Sunday, September 26, 2010

Yellow Needs More Cabs? For Whom?

There are several questions and interesting aspects about Yellow Cab manager Jim Gillespie's claim to the MTA Board that Yellow needs 139 more taxis in order to service all the radio calls that the company gets.

1. Why 139? Why not 140 or 135? Must be scientific, huh? Let's do the math:
  • Gillespie says that Yellow failed to pick up 280,000 or 25% of its radio calls during the last 6 months.
  • 280,000 / 139 = 2,014 radio calls that Gillespie expects each new taxi to pick up in 6 months
  • 2,014 / 182.5 days = 11 radio calls per cab picked up per day.
  • /2 shift a day = 5.5 radio calls per day per driver.
Sounds a bit lame, doesn't it? But, maybe Yellow doesn't expect much from new drivers. Let's look at the veterans for comparison:
  • If 280,000 = 25% then 840,000 (280,000*3) calls must have been picked up during the last 6 months by Yellow's 500 cabs.
  • 840,000 / 500 = 1,680 radio calls picked up per driver for 6 months.
  • 1,680 / 182.5 = 9.2 radio calls taken per cab per day.
  • /2 = 4.6 radio calls per driver per day.
Hmmm. Seems like the vets are even lamer. Let's do a little more math. What if each vet picked up 5.5 radio calls per day?
  • 5.5*2 = 11*182.5 = 2,007.5 picked up calls per cab for 6 months * 500 = 1,003,770 radio calls picked up.
  • If 280,000 = 25% then Yellow handles 1,120,000 (280,000*4) radio calls per 6 months.
  • 1,003,770 / 1,120,000 = the percentage of calls that would be picked up by Yellow drivers if the vets were as good as Gillespie expects the rookies to be = 89.6% of the calls picked up.
 What if the vets worked just a little harder and picked up 6 rides per shift per day?
  • 6*2 = 12 pickups per cab per day*182.5 days = 2,190 pickups for 6 months*500 taxis = 1,095,000 pickups.
  • 1,095,000 / 1,120,000 = 97.8% of the calls picked up.
Well, it looks like we've found a solution to Yellow Cab's problem - train or whip the slackers.

In short, this is the only time that I can recall a company using the incompetence of its personnel as a reason to expand its business.

In short, the only science involved in Gillespie's speech was the science of bs.

2. Yellow Cab will not guarantee that all, or any, of the new drivers will take radio calls.

Perhaps you, gentle and misinformed reader, imagine that Yellow has a dispatching system that will use GPS to automatically assign the closest of those 139 cabs to one of those 280,000 radio calls?

Alas - that's not the case. Yellow's computer will inform their closest empty cab that there is a nearby radio call but whether or not the driver will accept the order is anybody's guess. He or she can take it or leave it. This also assumes that the closest driver actually has his computer on, which is problematical.

What's going on here?

3. Yellow Cab (along with all other San Francisco taxi companies) is in the leasing business, not the taxi business.
  • They make their money from leasing taxis to drivers, not from the actual fares.
  • The drivers pay the companies first and then make their money from picking people up.
  • As long as a cab company can fill it's shifts with lease drivers, it doesn't matter how much actual business the company does.
  • Mild recessions (with declining demand for taxis) are usually good for cab companies because desperate, unemployed people will take bad shifts. A little money is better for them than nothing.
  • Yellow Cab, for instance, wasn't hiring in 2008 and 2009 because all their shifts were filled. 
4. Yellow Cab (along with all other San Francisco taxi companies) will never tell a driver to take a radio call. Why?
  • Cab drivers in San Francisco are Independent Contractors, not employees.
  • What these drivers are is independent of are all laws that protect employees.
  • Cab companies do not have to pay unemployment taxes, social security taxes or (for Long Term Lease drivers) Worker's Compensation, etc on Independent Contractors.
  • Telling a driver to take a radio call would make said driver an employee. 
  • Telling a driver to take a radio call would mean that Yellow Cab would have to pay the taxes etc listed above.
5.  Yellow Cab (along with most other San Francisco taxi companies) is more and more operating its medallions under long term lease arrangements.
  • The medallions are leased by the month and the taxi companies have no control over who drives the cab.
  • Hundreds of experienced drivers have lost their shifts due to this trend.
  • They have been replaced by new drivers who aren't trained (for Yellow to train them would make these drivers employees).
  • Most of these Long Term Lease drivers hang out at the airport or head downtown.
  • These new drivers are much less likely to take radio calls than the people they replace.
    And, those are the real reasons why people in the Bayview, the Sunset, the Richmond and Noe Valley, not to mention the attractive blond at Greenwich and Scott, aren't getting taxis as quickly or as often as they should.

    As long as the current taxi system remains in effect, 139 more Yellow Cabs will do little or nothing to improve San Francisco's radio business. 

    Gillespie was quoted in the Examiner as saying, "If we had more taxis and they were more spread out, people could get their cabs quicker and more people would call ..."
    If the cabs were "more spread out" ... but they won't be any more spread out than the current cabs are. Under the current system there is no leadership or direction, there is no one to tell the taxi drivers where to spread. The new taxis, like the currents ones, will gravitate to areas where the service is already good like SFO and Union Square but service to the outlying areas would not be improved one whit.

    If Yellow Cab (along with the other companies) ran their businesses in a more rational manner, if the companies were more interested in serving the public than in avoiding various forms of taxation, the taxicabs we already have on the street would more than adequately handle the radio calls.

    The only people who would really benefit from those 139 more medallions would be the owners of Yellow Cab along with the new medallion holders.


    1. This article identifies the issues accurately. The problem is that the public generally is uninformed. People believe cab companies are in business to provide transportation to the public and that cab drivers are crazy, but the media never bothers to examine the industry more closely and write about it. Unfortunately, taxi drivers are the only ones who can see through the bullshit. How do we get a taxi industry expose to the press because the general public has a right to know that cab companies are not really in business to service them?

    2. Hi Ed
      If you want to get a load of ubbercab follow them on twitter, vewe vewe interesting, always singing there praises. its basically a transportation application and seems to be growing rapidly. Dont know if anything can be done about them but MTA should do something. Dick

    3. You are completely correct when you observe that Gillespie is using Yellow Cab's incompetence as a reason for increasing its market share. Thanks for that, and thanks for all the math!

    4. Hi Anon - I wish you would use a name even if it's fake. I'm sending articles like this to press people. Hopefully somebody will look into what I'm saying.

      Hi Dick - I've heard that the MTA has already run a sting on Uber. Don't know if this is true.

      Thanks Christopher - the math was fun.


    5. Hi Ed,

      I'm glad to see your latest blog is generating so much interest. You have concisely boiled this issue down to its core. And your public comment at the last TAC meeting was dead on. As long as the public is being stranded out in the avenues or even in the heart of the Marina, UberCab, bandit cabs and other up-starts will try to fill the void and possibly flourish. When a person really needs a ride, they will jump into almost any vehicle. Who can blame them? Adding 139 more taxi's to the system, chasing after the same fare in Union Square isn't the answer. We need some vision and new ideas. These are big challenges. But if we don't don't start meeting them and serving the public who really pays all our bills, we could become fringe players sooner than anyone imagines.

      Erik Hattan

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    7. Way to be so short sighted with your math blogmaster! Don't mention the fact that cabs are constantly picking folks up that wave them down on the street. Or the cabs that are waiting at designated pick ups or hotels. Or cabs that pick up folks from the same area they drop people off. Of course the cabs live in a bubble where they sit on their 4.6 radio calls per day. Lame article that shows only 1 aspect of the business. Try again