suppliers and local government. I also do some lecturing in Masters-level courses, sit on the ITLS Board of Advice, serve as peer reviewer for many prestigious journals and offer media commentary from time to time.

In terms of my main research areas, there’s three. One is around future mobility, particularly in market-testing the Mobility as a Service (MaaS) proposition on demanders and also suppliers — envisioning and forecasting what the future passenger transport ecosystem might look like. My second area of expertise is around transport contracts, particularly examining how existing public transport contracts might evolve in the future into a multimodal contract concept — what we term mode-agnostic mobility contracts.

Lastly, I lead a lot of research into bus operations as well. I actually have a background in that industry so continue to be heavily involved in advisory work (including advice on contract tenders) for bus operators, plus strategic-level projects for the industry as a whole through the bus and coach industry associations, at both state and national levels.

We produce a lot of reports that actually end up on politicians’ desks. We advise on policy manifestos and parliamentary enquiries. I am so pleased to make a real-world impact through policy advocacy — but importantly advocacy that is backed by rigorous ITLS research.

For those of us who don’t know, Yale, can you tell us in a basic sense what that work in contracts involves?

The work on contracts is closely linked with our MaaS research agenda. There is a lot of interest on the entire demander-interface in knowing what end-users or customers are seeking in terms of MaaS, but very little focus has so far been devoted to understanding what the business community (and government) is willing to deliver. Any future MaaS model will require a radical redefinition in terms of the regulator-to-operator interface and also between interested businesses combined to form what we term a MaaS broker or aggregator. At the intersection of different stakeholders lies a contract, if you will.

With the MaaS concept coming to fruition, a lot of present public transport contracts are going to change in terms of their form, as we become more multimodal, and more customer-oriented. If we look at the bus industry in particular, there are 15 contract regions in Sydney all competitively tendered. These are very output-based (gross cost) contracts focused on delivering kilometres on these defined vehicle types called buses.

Certainly in a lot of other places around the world you have a similar story with these kind of management contracts, some better than others with sufficient incentivisation, actionable benchmarking and the like. But there’s not a lot of patronage incentive or freedom to innovate on the part of the operator, and we think in the future, there will be a blurring in terms of contract boundaries and the modes offered. Why must the service all be on full-sized buses running fixed timetables? This is particularly questionable as digital technologies make demand-responsive propositions more palpable.

We are already seeing early incarnations of multimodal contracts in Newcastle (NSW), metropolitan Sydney (Region 6) and interest from the Melbourne rail operator in the form of access contracts to and from rail stations. Going forward, there will be even more opportunities for these reinvented businesses (as MaaS brokers or aggregators) to bring together mode-specific operators like taxis, carsharing, ridesharing, bikesharing and traditional mass transit functions.

There will also be technology providers, developing the apps and the algorithms and also perhaps a financial enterprise as well in the MaaS business model. The contracts with government will go from being output-based to outcome-based, perhaps moving from delivering kilometres to more relevant KPIs, such as delivering accessibility to the end-user. So, we’re looking to the future in terms of how these contracts might look as well as the interface between interested businesses partaking in the MaaS entrepreneurial model.

We are of course involved with the International Conference Series on Competition and Ownership in Land Passenger Transport (known as the Thredbo series)—the world’s premier conference on public transport institutional reform, contract design and implementation. In fact through the series, we have pre-empted and advised on the design of reforms in several countries over the years. At our last gathering I gave a keynote bringing together Thredbo’s 30-years of contributions and later this year (2019) we will hold the conference in Singapore where myself and colleagues will lead a workshop (amongst others) on emerging business models and implications for the transport ecosystem.

Right, and so you also mentioned your PhD is close to being finished. What’s the topic of your PhD?

The topic is around understanding these integrated mobility services—that we term MaaS, and how it fits within a future transport landscape. A major part of the empirical work is in conducting a global survey where we received input from CEOs and MDs of transport operators and non-mobility businesses in 28 countries, covering virtually all developed economies. Their generosity helped us understand the preferences of candidate businesses in partaking in this future MaaS model, either as suppliers of transport service or as equity investors.

I quantified or defined this interface with these mode-agnostic mobility contracts, which I developed through an interview process with the business community. From this work, I am able to tell you which sorts of businesses are interested in MaaS and from which countries they will likely hail from. I can tell you their return on investment expectations, what kind of modal mix they are interested in, and how big these MaaS broker/aggregator businesses might be. In fact, my approach in using the stated choice methodology is such a novel application and so pioneering I was humbled to be awarded the prestigious David Willis prize (2018) for best paper in Australasia.

