SINGAPORE — Singapore’s largest land transport operator, ComfortDelGro, is helping its taxi drivers find work delivering meals and groceries as the COVID-19 pandemic crushed demand for taxi service.
The goal is to help cabbies supplement their income and maintain its fleet of cars. ComfortDelGro controls 60% of the roughly 18,000 taxis operating in Singapore. But it faces stiff competition from ride-hailing giant Grab, which is also based in the city-state. The pandemic is the latest challenge for ComfortDelGro, one that could force some drivers out of the business.
Starting in late April, ComfortDelGro’s drivers will deliver groceries for online supermarket RedMart, a unit of e-commerce group Lazada, which, in turn, is owned by China’s Alibaba Group Holding.
“The COVID-19 situation has been incredibly challenging for our cabbies, and the elevated safe-distancing measures will make it even worse,” said Tommy Tan, chief operating officer of ComfortDelGro’s taxi unit in a statement on Tuesday. “With the big mismatch in demand and supply for food and groceries, we reached out to RedMart.”
ComfortDelGro has also partnered with fast food chains KFC and Pizza Hut, as well as food delivery platform Foodpanda, in which the company’s taxi drivers deliver meals and groceries to supplement their income during the pandemic. More than 1,000 drivers have expressed interest in the work and the number is growing, a company representative told the Nikkei Asian Review.
The partnerships come as the Transport Ministry in late March temporarily relaxed regulations, allowing taxi drivers offer delivery services. The change will be effective through June.
Singapore from April 7 shut down most workplaces and schools for four weeks through May 4 and requires people to stay home as much as possible. That has eviscerated demand for transportation but increased it for meal and grocery deliveries.
The drivers’ delivery jobs do not generate revenue for the company, and the arrangements are “purely to get jobs for the drivers during this period,” a ComfortDelGro spokesperson said.
But helping drivers is crucial for the company to maintain its fleet. In Singapore, cabbies are self-employed, renting cars from operators. They have the option of switching to ride-hailing platforms such as Grab and Gojek, and some may leave the business entirely. The support measures should help retain drivers and allow the company to get up to speed quickly once the pandemic ends.
In addition to arranging delivery jobs, ComfortDelGro has waived car rental fees for drivers during the monthlong partial lockdown. This means taxi fares go straight into drivers’ pockets. The company says it will offer some relief on rental fees through the end of September.
The assistance, which is expected to cost the company nearly 100 million Singapore dollars ($70 million), is likely to push ComfortDelGro’s taxi unit into a loss this year for the first time, the company said.
Despite the hit to its earnings, the assistance to drivers is “a crucial move” for the company to maintain its fleet, analysts at CGS-CIMB wrote in a report published March 30.
ComfortDelGro’s businesses range from taxis to bus and rail transport. In addition to Singapore, it operates in the U.K., Australia and a few other markets. Its taxi business saw revenue decline 8% last year, lowering the entire company’s net profit by 13%. Its fleet size also shrank about 10% over the period.