converge what lies ahead in the future of mobility for sea?...converge - what lies ahead in the...

Converge What lies ahead in the Future of Mobility for SEA?

March 2019 Solution Centre

Converge - What lies ahead in the Future of Mobility for SEA?

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Converge is a series of reports by Deloitte Southeast Asia Innovation that provides insights into the technology trends and startup ecosystem in Southeast Asia (Footnote 1).

Each report provides a snapshot of the upcoming technology trends in a particular sector and introduces promising startups that are driving new ideas and taking on challenges that are unique to Southeast Asia.

This special edition on the topic of Mobility is co-authored together with Deloitte’s Future of Mobility Global Solution Centre, a Deloitte Global initiative.

Join us in discovering interesting and potentially disruptive startups and initiatives across a myriad of industries, and feel the pulse of Southeast Asia’s thriving digital revolution!

Who the report is for:

• Corporations exploring innovation capabilities and startup engagement

• Individuals who are keen to understand technology and innovation trends driven by the startup ecosystem in Southeast Asia

About Deloitte Southeast Asia Innovation

Deloitte Southeast Asia (SEA) Innovation is a cross-function, cross-country innovation unit dedicated to driving the innovation agenda as a culture and value creator across the region.

About Deloitte Future of Mobility Global Solution Centre

The Deloitte Future of Mobility Global Solution Centre aims to become a globally recognized pioneer of co-developed analytics & digital mobility solutions to address the rapidly changing mobility landscape, focusing on customer centricity & emerging technologies.

Have feedback on Converge? Drop us a note at [email protected]!

Footnote 1 Limitations: While we try our best to ensure that this report is up-to-date and is accurate in the presentation of trends as of the date of publication, there are some limitations to this report. Some startups choose not to disclose their funding rounds and/ or funding amounts. As such, the data might not reflect the exact situation.

Sources: This report draws from startup databases such as Tracxn, Crunchbase, and Tech in Asia, e27, as well as reported data from local, regional and global news sources, and respective company websites.

About Converge


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1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Brunei Darussalam Cambodia IndonesiaLao People's Democratic Republic Malaysia Myanmar

Philippines Singapore ThailandTimor-Leste Viet Nam

Urban Population (% of Total)

1 https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS

Urbanisation and the Challenges of Mobility

Mass mobility issues are often related to urbanisation, which is usually a sign of burgeoning prosperity. In the growing economy of Southeast Asia, it is common for the city centres to be a bustling hive of tourist and commercial activity, marrying the old and the new in a smorgasbord of economic opportunities.

Increasing urban density, however, is a double-edged sword. Beyond the benefits of agglomeration and the network effect, there are challenges like congestion and pollution, which adversely affect individual health and wellness.

From scrappy tuk-tuks to private cars to modern commuter subways, commuters looking to get around town in Southeast Asian cities are often faced with a plethora of options that provide no real relief to the congestion and pollution they expect to experience. With Southeast Asia becoming increasingly wealthy and urbanised (see Figure 1), this is set to get worse with more vehicles and residents in the urban centres.

The sight of skyscrapers remains a common representation of modernisation and prosperity in this region. As cities compete to build up, instead of spread out, the solution to congestion issues at these centres resides in public transportation system improvements. Jakarta recently opened Indonesia’s very first mass rapid transit system in March 2019 to alleviate gridlock in the city centre. Ho Chi Minh City and Hanoi in Vietnam are also building up their urban commuter rail systems.

The dizzying pace of economic progress and urbanisation has given both new aspirations and new headaches for city governments to deal with. In this report, we will also see corporations and some entrepreneurs stepping to the fore, making use of emerging technology trends to create solutions that can alleviate the problems which come with urbanisation.

Source: Urban Population (% of Total), World Bank, 20171

Figure 1: Urbanisation Trends for Southeast Asia


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The smartphone changes mobilityEminently, advancements in consumer telecommunications, computing and smartphone internet penetration in Southeast Asian countries have enabled many app-based solutions to emerge within the last decade. While commuters rejoice at having many transportation options at their fingertips, changes to back-end operations and business models, the continuous maintenance of mass transportation infrastructure, and mindset shifts towards the business of providing first-mile last-mile transportation services, are all required for societies to fully embrace and benefit from the potential of having new technology in our lives.