One of the core contributions of my work is that we’re actually mapping the preferences of suppliers with the preferences of demanders, and through this, we can reach a market-led equilibrium for what this MaaS future might hold. In my third phase of research, I am having conversations with governments to see if this equilibrium outcome is acceptable to them, and what kind of regulatory or governance interventions might need to be developed to perhaps regulate for any unintended consequences, and bring the future in line with governments’ urban and societal objectives.

I listened to your answer there, and when people wonder why things take so long to happen, it’s perhaps not too surprising is it?

It feels like I’m tripping over myself a bit just trying to explain it all!

Indeed, well it’s all new, it’s all coming, and it’s all complicated, but we’ll all get there. Speaking of getting there, how is it that you came to be in the transport and mobility space?

Look, transportation has been a big passion throughout my entire life. We moved around a lot growing up. I went to six primary schools in total, and I’ve had exposure to different cities and different parts of cities as well. Again, a lot of appreciation for transportation and land use—what works well and what could be improved—and how transport impacts the lives of all people.

My first degree was in geography, after which I was fortunate enough to work with the bus operator in Canberra, doing network planning, scheduling and service development. One of my proudest achievements was taking on-time running to its highest level on record. I was involved with several network reviews where I also optimised what I term effective frequency (between locales and on major corridors) without compromising operational efficiency—so in effect, enhancing service for zero additional cost through clever scheduling. I also led a major wayfinding project which brought many international design best practice principles (for instance, spider maps from London) to Canberra.

I’ve also been involved in a few other places as well. I studied at the Institute for Transport Studies (ITS) at the University of Leeds in Britain, where one of the people I met there was Professor Chris Nash. It was through him that got me really interested in the whole privatisation and economic deregulation experience in Britain (both bus and rail) and the public transport contracts space (again linked to the Thredbo series).

More recently I have spent time in South Africa, looking at the informal minibus-taxi sector, particularly in its interface with formal fixed route buses, bus rapid transit and rail, and seeing how the (organic) integration experience might relate to what we can learn in developed economies. In fact, there are a lot of parallels between minibus-taxis and these new shared mobility providers (Uber and the like) and if we can get the interface with public transport working effectively, we are halfway there in terms of what we want from MaaS.

Lately, I’ve been spending time particularly over the past year in the Nordic countries talking to MaaS operators and regulators and understanding many of the challenges they have been grappling with. This fieldwork helped inform the design of the MaaS broker model we have been testing with the business community empirically.

Okay, and let’s leap into the world of hypotheticals. Let’s just say someone comes to you with a large amount of money and offers you a very generous timeframe in which to spend it. What transport problem anywhere in the world in any discipline, what would you like to take on in order to make an impact?

A lot of things that I think will make the biggest impact, because that’s the other part of your question in making an appreciable impact, is the small tweaks that we can do which might not necessarily carry the same political kudos. And as an example, one of the former Secretaries in Transport for NSW, Tim Reardon—he was very fond of what was called the Pinch Points program.

These small measures, things like designating bus lanes or building queue jumps or extending turning lanes—these bottlenecks—the return you’re getting is in the order of [benefit-cost ratios] 20s or 30s, but no one is really talking about it, because they do not carry the same political points. There’s no fancy ribbon cutting or something shiny to show off. A big part of our challenge as academics is to communicate the reality and try to start changing this conversation.

Most of the cost of new infrastructure is in constructing the right-of-way, either through property acquisition or tunnelling. As you would know 30% of urban space in our cities is already allocated to transportation. Money is better spent to reallocate this existing road space, rather than building new ones—I mean you can never build enough anyway. What we need to do is allocate our scarce road space to the most efficient modes—the modes which can transport the most amount of people per unit road space, which is of course mass transportation. That is the way to actually achieve mode-shift, by making public transport better (through dedicated right-of-way and improved services) and making driving harder, slower and more expensive. The present conversation has always been about making both public transport and roads better at the same time and so the relativity between public and private modes remains the same and people’s travel behaviour will not change beyond a few corridors at the margins.

I think that’s a good answer, Yale. You’ve twisted the big-budget aspect of the question to how to treat the big issues. So, could I ask you, the second part of my hypothetical, is what small project would you like to take on that would be with a limited budget, limited timeframe, but appreciable impact.

Well, I felt like what I just said was a limited budget one. I don’t really have an answer for you in the unlimited scenario since I think it is incongruous with practical reality.

I think you did have an answer, but I’m curious this time if you could pick one small thing that you could attack.

