Dockless Bike Sharing: A Great Leap but an Uncertain Landing


A Great Leap But An Uncertain Landing

In barely five years, dockless bike sharing systems have gone from exciting idea to world-phenomena.  There are over 70 firms that have placed somewhere between 10 and 25 million “park anywhere” bikes in several hundred cities with over a hundred-million users.  China is the epicenter of this modal tsunami but the industry is rapidly expanding around the globe, including explosively in the USA.

The hope is that these systems, like the Hubway-style dock-station services that preceded them, will massively increase bike usage – reducing future increases in car congestion, improving air quality and public health, helping promote local businesses.  The hope is that their low cost, ubiquity, and flexibility will make expansion easy and solve the geographic inequities of the dock-station-based approach.  The Hubway model has proven to be not viable in the suburbs: boosters claim that the much-lower entry cost of dockless systems (cheaper for the vendor, no upfront investment for the municipality) will lead to their presence in a broader set of communities and help create a critical mass of voters pushing for improved cycling infrastructure, better traffic speed enforcement, and kid’s programs.



Skeptics fear is that these venture-capital-funded startups continue to act like short-sighted predatory outlaws, dumping tens of thousands of cheap machines on our streets, cheating their customers, leaving piles of discarded junk blocking sidewalks and fire lanes, and after running through their initial funding falling into bankruptcy leaving chaos, ill-will, and crippled station-based systems in their wake.  And when it’s all over, things won’t be any better for low-income, non-English-speaking, or less urban people.  The recent total collapse of Seattle’s bike share organization, Pronto, -- like an earlier implosion of Melbourne, Australia’s bike share system -- is a negative example that US cities should study beyond the obvious helmet-requirement laws that both cities enforced.

Even in the best of circumstances, the highest hopes for these systems are unlikely to be realized.  It’s likely that dockless operations in low-density areas – rural and suburban communities, isolated college and corporate campuses – will continue to require public subsidy since they won’t have enough riders for vendors to become profitable either through user fees or corporate sponsorships.  It’s likely that mid-sized areas will only be able to economically support bike-share programs along specific commuting or shopping or high-use park corridors.

The long-term success of the industry depends on a combination of product and business model improvements along with increasingly sophisticated public regulation that pushes the market forward and ensures public benefits are the primary outcome.  The successful firms will be those that develop the strongest partnerships with the varied communities in which they operate, flexibly evolving their offerings as public understanding and ridership develop, bootstrapping their revenue in a sustainable growth pattern.  



The Metropolitan Area Planning Commission (MAPC) has organized 16 communities covering over 100 square miles from Chelsea to Needham to collaboratively issue a “Master Contract” RFP in an attempt to set the framework for ensuring some level of public service and accountability from these companies.  While a welcome and vital first step, and partly because dockless bikes are a “no direct cost” deal for municipalities (the vendors or their advertising sponsors pay for design, buildout, and operation), the current RFP leaves many key issues open in hope that the initial one-year contracts (renewable for up to 5 years) will provide time for experimentation and learning.  Some of the deep-pocket vendors will try to flood the region with market-share-grabbing numbers of bikes; others will emphasize more gradual expansion.  Still, by encouraging the introduction of “pedal assist” electric bikes as part of the mix, the RFP is exposing the region to the dangerously incoherent current local and state regulation of those vehicles – even very few US vendors currently have systems that allow eBikes to self-charge without docking.

To maximize their public value, shared bikes – docked and dockless – must be treated as a “last-mile” extension of our regional public transit system, and as an alternative to car travel for short trips.  They have to be sturdy (meaning heavy), use non-standard parts (to reduce vandalism and theft), have a high gearing (to make it easier for non-athletic people to use), and durable lights that don’t require batteries.  They are not a substitute for personally owned exercise/recreational, touring, or long-commute bikes.  But because they fill a huge gap in our current transportation system they deserve government and public promotion and financial support.



Back in the 2000-decade, Nicole Freedman, then in charge of Boston’s bicycle program (and now Transportation Director in Newton), pushed hard to set up the Hubway Bike Share program – which built on the breakthrough vision of Zipcar to use a digital platform, GPS technology, and smart phone apps to transform the relationship of use to ownership.  She felt that bike share was a game changer -- suddenly and vastly increasing the number of cyclists on downtown roads.  The growth in visibility, its obvious functionality, and the presence of so many adults wearing business clothes would dramatically increase both its safety (“safety in numbers”) and acceptability – making bicycling a “normal” part of the mainstream transportation mix.  