A multitude of apps now enable consumers from this region to hail a ride from anything ranging from a car to a motorcycle to a 3-wheeled vehicle (for example, a tuk-tuk), or for consumers to

move across a distance using a shared bicycle, a shared electronic scooter, or a shared car. The immediacy with which personal demand and mass supply for transportation can now be matched has also transformed the landscape of on-demand mobility provision, extending this model to traditionally scheduled and fixed-route systems like public bus services.

SWAT and Via Transportation, for example, are two companies that have developed a dynamic routing and matching algorithm to enable a fleet of on-demand public bus services (see Table 1). Announced in 2018 by the Singapore government, this new service is slated to be on trial for six months, and will allow commuters to request for pick-up and to alight at any bus stop within the defined geographical location of the trial2.

2 https://www.lta.gov.sg/apps/news/page.aspx?c=2&id=ba5e1ec1-ace5-4639-ad5c-e5f3fd1c92a8


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Startup Description Country Year founded

Funding

SWAThttps://swatmobile.io/

SWAT provides shared ride services which uses dynamic routing algorithm for booking shared rides. The platform uses algorithms to assign passengers for each ride maintaining the lowest possible commute time for the passengers. The platform uses distance-based pricing model.

Singapore 2016 Seed- S$3M

Via Transportationhttps://ridewithvia.com/

Via is an on-demand transit system that takes multiple passengers heading in the same direction and books them into a shared vehicle.

USA 2012 Series C- US$387.1M

Dada Bushttp://buskeji.com/

Dada Bus is a bus pooling app for shuttle service. It leverages big data to smartly match users with routes. Provides services on 2,000 transportation routes in 30 Chinese cities, catering to 2 million users as of Feb 2016. Has 800+ buses which are run by 100 operators. Aimed at white-collar workers and allows users to book through wechat and its own app.

China 2014 Series C – US$59.7M

Shuttlhttps://ride.shuttl.com/

Shuttl is an app-based bus-pooling service operating in select Indian locations, primarily catering to corporate commuters. Users can book the service by selecting the boarding point and drop points. The company rolled out inter-city bus services and rentals in Nov 2016 to make use of unutilized fleet capacity.

India 2015 Series B – US$36.6M

Table 1 – On-Demand Bus Services

*Information and numbers sourced from Crunchbase and company websites


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3https://www.straitstimes.com/asia/se-asia/indonesia-charging-ahead-with-electric-vehicle-ambitions4https://asia.nikkei.com/Business/Business-trends/Japan-carmakers-angle-for-EV-primacy-in-Southeast-Asia5https://www.edb.gov.sg/en/our-industries/company-highlights/bollore-global-innovation-centre.html6https://www.straitstimes.com/singapore/transport/fan-maker-dyson-to-build-electric-cars-in-singapore7https://www.scmp.com/magazines/post-magazine/long-reads/article/2182466/powered-state-china-takes-charge-electric-buses8https://www.livemint.com/auto-news/how-fame-2-scheme-aims-to-promote-the-use-of-electric-vehicles-in-india-1552352972259.html

Much has been discussed about the battery-charging infrastructure required around town to make any network of Electric Vehicles (EV) feasible as a mode of transport. Over the years, as the technology of specific components of the EV, like batteries, improve as well, governments are finally coming around to embrace and lay the groundwork for EVs.

In Indonesia, the government has said in January 2019 that it was open to foreign investment for the manufacture of EVs, and has decided on fiscal incentives to encourage the sale of EVs locally. Their aim is to have EVs form at least 20% of total domestic vehicle sales by 2025, which translates to about 400,000 cars and 2 million motorcycles3. In Thailand, the government has offered generous tax incentives

to automakers producing plug-in hybrids and electrics in the country. Meanwhile, in Vietnam, conglomerate Vingroup has also taken huge steps towards EV development, targeting to launch their homegrown electric vehicle in September 2019 with the backing of about 20 European companies, including BMW4.

In the meantime, in Singapore, the government has supported BlueSG, a subsidiary of French conglomerate Bolloré Group, in their pursuit of implementing a network of 1000 EVs and 500 charging stations across the island to facilitate their car-sharing business venture5. Most significantly, Dyson’s decision to establish manufacturing operations in Singapore for production of its first electric vehicle, targeted to launch in 2021, signals great intentions from both parties to make a big impact on the EV industry in the region6.

Would it be more consequential for public or private vehicles to go electric? China’s tech hub Shenzhen has blazed the trail by electrifying its entire public bus network7. Meanwhile, India’s government has recently expanded its Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (Fame II), showing its renewed support for the industry to deliver on greener private and public vehicles that can reduce pollution in the country8.