Well, I think what I just said in reallocating road space is a limited budget one, but I suppose… I would like to see a network-efficient road user charge in place. This is again linked to MaaS which will bring in a lot of opportunities for a pricing model which will finally optimise this transport network of ours. What we can do — and I have published an important paper on this concept — is to ‘hide’ a network charge within a mobility package price that people subscribe as part of MaaS. I think doing so is important anyway to discourage people from all moving to point-to-point transportation options (by definition low volume and low occupancy) which will be a big problem particularly as autonomous vehicles come online and prices start to drop. Our proposal will disguise the charge from the end user, so make it more politically palpable since this is where usually a lot of the pushback comes from.

Our model is very different to the present tolls which are really just to finance infrastructure and also cordon-based models in places like Singapore, London and Stockholm which are not network-efficient and really just redirect traffic. What we do is set the price by modal efficiency — incorporating both spatial and temporal elements like how many people are in the vehicle and what proportion of time the vehicle spends on the road (so capturing whether it is shared or privately-owned).

The price also varies by geography, such as where you are in the city, the time of day, as well to the minute. We just establish a clearing house mechanism to set this price input and mandate all MaaS providers to pay it which hopefully they pass on in full to the end-user. One major challenge is that all people must consume transportation as a service — which might turn into reality one day, who knows? But finally we will be able to bring the transport network in line with other utilities like electricity or telecommunications or water to have a pricing regime which better aligns demand and supply.

Okay, let’s leave hypotheticals and get back to you. Of the work you’ve done so far, projects you’ve been involved in, what have you been most proud of?

Well, in my old role playing with buses, as I said, my proudest achievement was to take on-time running to its highest ever—in fact, it has never been the same since I left. I want to make the important point here especially in a world where there’s so much hype from start-ups and technology types… my success was really the result of familiarity with the network (routes and stops and how drivers drive) and having that human overlay, rather than just doing straight up data mining and implementing whatever the computer spits out.

I am a big believer in learning through the soles of your feet. In fact, I even trained to become a qualified bus driver and am still driving today in my spare time. I hope more people can blend strategic and tactical expertise with operational knowhow. It is a lesson too for an industry where so much has been promised by automation and other innovations. You will see the most successful on-demand trials in NSW are the ones with a human overlay and I think it is incredibly important that we recognise what a human brings before we dismiss their necessity.

Right now, I’m so proud to be part of the public transport team at ITLS spearheading our MaaS research work. When I embarked on this journey back in 2016, I took a lot of convincing to get on board, I have to say. Back then MaaS was a term virtually unheard of, beyond maybe a few select entrepreneurs in Finland. These days, through the leadership, vision and strategy from our director Professor David Hensher, and embarking on the research early when nobody else was, we’ve been able to reach the forefront and I would say as one of only three centres around the world with a quantitative and empirical program of research around intelligent mobility and MaaS. The world truly looks to us for leadership and expert advice in this space.

As you know, there is so much interest in the community that MaaS has become a catch-all of innovation and in danger of becoming just another buzzword. It’s been a theme for so many conferences in Australia and around the world. I get invitations every other week to give a talk or run a workshop on a lot of this future mobility material. We are now writing what is probably the world’s first monograph on MaaS, compiling all our years of research at ITLS. There are also a number of exciting projects in the pipeline so do watch this space.

Speaking of addition, a lot of people have done work in a lot of different areas in transport. Is there an area in transport research that you haven’t been involved in yet that you are interested in doing so?

Yes. I’ve had a lot of involvement with the bus industry over many years. These days I am quite keen to get to know the railway players a little more. Many are multimodal and multinational which will bring a host of new perspectives and opportunities for us as ITLS to partner and contribute.

I think there is a lot to learn from the aviation sector as well. Certainly, airline alliances which emerged from the pressures of economic deregulation in the US and then joined by other countries has some parallels with the MaaS broker/aggregator model we developed. There is of course also a macro context in terms of MaaS around roaming between cities and also interurban/regional travel.

Many companies including traditional aerospace giants are developing passenger drones or vertical take-off and landing (VTOL) aircraft in an urban aviation context. Uber certainly sees the potential and are already looking at trials in the next few years. What is clear is there will be an increased blurring of modes and greater travel options and it is indeed hard to fathom just what this kind of future might emerge to become.

I guess the interesting thing for you there is not just the fact that you’re learning about new individual modes, but you also learn more about those, for want of a better word, rubbing points where those different modes come together.

