Wee Ka Siong: eHailing providers are free to set their own fare structure, price hike due to shortage of drivers

Transport Minister Dr Wee Ka Siong has recently called upon eHailing providers to explain the recent surge in pricing for ride-sharing services which some claimed to be as high as 400%. After discussions with the relevant parties, he has issued a statement to clarify the current situation and what steps are taken to tackle the issue.

Despite calls from some quarters to regulate eHailing pricing, Dr Wee said the eHailing providers are permitted to set their own fare structure based on their own formula and their terms of service with their customers in a free market. He shared that typically the fare structure consists of base fare and surcharge. While the Government does not regulate the base fare, the surcharge shouldn’t be more than two times the base fare, taking peak rates and fuel prices into account.

From what he gathered from the eHailing operators, the recent surge in fares is due to supply-and-demand imbalance and high traffic volume which led to longer travel times. While there’s an increase in demand for eHailing services, the companies have reported a drop in the number of registered drivers by as much as 30% compared to pre-pandemic levels.

He added that these factors had the most effect on the fare algorithms of the eHailing platforms which also take into account other factors such as distance, traffic volume, weather patterns, and supply and demand. The Ministry of Transport has shared that there are over 130,000 individuals who hold vocational licenses to work as eHailing drivers.

To address the surge pricing issues, the eHailing providers have assured the Ministry that they are allocating more resources to increase the number of available drivers. Meanwhile, the Government will also ensure more eHailing providers, taxis and buses are available to provide commuters with better last-mile connectivity. It expects the eHailing sector to grow with more driving schools and eHailing platforms accepting more applications to sign up as a driver. There are currently 21 active eHailing platforms nationwide including the Klang Valley.

As highlighted recently, the same issue is also affecting food delivery services as well. With all economic sectors reopened with no restrictions, food delivery services in the Klang Valley seem to take a longer delivery time while the cost of delivery is also noticeably higher during peak hours. An association representing delivery riders claimed that delivery orders have dropped by 10% but about 25% of riders have left the platform.

The surge pricing for eHailing services during peak hours has also encouraged more commuters to take Taxis instead. The Combined Taxi Across Malaysia claimed that the number of taxi passengers has increased by 40% lately. Unlike eHailing platforms, the fare for taxis is fixed with a RM3 base fare and a surcharge of RM0.10 per subsequent 115 metres travelled.

[ SOURCE, IMAGE SOURCE ]

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