The proponents were right.  There are now over 1800 Hubway bikes available at over 185 stations throughout Boston, Brookline, Cambridge, and Somerville whose users have taken about 5.3 million rides. Opponents’ predictions of skill-lacking newcomers killing themselves and others on city streets have proven untrue.  While tourists are frequent users the majority of Hubway rides are by locals.  Even people (like myself) who own their own bikes use Hubway for commuting when the threat of later rain makes them reluctant to leave their own bike outside all day.  



Of course, things weren’t perfect, with many of the problems related to the docking system – the need to pick up and drop off at particular docking sites, the expense (up to $50,000 to set up and $40,000 annual operation) of setting up each additional docking station, the networking pressure to expand incrementally from a dense core, the related need to start downtown (rather than in neighborhoods) where experience in other cities suggested the largest initial cohort of likely riders would be found.  (The downtown focus also contributed to bike-awareness among government decision-makers whose support was necessary for city-wide bike facilities expansion.)

On the other hand, ever since its invention in Amsterdam in 1999, docked-station bike share systems have an impeccable safety record: nationally, over 100 million trips but only two fatalities (one in Chicago and one in NYC due to a terrorist attack). Dock-based design makes them safer than other models: more durable, built-in lighting, heavier/sturdier bike for slower speeds, drum brakes, upright position, etc.  (Many dockless bikes don’t meet these same specs.)  And Boston put in a decent effort to ameliorate the shortcomings – $5/year low-income memberships via web or walk-in because the annual membership was still too high for many people, increased publicity through a partnership with the Boston Medical Center via “Prescribe a Bike” where low-income patients get a $5 voucher along with a helmet and Hubway fob, the commitment to put at least a quarter of all additional stations in low-income areas, the city’s annual Women’s Ride and Youth Cycling program, the Roll It Forward free bike program and associated bike repair opportunities.  None of this is enough.  But it’s a lot more than nothing.

Still frustrations abound. One study found that nearly 43 percent of white residents in the four Hubway communities live near a bike-share station, compared with only 7 percent of black residents.  Even for those who can afford the annual membership, docking sites weren’t always where you wanted them and sometimes lacked either bikes or parking spaces.  The entrance of the private, for-profit firm Motivate as the Hubway operator brought additional capital but raised questions about the firm’s commitment to expansion not only within the Boston-Cambridge-Somerville-Brookline core – surrounding cities found it difficult to deal with Motivate or to get included.  (Unlike NYC and San Francisco, Hubway's equipment is publicly owned -- a conscious decision by Boston and other city governments to retain more control and emphasize bikeshare as public transportation.)



Enter dockless bikes.  Proponents describe them as the solution to all problems.  The GPS-tracked and phone-controlled services have already conquered China with significant presence in Singapore, Malaysia and Thailand.  No one knows how many “park anywhere” rental bikes are already on the road – somewhere between 10 and 25 million with over a hundred-million users.  There are over 70 companies in the market, the three biggest being Singapore-based oBike and China-based Ofo and Mobike.

Although none of them are making a profit, they are fueled by a massive influx of the equivalent of over two billion US dollars of Asian Venture Capital money.  Mobike is backed by at least $1 billion in investments, including from tech giant Tencent and Bertelsmann, while Ofo enjoys a comparable capital pool, with investments from e-commerce firm Alibaba, Ant Financial Group, Coatue Management, and others.  (There is some speculation that Alibaba’s investments are mainly aimed at increasing the demand for its on-line transaction services.)  The Big Three are now going global, including in the US.  Mobike is in 150 cities and plans to grow to 200 this year.  Ofo, with a capitalization of more than $2 billion (US$), has over 8 million bicycles in over 170 cities in seven countries, leaping to 20 million bikes in 200 cities within months – as owners of their own bike manufacturing capabilities, they are able to drop huge numbers of machines in target markets. 



Many of the firms seem to be following an Uber-like strategy: flood the market and underprice rivals by giving the product away to gain market share dominance, burn through VC money with the goal of outlasting the competition and ending up as one of the two or three survivors, ignore any laws or regulations or external problems including customer service that might slow your expansion.  In China, this has led to over-saturation of many areas with tens of thousands more bikes than the number of users can support.  And many of the bikes are flimsy, poorly designed and constructed, frequently out of service, and constantly being stolen or vandalized.  (There are reports that many of the Chinese manufacturing firms creating the bikes are environmental and workplace safety disasters as well.)  Cities are now dealing with “huge piles of mutilated, stolen, and abandoned bicycles…[dropped] indiscriminately, blocking the way for pedestrians and traffic. Bicycles have been found dumped in rivers, abandoned on open land, and hanging in trees,” according to press reports.  It is a massive transfer of capital from investors into landfills.