Absolutely, and I think it is no longer useful and even misleading to consider modes in isolation and as mutually exclusive. Back to land modes if I may—we are already seeing with these transportation network companies (Uber, DiDi, Lyft, and the like) and their microtransit propositions that are blurring the line of what is a fixed-route bus and what is a taxi. Throw in these on demand trials and we are seeing in effect very similar services with the key difference being whether the service operates commercially or under contract to (and subsidised by) government. Surely, there can be a better way to bring different modes together!

Lately, we’ve been seeing so much media commentary about these ‘trackless trams’, which are essentially a new kind of bus which bring in a lot of the characteristics intrinsic to rail—like guidance systems which are now optical but in the past have been mechanical (like Adelaide’s O-Bahn). In Europe, there are an increasing number of tram-trains, again to bring together the best characteristics of each mode. All of these are heavily blurring what bus and rail are, especially as traditionally there’s been so much ideology from people around these modes—the idea that “trains are sexy, buses are boring”.

We as people should be less worried about what mode we’re travelling on. At the end of the day, it doesn’t matter whether the vehicle has rubber or steel wheels so nor should we be emotionally attached in our preferences. Rather, it’s about travel cost in financial (dollar) and temporal (time) terms. It is about the intrinsic service characteristics—frequency, span, speed, stops, connectivity—not modal technology.

It’s everyone making a connection, be it with a mode of transport, or indeed the modes connecting with each other somehow, the easiest way, the best way, the cheapest way possible.

Yes, yes, I definitely agree there. Too often, it’s just… take as an example, with light rail versus bus and we see this debate in every city around Australia and many developed economies.

What I advocate is to identify the transport problem, then select the right mode most suited to fixing that transport problem, and not the other way around.

Last question. We talked about a few different types of new technology coming at us, what is it in the next three to five years that you see coming that you’re most excited about?

Okay, if I may be my maverick self again and answer this question a little differently, can I say I’m less excited about technologies and all the hype that it brings?

You may.

I just feel that sometimes by default we have to be excited about new technologies. All this talk about electrification, automation, the internet of things, how it will change the world… it’s not that it isn’t exciting, it’s just that it does not target the fundamental geometric problem in our cities. Cities exist because they reap economies of agglomeration by (amongst other things) solving the transportation problem.

Successful cities are dense, urban environments so by default road space has to be a scarce, limited commodity. Technology is not going to change this reality. What we need to do is to build a strong sharing culture, dismantle car pride, and shift people away from privately-owned and single-occupancy vehicles. In other words, it is the spatial and temporal efficiencies of transportation that we need to address. I hope I’ve been able to show that the problem is not technological or even economic; it is political and emotional—and human nature is something difficult to change.

Technology is nothing more than an opportunity. How we harness it to achieve these stated objectives is the main question. There is a growing school of thought that many of these emerging technologies will not make the world a better place. Take for example the danger with autonomous vehicles. If they are so cheap and everyone will own one, what does it mean for traffic congestion, our urban form, and our health?

Where I think the potential lies is in how new regulatory and governance arrangements might help ensure that technology works to our advantage. MaaS offers itself as a game-changer in this context. The potential is certainly there but by no means guaranteed. The opportunity is what motivates me as I carry out my research, engage and advise the transport community. This is the future I am excited about!

BONUS Q and A!

iMOVE asked Yale a few more questions, based around his topic at the Transport of Tomorrow Symposium, Digital public transport in an era of shared and collaborative mobility.

How much of a shift do you see ahead for public transport?

One or two years ago there was certainly the view that Uber and their type were out to get public transport and especially as autonomous vehicles come online offering cheap point-to-point transportation we will see huge declines in public transport although these days I am far more optimistic with where things are going. We have conducted demand-side research which shows consumers regarding public transport to be an integral component of any multimodal MaaS package.

In our capital cities we have excellent radial rail systems, but the issue remains that first/last mile from people’s homes (e.g., only 7% of Melbourne population are within walking distance to a railway station). Under a MaaS future, I see traditional public transport (rail and bus) thriving on arterials but many low-density services might be replaced by more demand responsive personalised modes. The challenge is to integrate these shared and fixed modes together in an offering attractive to end users.

How much a shift do you see the public having to make in regards to public transport?

There can be a lot of stigma around public transport (particularly in places like the US), but with MaaS what constitutes pubic transport will be fundamentally redefined. The genesis for MaaS is to move away from transportation consumed via asset ownership (i.e., purchase of a private car) to one based on access (via a subscription or PAYG model)—how is the latter different from existing mass transit? MaaS therefore constitutes all non-ownership modes including traditional (mass transit) public transport but the difference here is that it also encompasses these emerging shared mobility services (ridesharing, carsharing, bikesharing).