Perhaps, it would be easier to implement electrification on public transportation systems, since governments can more easily control, monitor, and manage the infrastructural development needed for a public transportation system, which serves a larger volume of commuter activity, compared to private vehicles.

Slowly but surely, the onset of Electric Vehicles in Southeast Asia


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Public transportation is an important system to get right in order for the wider society to function, and often involves a government hand. Attempts to privatise and commercialise public transportation provision has shown what a poor profit this business brings, however.

Asset-heavy and capital-intensive, commercial public transportation companies have turned to other incidental activities like property rental to boost profits —to varying levels of success. Hong Kong’s commuter rail service, MTR Corporation, is popularly known to make more money from property development, than the provision of mass transportation9.

Commercial public transportation is a tough business; beyond the expensive infrastructure required of them, they have to comply with strict government guidelines ensuring affordable pricing and have to face the wrath of angry commuters when systems break down.

Singapore’s commuter rail operator SMRT Corporation has experienced this in the past few years, when breakdowns and disruptions have occurred more frequently than before, prompting the public at large to voice vehement displeasure10 and question their competence and business model11.

This phenomenon of business diversification is not just for urban rail operators though. Even amongst disruptive startups in the mobility sector, most notably Go-Jek and Grab in Southeast Asia (see Table 2), we have seen their shift from being ride-hailing apps specifically, to being the “everyday superapp” for their users12 13, in a model that takes after China’s WeChat all-in-one umbrella app structure that houses many mini programmes serving a variety of their users’ everyday needs.

Diversification needed for profitability

9https://www.scmp.com/news/hong-kong/economy/article/2136403/mtr-corp-announces-64-cent-rise-net-profit-hk168-billion10https://www.todayonline.com/singapore/when-it-not-enough-smrt-apologise-breakdowns11https://www.asiaone.com/News/AsiaOne+News/Singapore/Story/A1Story20111218-316922.html12https://www.grab.com/sg/press/business/grab-unveils-open-platform-strategy-to-build-southeast-asias-first-everyday-superapp/13https://www.gojek.io/superapp/14https://www.straitstimes.com/business/grab-launches-online-checkout-system-plans-customer-credit-services-and-loans


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The businesses of Grab and Go-Jek seem to be evolving everyday as they experiment with new services, markets, and pricing models. One of the biggest push from the app-based startups is in financial services. Grab, for one, has not only created its GrabPay e-wallet system, it announced at a conference in March 2019 the launch of an online checkout and point-of-sale device integration, a Pay Later plan offering credit and instalment payment options to worthy customers, and a variety of insurance options for all its different segments of users14.

Startup Year Founded

Active Regions Some Notable Funders Funding

Go-Jekhttps://www.go-jek.com

2010 Singapore, Malaysia, Indonesia, Philippines,Vietnam

Tencent Holdings, JD.com, Google, Temasek Holdings, PT Astra International

Series F – US$3.1B

Grabhttps://www.grab.com

2012 Singapore, Malaysia, Indonesia, Philippines, Vietnam, Cambodia, Myanmar, Thailand

SoftBank Vision Fund, Central Group of Company, Yamaha Motor, Hyundai Motor, Toyota Motor, Microsoft

Series H – US$8.8B

Didi Chuxinghttps://didiglobal.com/

2012 China, Australia, Japan, Mexico, Brazil

SoftBank Investment Advisors, Apple, Tencent Holdings, Alibaba Group, Ant Financial, Temasek, Ping An Ventures

Corporate Round – US$20.6B

Olahttps://www.olacabs.com/

2011 India, Australia, UK, New Zealand

Hyundai Motor Company, Kia, Tencent Holdings, SoftBank Group, Didi Chuxing, GIC

Corporate Round – US$3.8B

Table 2 – Becoming the Everyday Superapp in Asia



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Armed now with the ability to track how users actually drive and how commuters actually move through the various modes of transportation, insurance tech startups are emerging to offer personalised quotations and premium plans based on real usage.

An example of usage-based insurance was launched in 2016, between insurance company AXA and Grab, offering commercial motor insurance for Grab drivers based on a “per kilometre driven” basis, instead of the norm of fixed annual premiums15. Since then, Grab has grown in its ambitions as a financial services provider. Based on Grab’s latest announcements in March 2019,

their plans to roll out even more financial services include micro-insurance and an insurance marketplace through their joint venture with Chinese company Zhong An Insurance.