As the big firms consolidate their presence, primarily in the larger cities, smaller companies – both those that manage the sharing systems and those manufacturing the bikes – are being forced into smaller cities and university communities or driven out of business, taking their customers’ prepayments with them and leaving their bikes behind for city governments’ to deal with.  For the surviving firms, rapid expansion is still the primary strategy, raising questions about their own their long-term viability and about what will happen to the entire bike-share concept when the big guys run out of VC money.  One warning come from Minneapolis’ car-share experience where the “traditional” car share business was undercut and driven out by Uber and others, all of which subsequently reduced their presence and left the area without sufficient service at all.



As the Asian-based firms begin throwing bikes into US cities, they are being joined by several US-based firms, most notably Limebike which was founded and run by Chinese-Americans but financed by US money, as well as Spin, Vbike, Zagster, Jump Mobility, and others.  Some, like Zagster focus on smaller cities, college campuses, and other discretely bounded markets; but all of them want to grow – Zagster has recently launched its PACE dockless system.  (The total number of companies keeps growing, making it hard even for marketing firms to count them all: e.g. this list; or for a world-wide perspective: this one)  Chelsea and Malden already opened their doors, or had them pushed open, by a couple of incoming dockless vendors --- resulting in much confusion and the rapid migration of bikes to other towns.  In an effort to pro-actively create some order out of this free market demolition derby, the eastern Massachusetts regional public planning agency, Metropolitan Area Planning Council (MAPC), gathered 16 cities with a combined population over two-thirds million to establish some ground rules for entry. 

Working within the constraints of a “30-b” state authorized contract, MAPC issued a “Master Contract” Request For Proposals (RFP) to select a regionally preferred vendor under which each participating municipality would be able to start from a solid foundation while negotiating a local contract.  The Master Contract requires:

  • proof of financial resources and previous experience delivering the promised bikes and services,
  • explicit measures to ensure equitable access to low-income and non-English-speaking populations including those without use of a smart phone,
  • a description of how the shared bikes will be integrated into transit and other travel modes,
  • guarantees on equipment maintenance and customer service and “geo-fencing” to prevent both improper parking and the drifting of bikes into Hubway communities (which have “exclusive” agreements with Motivate),
  • removal of abandoned or improperly parked bikes as well as rebalancing of bike locations to avoid clumping, and
  • data sharing on bike locations, trips, and system operations with protection of user data. 

Localities would be free to add additional requirements such as a “nominal” permitting fee, year-round operations, and bike parking regulations.  Suburban communities, in particular, will have to think carefully about how to keep the bikes from ending up in people’s backyards far from town center or transit stations or stores, unavailable for the next potential user.



Significantly, the RFP says “favorable” attention will be given to vendors that promise to provide electronic motor assist on at least 50% of their bikes.  While eBikes promise to facilitate an exciting expansion of the bicycling population, and may be needed in hillier towns, it runs into the problem that Massachusetts’ regulation of eBikes is incoherent at best and dangerously misguided at worst

EBikes are usually divided into “pedal assist” and “motorized”. In the first group, the “assist” only kicks in when the rider is turning the pedals, or may not kick in at all if the bike has a “pedal only” mode (some dial-up the engine based on the speed of pedaling, some simply have one electric speed). Pedal-assist bikes also have maximum speeds, in line with what a rider could achieve on a standard bike. There are estimates that pedal-assist bikes in mixed bike share systems see three to 4 times as many trips as the standard bikes in the fleet.

Motorized eBikes run entirely on engine power controlled by a throttle.  But the assist versus motorized difference is a technical rather than street-significant distinction when deciding what machines will be allowed in bike lanes, or require driver licenses, or be subject to regular vehicular inspections.  More relevant distinctions are the top speed that the motor can move the machine (over 20mph or more than a set horse-power should make it ineligible to use bike lanes and multi-use paths) and the physical size (over a certain width or length should also preclude using standard bike facilities).  Other important regulatory criteria include the fact that it is electric rather than fossil-fuel driven, it’s noise level, the presence of brake and night-driving lights, the distance it takes to stop the eBike at top speed, the minimum load it can carry, and how other types of the emerging category of low-power transportation tools (Segways, motorized boards and scooters, and who knows what else will come) can qualify for similar treatment.



