Smartphone apps shake up Hong Kong transport and delivery services

Three apps employed by rival transport networks have revolutionised delivery services in the city

PUBLISHED : Friday, 13 February, 2015, 6:01am
UPDATED : Friday, 13 February, 2015, 6:01am

Ray Liu started working as a van driver to transport goods nine months ago. He didn't look forward to getting up in the morning because he was frustrated at the way call centres just gave him a client's phone number and expected him to do the rest: call to determine pick-up and drop-off points and what needed moving, and to negotiate the price.

"If I called and couldn't get through, and I told the operator that, she'd say: 'Driver, please listen carefully and don't waste my time. Here's the number.' Maybe she'd get one digit wrong, and you might have several exchanges over the phone," says Liu, 38. "Once I was driving, talking on the phone, trying to get an order straight and taking notes, and a policeman was glaring at me the entire time."

When he started each day, Liu had no idea whether he would get one job or 10.

Fortunately for Liu, there are now three technology companies in Hong Kong dedicated to making life easier for van drivers, and anyone who needs something delivered.

Liu now finds work through EasyVan, a hi-tech start-up that allows people to hire vans and their drivers using a smartphone app. Customers who need a van input their details into the app. Then, drivers can see these orders for themselves, with the destination and price - determined by the distance - so they don't need to go through a call centre.

EasyVan, founded in 2013, now operates in several other cities, including Singapore, Bangkok and Shenzhen. The company has signed up more than 11,000 drivers in Hong Kong alone. Last month, EasyVan secured US$10 million in investment to expand across Southeast Asia.

But there are other companies, too. Uber, the ride-sharing company, has launched Uber Cargo, so its users also can now book vans, not just cars.

According to Sam Gellman, general manager of Uber Hong Kong, the van hire market is huge and millions of Uber users in Asia want a cargo service.

"We think it's a US$1 billion-a-year business just in Hong Kong, so it's a really massive market," Gellman says.

GoGoVan has also been taking a slice of the pie.

There are two reasons the three rivals regard the business as such a value proposition: vans are not used efficiently, and drivers want more flexibility in their work.

EasyVan founder Chow Shing-yuk says that in Hong Kong, van drivers make an average of 10 deliveries a day, but a lot of vans are idle most of the time.

"Now, you can track how much capacity is available, and you can find out where each vehicle is at any given time, so you can make better use of these resources," Chow says.

"On the mainland, there are 20 million small vans and more than a million taxis. I think that points to a lot of idle capacity. If these resources were used more efficiently, you wouldn't need that many vehicles. Maybe you could get by with just 80 per cent.

"The whole pitch is about using the internet through mobile phones to make better use of these resources, and I think the capacity of these vans is one of the most underutilised resources."

The business depends on the vehicles, but Chow says the goal is to see fewer of them on the road.

Gellman agrees. "It is Uber's goal … we do well if people decide that they aren't going to own cars. We have a lot of riders who do own cars and we ask them: 'What would it take for you not to own a car?'"

We think it's a US$1 billion-a-year business just in Hong Kong, so it's a massive market
Sam Gellman, Uber Hong Kong GM

Gellman says a lot of riders respond that they used their cars mainly to collect groceries, transport their surfboards, bikes or large pets around when they needed to. These responses prompted the launch of Uber Cargo.

Liu points out that using the app helps him and other drivers avoid dealing with irritated call centre operators. It also allows him to schedule orders in advance, develop a loyal client base and work whatever hours he wants. Moreover, some call centres close promptly at 8pm every day, whereas the EasyVan app is operational round the clock, so if he feels like taking time off on Saturday and making up for it on Sunday, he can.

But for all the business available, turning a healthy profit is another matter. Both apps are free to use, and EasyVan is not yet generating revenue. GoGoVan charges the drivers a small commission.

That doesn't concern investors such as David Chang, who contributed to the recent US$10 million investment in EasyVan.

"The revenue won't be seen until years down the line, until we create a monopoly," Chang says, referring to the likes of Google and Facebook. "Once a monopoly is established, good luck breaking it."

Chang, a partner at venture capital firm Mindworks Ventures, says he sees the potential in EasyVan beyond merely being a logistics platform. He says the data EasyVan can glean about patterns of goods delivery in Hong Kong can also be valuable.

"For example, at Christmas time, you'll know exactly which areas want the most Christmas trees delivered to their houses. It's extremely valuable data that merchants can fine-tune and target," Chang says. "If I know that no one in Causeway Bay will buy my ice cream, that all the buyers are in Central, then I'll move to Central."

Chang says he's also putting his money into EasyVanbecause he has faith in Chow, a former professional poker player. He believes Chow has the audacity to succeed in a non-traditional career.

And Chow believes the time is right for Hong Kong to nurture a successful local technology company.

"There's a first time for everything," he says. "Just look at my background. When I took the local public exams [HKCEE], a student from the New Territories rarely got 10 distinctions. I was the first. And Hong Kong had never seen a full-time professional poker player, either.

"With any internet-based business, it takes time to see profits. [EasyVan] hasn't made any revenue since we launched; we've just been burning through money.

"It's a bit like poker, because at the very end of my poker career, I made a million dollars, but I didn't make a lot of money during the first four years. You need to endure even if the future is uncertain; keep going until you get to a pay-off."

Steven Lam, co-founder of GoGoVan, says that although he takes pride that his company made the first move in the business and has recently launched in South Korea, all three companies can succeed.

"There's definitely potential in this market; otherwise, the other two companies wouldn't have joined the game, especially Uber," he says. "That proves there's a future in this market."