In many ways, MaaS therefore becomes the public transport of the future so people’s conceptions of what constitutes public transport will need to change. There are a lot of reforms occurring in the contracting space and with what we term “mode-agnostic mobility contracts” , governments and transport operators are beginning to envisage and operationalise this MaaS (public transport) future.

When do you think we will see a true, non-conceptual MaaS at work in Australia?

I believe the technology is ready with a number of trials coming online in the next few months. Many of these I must say only encompass constituent components of the MaaS vision and are generally limited by geography, modal offering or degree of integration (e.g., just information or PAYG not subscription).

I would argue that true MaaS incorporates an institutional overlay with a network charge (as with any other utility) and will require all people to consume transportation via MaaS though this is a future which might never be realised.

Will MaaS work? What barriers are there to its taking off?

The concept is sound but issues arise when we add the human element. A major condition for MaaS is firms collaborating (either as operators of physical services, technology suppliers or financial investors) and there always exists commercial issues like cost/revenue sharing between responsible stakeholders, choice of branding and control/ownership of the customer.

At a broader scale are the issues of uniformity and interoperability between regions and operators. What is needed is a national vision for MaaS as in Finland or the Nordic countries and operationalised through regulation to ensure competition and a ‘level’ playing field.

Will MaaS be available in regional Australia? Where might its spread stop, and what might stop its spread?

Good question and one I have been asked on several occasions. In rural and regional environments space is more readily available and so may accommodate a greater mix of point-to-point offerings using less spatially intensive modes. Via (a microtransit product) cites that they enjoy better vehicle occupancies in a small town (Sittingbourne, UK) than Manhattan due to strong community ownership and a lack of other options. Perhaps this is scaleable to MaaS generally (though probably with a higher price than metropolitan) but I believe it will still be centred around small country towns and not its hinterland where travel flows are even more scattered.

What’s more important in MaaS – the pricing, or the multiplicity and easy availability of mode options?

Pricing is very important although I underscore that MaaS is premised on increasing people’s marginal cost of transportation. Laypeople too often discount the capital costs of their vehicle and regard them as ‘sunk’ (sometimes even ongoing maintenance and fuel costs) which makes non-ownership modes difficult to compete.

The one-stop digital platform will also be important in showcasing the diversity of options previously unknown although I must say this is only an enabler in itself and will mean very little if the individual mobility services which they integrate are not up to scratch.

If MaaS has a strong takeup in major cities, how soon do you see it as having an impact on single-occupant car journeys? And what might be that impact?

We cannot know since this will depend on the pricing model and what sort of regulatory overlay is implemented to ‘nudge’ people towards particular modes. Many MaaS service providers might have a bias towards point-to-point transportation modes (taxis and ridesharing) since they are usually more profitable and thus might encourage their users to shift from shared modes and mass transit (caveat being the temporal dimension).

In this future there will be a net increase in congestion—and I argue even if autonomous vehicles were to come online (despite proponents citing reduced vehicle headways etc. as reasons to be optimistic).

What MaaS might succeed in is making a dent on car ownership particularly at the margins (i.e., people’s second cars). A proposal I have advocated for is the establishment of a clearing house mechanism to regulate for how MaaS is deployed and how different modes are priced will help ensure a network efficient optimum.

What do you see as the Transport of Tomorrow in the short-term? (5 years out)

Not too much change barring some trials here and there. Many are limited to restricted geographical areas, transport modes, actors or services. In Australia, there is not enough scale and when we speak of pilots (be they automation or electrification or 5G) they turn out to be one or two vehicles whereas in places like China pilots mean entire cities.

I believe we will see pockets of innovation and ‘smart’ cities around the world—say the Greater Bay Area around Shenzhen and also California—with the deployment of new technologies but it will take time for this to cascade to other places.

What do you see, if your crystal ball/wish list extends this far out, in the Transport of Tomorrow in the medium-term? (20 years out)

I think autonomous and electric technologies will mature during this period. Congestion might not improve but travel time certainty will with better data analytics and so travel becomes more predictable. People say with teleworking and the like we may have less need to travel but I doubt this will be the case since us humans are social creatures.

The sharing culture remains an issue and might be the greatest constraint towards greater network efficiency. Only if regulatory mechanisms are in place (i.e., road pricing) will we see a change. In the end, these become emotional and political issues rather than technological or even economic.

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