The MAPC RFP is a vital and well-thought-out first step in ensuring that dockless bike share programs serve the public interest as well as private profit.  It ingeniously uses the value of allowing bikes to park on municipal sidewalks and other public land as the basis for the 30-b “procurement” of a service for which cities will pay nothing.  Although there are no criteria for setting an upper limit on the number of bikes in a city or the region by any one vendor or in total – controls that several Chinese cities have found it necessary to impose – city representatives believe parking and rebalancing requirements (under which bikes must be returned to various towns or even neighborhoods to maintain minimal numbers) will provide sufficient control.  Because it is a “no fee” procurement, the RFP avoids proscriptive details, leaving it up to RFP responders to competitively propose ideas about ensuring equitable access to low-income or non-English-speaking groups, geographic distribution, and other key operational characteristics.  RFP evaluators will have to push extremely hard on vendors to get a handle on the details below the generalities and good intentions. Additional cities, universities, or other entities can join the collaborative and Master Contract if it is renewed at the end of the first year.

Still, although one of the complaints about dock-station bike systems is the lack of expansion into low-income and non-white areas, there is no guarantee that the dockless user-controlled distribution system will lead to anything better.  Affordability for low-income as well as for non-English-literate people will also take more attention than the RFP currently provides.  And while the 16-city collaborative intends to continue meeting, there is no formal mechanism for continued collective review and approval of vendor equipment or for a set of criteria and schedule of periodic performance evaluation – or for funding on-going oversight. 

Given the volatile state of this industry it would be foolish for any municipality to allow a monopoly to emerge or to sign an exclusive contract with any one firm.  Leaving a city open to any vendor that wants entry would be disastrous – unlimited competition pushes each firm to focus on Darwinian market-share expansion rather than mode shift and service improvements, and reduces the value of potential business sponsorships needed to keep user-costs low.  Having three or four firms emerge from the RFP process ready to compete with each other for local implementation would use market pressure to improve performance and protect the region from the almost certain bankruptcy of many of the businesses.  (Mergers, acquisitions, and bankruptcies are already consolidating the industry in other countries.) On the other hand, it might make oversight easier and give municipalities greater bargain power to grant one vendor a limited-time exclusive contract.



Because of the 30-b process, cities will probably have legal standing to demand compliance with contract provisions with contracted vendors.  And protecting the public right of way from vendor-enabled blockage is a recognized legal power. But it is not currently clear how the provisions of the RFP or the supplemental regulations imposed by individual municipalities can be enforced on vendors that don’t get selected. It might be possible to treat non-selected firms’ bikes as trash and their activities as a public safety hazard, but these are weak hooks on which to hang the confiscation of private property.  And it will be complicated to legally distinguish the share bikes from personally owned equipment.  The urban core of Hubway cities will have a hard time keeping the dockless bikes out – undercutting their own investments and public access.  Better city or preferably state laws are needed.  Even though it’s a “no direct cost” service, all dockless shared bike vendors should be required to post a large performance bond in addition to the insurance policies the RFP describes.

The collaborative regional group that MAPC pulled together to create the dockless bike share RFP should also agree on a formula for imposing a business permit fee for these firms – based on population, number of bikes, and municipal costs for cleaning up vendor-presence problems including the presence of parked shared bikes in unallowed locations.  But why not also create a “commercial road use” pricing structure that might open the door for imposing similar fees on Uber and the other platform-based transportation companies.  



As we’ve learned from Hubway and other dock-station shared bike systems, people will massively and happily start using these services even before cities have set up fully developed bike-lane networks with the right assortment of off-road paths, protected near-road bike lanes, standard bike lanes, and shared or slow or neighborway streets as well as convenient and adequate front-entrance and indoor secure bike parking.  In fact, the rapid increase in cycling caused by the introduction of sharing systems help generate the political will needed to construct these facilities.  But safety and public service, not to mention urban transportation, are obviously improved when appropriate infrastructure is put in place.  One potential of at least the current dockless business model is that it can uncouple municipalities from bikeshare funding and operations, freeing them to focus resources on infrastructure.

Dockless bike share systems will only increase this dynamic.  The good news is that, if done carefully, it will improve conditions for all bicyclists while helping prevent additional car congestion and pollution. 


Thanks to Scott Mullen, Phil Goff, Nicole Freedman, Karl Alexander, and many others for helping me understand this rapidly evolving industry and/or for comments on earlier drafts.


Related Previous Posts:

> THE E-BIKES ARE COMING:  How To Avoid Disaster

> BETTER BIKE LANES:  Improving On What Got Us Here

> CAR CONGESTION:  Why It’s Increasing & What To Do About It



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