KARACHI: Within a few months of their launch, mobile app-based car-hailing services Careem and Uber have become the preferred mode of intracity travel for thousands of urban Pakistanis, especially women.

While Dubai-based Careem directly made inroads into markets in Karachi, Lahore and later Islamabad in October last year, its San Francisco-based rival, Uber, has been operating in Lahore alone since its launch four months ago.

Explaining the reasoning behind this, Uber’s head of expansion for Pakistan, Zohair Yousafi said, “Lahore is the perfect place to test the market. It is not as big a metropolitan as Karachi, yet [it is] a significantly bigger and diverse market when compared to Islamabad.” The company plans to launch in Karachi within the next few months.

Despite differences in presence and customer base, both transport companies have received a public response that surpassed initial expectations.

This success is related in large part to the rise in the popularity of smartphones. According to market estimates, there will be 40 million smartphones in Pakistan by the end of 2016. “The [Pakistani] population is quickly modernising and adapting technology; especially when it comes to smartphones the uptake has been incredible ever since the launch of 3G and 4G services,” said Mr Yousafi.

Owing to the relative ease of hailing a Careem or Uber, they have been a hit among women. “Increasingly, more and more women are using [our service] because for them, there is no other option,” said Careem’s managing director Junaid Iqbal.

A feature included in both apps that allows customers to share their route and car details with family members has also been widely welcomed. While both companies have encountered minor mishaps and complaints, there have been no major setbacks so far.

“It is a learning process ... we are learning, the customers are learning,” Mr Iqbal told Dawn.

At the time of their launch, both Uber and Careem enticed customers with generous flat discounts. Now promo codes are offered occasionally. Both companies maintain that their per-kilometre charges, ranging from Rs13 to Rs25, are affordable. Careem also plans on introducing a loyalty programme for its customers.

In a departure from its usual business model, Uber allows its Pakistan customers to pay in cash, rather than credit cards.

Yet, it is not always smooth sailing for Careem and Uber.

As demand surges, both companies are tackling complaints of car shortages by a customer base that has quickly adopted the app-based technology. Despite continually adding new cars to the fleet, of late, the social media pages of Careem have been filled with complaints from disappointed customers who received a “no car is available” message after repeated attempts to book a ride. Uber has received similar complaints from its customers in Lahore.

The problem spiralled over Eid when customers, who had planned to go out with friends and family to celebrate, were forced to use alternate, less convenient, travelling means.

The shortage issue exists simply because “demand is completely outstripping supply every day,” shared Mr Iqbal. He further added that on Eid many drivers had family obligations and a number of them went to their native towns on the occasion, further diminishing car supply while demand spiked.

This is despite successful recruitment drives by both Uber and Careem, which garnered a lot of interest for driving jobs. With flexible hours and handsome incentives, the drives managed to attract accountants, retirees and even ex-hockey players.

“The flexibility, entrepreneurial opportunity and earning potential of Uber’s innovative technology have an equally transformational impact on the livelihoods of driver partners and their families,” said Mr Yousafi of Uber.

But even so, some of the models followed by the transport giants internationally are not feasible in Pakistan. Careem wants to attract ‘captains’ (drivers) who can drive around their own private cars for the service. This is a tall order in Pakistan; most driving applicants do not have their own vehicles. Furthermore, Mr Iqbal shares that “some 30 to 40 per cent of prospective captains (drivers) who walk into the Careem offices hold fake driving licences,” and therefore cannot be offered a job.

Careem is striving to minimise the demand-supply gap by increasing cooperation with owners of rental car fleets, entrepreneurs who wish to invest in cars, and people driving their private vehicles. “We are taking new captains on board everyday ... but how Karachi has taken to Careem is unbelievable,” shared Mr Iqbal, conceding that a small supply-demand gap is likely to persist as more people discover their service.

He believes even the cropping up of multiple transport services is not enough to meet the needs of populous cities like Lahore and Karachi. With a growing middle-class and an ever-expanding presence of women in the workforce, the Pakistani market has proven to hold massive potential for the companies.

There are also other questions about the impact of Karachi and Lahore’s notorious traffic jams on the service. Careem’s Mr Iqbal argues if the online car business keeps growing it will only reduce the car burden on roads; “one vehicle can cater to a large number of people, hence fewer additional cars will be required.”

Some are concerned that the arriving of multinational transport companies will diminish the market for local, often needy, rickshaw and taxi drivers. Indeed, internationally, taxi drivers have frequently demonstrated against car hailing services claiming they have unfairly taken their business away. In March, taxi drivers in Cairo parked their cars on a road in protest, causing a gridlock jam. The Police had to fire warning shots to disperse the large demonstration.

For its part, Careem plans to launch rickshaws in its fleet soon and make them “our asset” in a co-op arrangement.

Published in Dawn, July 19th, 2016