With 6.6 million drivers and agents, over 100 million users, delivering over 6 million rides a day across 8 countries in Southeast Asia, Grab has access to individualised first party data on personal commuting, payments and other daily requirements. Would insurers be similarly enabled by technological advancements and new business models to tap on this treasure trove of possibilities?

Can insurance providers adapt?

15https://www.axa.com.sg/latest-news/2016/grab-and-axa-launch-first-usage-based-insurance


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Despite the spectacular exit by Uber from this region in 2018, mobility service startups continue to emerge and hustle to gain market share. While we have yet to see the enthusiasm for this sector taper off, it is expected that the many players will eventually consolidate to leave much fewer dominant players, with much larger fleets to manage and own across the region. This has been the case in Europe (see Figure 2), and we foresee that a similar situation may emerge in Southeast Asia, with the natural attrition of startups with poorer value propositions, operational experience and funding.

The importance of fleet management will certainly emerge in time to come with dominant players forming. The ability to optimally coordinate a vast amount of these resources will require a whole new level of management, and will be of paramount importance as dominant players strive to sustain and win over keen competition.

Moving beyond mobility solutions, fleet management is also starting to become a branch of business on its own. Startups focusing on telematics and analytics have also emerged, like DRVR from Thailand, and Overdrive in Singapore. Such startups aim to make fleet operators more efficient with the use of predictive analytics, based off the data collected on tracked vehicle performance, driver behavior, unscheduled stops and other relevant events. (see Table 3). Having data analytics to help detect faults within each vehicle or with driver behaviour enables preventive measures to be taken, improving safety as well.

Importance of fleet management comes during consolidation

Figure 2: Europe’s Consolidation of Fleet Management Business

22 5 Players man-

aged>50% of market share 15 years ago…

In Europe where the fleet management business has become a significant market, multiple cross M&As have led to the consolidation of the market, and the same could occur in Asia.Source: Deloitte Analysis

Players manage>50% of market share in

2017…Deutsche Leasing

ALD Automotive

HPI

Arval

Alphabet

Fleet Company

TÜV SÜD ASG

Masterlease

Athlon

LeasePlan

GE CapitalCar Professional

Management

FleetLogistics

Daimler Fleet Management

Parcours

Fleetlevel

ING Car Lease

Automotive Service GroupHLA ARI

LHS

ALD AutomotiveAthlon

Arval

AlphabetLeasePlan


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Startup Description Country Year Founded

Funding

Overdrivehttps://overdrive.sg/

Overdrive is an integrated cloud solution that allows its user to connect a vehicle from his/ her smart device. It helps users to get instant one-time location of the vehicle, engine cut to immobilize the vehicle to prevent unauthorized usage with the wireless relay, blast tracking with 15 minutes real-time location updates, receive instant notifications from the vehicle and plan maintenance schedule

Singapore 2015 Series A - US$2.9M

Versafleethttps://versafleet.co/

Versafleet is a cloud-hosted solution for logistics operations. Has features for job order management, scheduling, dispatching, route optimization, with the VersaDrive app for drivers for up-to-date job details, photos, e-signatures capture, and updating order status

Singapore 2012 Seed – US$3.5M

DRVRhttp://www.drvr.co/

DRVR provides fleet management and big data analytics focused on driving behavior to improve fleet efficiency, direct costs, and deliver improved customer service.

Thailand 2015 Seed – US$522K

Katsanahttps://www.katsana.com

Katsana is a data company focusing on usage-based insurance and connected cars. Its prediction engine tracks driver behaviour patterns, scoring drivers based on actual risk on the road, and engages them to become better drivers. Katsana provides the next generation web-based GPS tracking and fleet management solution. It employs advanced GPS trackers that utilize both GPS and GLONASS positioning system

Malaysia 2013 Venture Round – US$1.1M

Table 3 – Fleet management analytics startups


Source: e-Conomy SEA 2018 Southeast Asia’s internet economy hits an inflection point, Google and Temasek (2018)”

2015

E-commerce

5.5B

2017

10.9B

2018

34%

SEA E-commerce market size (GMV, $B)

