Wednesday, December 11, 2024
atOptions = { 'key' : '9c978b9d1ca9d2f60c1970fa17e039ea', 'format' : 'iframe', 'height' : 90, 'width' : 728, 'params' : {} };
Homecommentary singapore businessCommentary: Could Trans-cab merger and rumoured foodpanda buyout spell trouble for Grab...

Commentary: Could Trans-cab merger and rumoured foodpanda buyout spell trouble for Grab customers?

SINGAPORE: Whether you’re a Grab user or not, a series of developments related to the company has become the talk of the town – from the proposed acquisition of taxi operator Trans-cab to rumoured buyout talks of foodpanda’s Southeast Asia business.

The top question for many is, of course: What does all this mean for consumers?

At first blush, it might seem like these acquisition decisions are connected – the self-styled “super-app” trying to increase market share by gobbling up competitors in the ride-hailing and food delivery sectors. In theory, decreased competition could lead to higher prices.

On Oct 16, Singapore’s competition watchdog said it was “unable to conclude” that a merger between Grab and Trans-cab, the country’s third-largest taxi company, would not give rise to competition concerns.

Industry insiders and consumers alike are speculating on Grab’s broader objectives. Southeast Asia’s tech landscape has been in constant flux in the last few years. Most platform companies are now pushing for profitability over hypergrowth, driven by investor pressure and macroeconomic uncertainties.

TRANS-CAB FLEET HELPS SECURE SUPPLY

On closer examination, Grab’s potential acquisitions appear to be disparate business considerations addressing distinct challenges.

The Trans-cab deal is a direct response to the supply challenges in the Singapore ride-hailing market. Earlier media reports cited Land Transport Authority (LTA) figures of about 63,000 active drivers (taxi drivers and private hire) in the first half of 2023 – higher than the 55,000 at the end of 2022, but still lower than the 69,000 active drivers before the pandemic.

Grab had mentioned supply shortages in a few earnings calls previously and has been taking steps to address this. For example, earlier this year, it had also re-introduced carpooling service GrabShare in Singapore and the Philippines.

Related:

Commentary: Is Grab set to become the next Netflix – and not in a good way?

Commentary: Ride-hailing drivers and delivery riders finally on a more equal footing with employees

Seen in this frame, Grab’s acquisition of a taxi company is an attempt to secure a reliable supply base of drivers and vehicles. It seems to be a win-win partnership for both sides.

Grab intends to digitalise Trans-cab’s booking services so that taxi drivers receive bookings from both the Grab platform as well as Trans-cab’s existing call centre. This will increase productivity (and earnings) for taxi drivers that used to wait mainly for customers via street hail or the call centre. And for Grab, the increased supply of vehicles and full-time drivers will alleviate some of the pent-up customer demand.

How about concerns of a potential monopoly? ComfortDelGro remains a formidable competitor for Grab in Singapore, with 64 per cent market share compared to Trans-cab’s 15 per cent. The LTA’s point-to-point transport regulatory framework also does not allow ride-hail operators to prevent drivers from using other platforms.

If ComfortDelGro could make significant enhancement of its technology, particularly in mapping and search, it would strengthen its competitive position significantly.

RELATED ARTICLES

Most Popular