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Uber hopes to lure back drivers with $250M in incentives

Uber hopes to lure back drivers with $250M in incentives

Uber (NYSE: UBER) has announced a $250 million “driver stimulus” boost in an attempt to lure drivers back to the service as pandemic-related restrictions are lifted and riders return.

“Boosted incentives and guarantees will help welcome existing drivers back to Uber and ensure first-time drivers do well as they learn the ropes,” wrote Dennis Cinelli, vice president of U.S. and Canada mobility for Uber, in a blog posting announcing the initiative. “In 2020, many drivers stopped driving because they couldn’t count on getting enough trips to make it worth their time. In 2021, there are more riders requesting trips than there are drivers available to give them — making it a great time to be a driver.”

According to Cinelli, Uber drivers are making an average of $31.03 per trip in Philadelphia, $28.73 in Chicago and $26.05 in Miami before tips and before the driver stimulus kicks in.

“We want drivers to take advantage of higher earnings now because this is likely a temporary situation. As the recovery continues, we expect more drivers will be hitting the road, which means that over time earnings will come back to pre-Covid levels,” he wrote.

In its end-of-year earnings report, Uber said mobility-related bookings were $6.79 billion in Q4, off 47% year-over-year. Uber offset some of the decline thanks to its Uber Eats and Uber Freight divisions. Uber’s Delivery business, which includes Eats, saw a 66% year-over-year increase in merchants on its platform and posted 128% growth in gross bookings in Q4, reaching a $44 billion run rate by December. Uber Freight posted year-over-year growth with revenue of $288 million in Q4, up 8.6% over Q3.

Gridwise co-founder and CEO Ryan Green in February told Modern Shipper that rideshare driver availability had fluctuated throughout 2020.

“From the supply of drivers as soon as the pandemic came in March, by April we saw a 65% decline in drivers for ride-hailing services,” he said. Some, he said, switched over to delivery services, especially as demand for food delivery skyrocketed. Food delivery, though, was paying as much as $2 less per hour than rideshare, Green added.

“The ride-hailing drivers that continued to drive were making a median of up to $18 an hour while the food service drivers were making $16 an hour,” he noted. Food delivery has continued to be lower-paying than rideshare, Green added.

Green said the supply of drivers that rideshare companies built up heading into the summer suddenly was too great for the demand in the second half, depressing rates.

“What you did see was a big boost in driver earnings per hour [early] so those drivers that were out on the road in the summer [did well],” he said. The peak was in summer, but that “just continued to decline … correlating directly to a decline in [driver] incentives. As the second wave came around, there was a decrease in demand, and service providers had built up supply, so now there was no [reason for incentives].”

Uber feels it’s time to reinvest in drivers.

Click for more Modern Shipper articles by Brian Straight.

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7 April 2021, 22:00