62%

114%

23.2B

2025

102B

CAGR ‘15-’18

CAGR ‘15-’25

62%

34%

CAGR


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As one of the most engaged, mobile-first internet regions globally, Southeast Asia provides much more business opportunities to app-based companies than just ride-hailing. The Southeast Asian digital economy, which would include ride-hailing, ecommerce, and food delivery, is slated to exceed US$240 billion by 2025, from US$72 billion clocked for 2018.17

The ecommerce segment has been identified as the fastest growing segment of the burgeoning digital economy of Southeast Asia. It reportedly reached US$23 billion in 2018 and is forecasted to surpass US$100 billion by 2025 (see Figure 3). One of the biggest hurdles to ecommerce in this region, however, is last mile delivery18. Unlike major markets like USA or China, Southeast Asia is not only fragmented by country borders, it is also physically fragmented. Indonesia, for instance, is made up of over 17,000 islands, while the Philippines has over 7,500.

E-logistics take off!

Figure 3: SEA E-Commerce Market Size

17https://www.thinkwithgoogle.com/intl/en-apac/tools-resources/research-studies/e-conomy-sea-2018-southeast-asias-internet- economy-hits-inflection-point/18https://www.reuters.com/article/lazada-strategy/planes-trains-and-automobiles-lazadas-logistics-battle-to-win-se-asia-idUSL8N1M906S19https://www.theguardian.com/global-development/2018/jan/02/rwanda-scheme-saving-blood-drone


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Startup Description Country Year Founded

Funding

Ninja Vanhttps://www.ninjavan.co/

Ninja Van provides e-commerce logistics services to enterprises companies in SEA countries. Core offering includes last-mile delivery, drop-off services, and collect services. It is involved in providing logistics needs of customers by offering them options of tracking their parcels, receiving real-time updates and gaining access to alternative pickup points. Utilizes proprietary technology to automate, optimize, and streamline the operations.

Singapore 2014 Series C – US$117.5M

Skootarhttps://www.skootar.com/

Skootar is a web and mobile app that connects users with available scooter messengers in the area. Skootar also features tracking and rating systems for messengers.

Thailand 2014 Various – US$470K

Zoomzoomitnow.co/

Zoom provides on demand local delivery services for individuals and businesses, connecting the shipper with a runner, who may can sign up on the platform to provide delivery services.

Malaysia 2016 Seed – MYR4M

Logivanhttps://www.logivan.com/

Logivan is an online marketplace for on-demand trucking services. The platform connects shippers with a network of truck owners/drivers with unutilized capacity and enables shippers to search and book trucking services. The platform also offers real-time freight visibility, electronic proof of delivery and online payments.

Vietnam 2017 Venture Round – US$7.9M

Table 4 – Logistics Technology Startups



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The modernisation and growing prosperity of Southeast Asia is more than just building higher skyscrapers. Becoming a smart city is also the goal, and there are many ways lives and livelihoods can be improved with the interconnectivity made available to us by the Internet of Things. Mobility is an integral part of a smart city. As can be seen by the startups that have shaken up the industry, it is clear that mobility is more than just how people move from point A to point B, but also about goods, retail commerce and financial services. Underpinning all of that is the incredible wealth of first-party consumer data smart cities and new-age companies sit on, changing the ballgame for almost every consumer-facing industry that exists.

In such a highly interconnected ecosystem, it is almost impossible for one party to dominate and control, necessitating a mindset change in how companies think about and view their businesses. Business competitors are no longer locked in a zero-sum game, and the

potential benefits of partnerships and alliances are becoming stronger with this interconnectedness. Partnerships and collaborations are inevitably the way forward, to catalyse change within organisations to catch up with the rapidly changing environment and demands of the consumer. Traditional automaker competitors Daimler and BMW, for instance, have set up a joint venture in Berlin to spearhead their combined efforts into creating a suite of mobility services for Europe20. Japanese car-manufacturer Toyota is also looking to move into providing mobility services, and has invested in and partnered up with Grab to provide their fleet with telematics solutions21.

Traditional business models cannot carry us into the new world of smart cities and mobility in Southeast Asia. Instead, it would be of paramount importance to groom ecosystems, so that various stakeholders can learn from and work with each other. That will be the hope for a congestion-free and pollution-free future of mobility in Southeast Asia.

The brave new world requires alliances

20https://www.daimler.com/innovation/case/shared-services/jv-daimler-and-bmw.html21https://asia.nikkei.com/Spotlight/Sharing-Economy/Grab-leverages-Toyota-s-telematics-technology-as-competition-heats-up


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