50 pilots fight for 1 order


An Indonesian motorcycle taxi driver Aji smokes and constantly checks his smartphone while waiting for roadside orders in downtown Jakarta on a hot June morning, but looks at the prospect of another unsuccessful day.

Before the start of the coronavirus epidemic, the father of four 35-year-olds carried at least 20 passengers for a daily income of between $ 13 and $ 20 as a driver for the Gojek local navigation application.

But when the transportation services stopped under the city blockade, Aji considered it a good day if he received more than two food delivery orders, which pay him $ 0.70 each time. Some days he did not have one. Even with relaxed restrictions this week, he’s struggling to feed his family.

“The situation is that there are a lot of drivers but the orders are few,” he said, asking to be identified only by his first name.

Eleven drivers from Gojek and Grab, who are supported by SoftBank Group, in Indonesia, Vietnam and Thailand told Reuters that they had also experienced difficulties, with revenues cut by more than half as the pandemic raged in South East Asia.

And, disappointingly, for both drivers and businesses, an increase in food deliveries – anticipated as a major growth area for both companies – is far from offsetting transportation losses.

Even in Vietnam, considered a recovery success, drivers are in shock.

“The pandemic could cost us and many colleagues our vehicles that we bought with borrowed money,” said car driver Grab Tung in Hanoi, concerned that the lenders would repossess the vehicles. vehicles.

Unions representing Gojek and Singapore’s biggest rival Grab, Southeast Asia’s most beloved startup with $ 14 billion, say thousands of drivers are in the same situation, especially in Indonesia, the largest two companies market.

Basic promise

Their fate threatens a fundamental promise of both companies: they can improve the lives of tens of millions of people across Southeast Asia while providing big paydays to their top institutional and financial investors.

Governments in Southeast Asia have warned that millions of people may be out of work as a result of the epidemic.

The two companies told Reuters that they support drivers with measures ranging from food packages and vouchers to low-interest bank loans and discounts on car rentals. But the crisis also led them to cut the subsidies which fueled their growth.

Doubts have also arisen about the global carpooling model and whether investors will continue to inject massive funds into startups.

Even before the pandemic, Grab and Gojek – like Uber and Lyft in the United States and other carpooling companies around the world – were operating at a very high rate.

Grab co-founder Tan Hooi Ling warned that the company could potentially face a “long winter”.

Both companies still have a lot of cash. A source familiar with the matter said that Grab has $ 3 billion in reserves. Sources familiar with Gojek’s finances said it was finalizing an investment cycle of more than $ 3 billion at a valuation of $ 10 billion; Facebook and Paypal announced investments in the fintech industry of Gojek last week, and it also counts Google and Tencent among its funders.

So far, everyone has avoided major layoffs, although Grab is setting up unpaid voluntary leave for staff and Gojek is reviewing its services. In the United States, Uber, whose operations in Southeast Asia have been acquired by Grab, said it would cut 23% of its workforce.

“Transportation fell off a cliff, food remained stable, while logistics went through the roof and online payments are high … so having a product portfolio helps,” said Hans Patuwo, chief of the operation of Gojek. “If we were just a transport company, I would be very upset.”

The leaders and investors of the two companies highlight the resurgence of orders from the Chinese carpool company Didi Chuxing as a reason for optimism.

“The recovery rate will depend mainly on the end of the government closings,” said Grab chief operating officer Russell Cohen, noting that Grab’s transportation operations have previously been profitable in several markets.

The crisis has rekindled speculation among investors about a merger of the two companies, which, according to sources, was discussed in early 2020, but did not lead to serious discussions.

Gojek said any report on a merger was inaccurate. A spokesperson for Grab declined to comment.

Food delivery

Grab and Gojek have long touted the fast growing food delivery industry as a great opportunity. But with platforms taking only a 20% to 30% commission shared with pilots, the margins are slim. And growth did not materialize in all markets during the closings.

A CEO of a restaurant chain in Jakarta said that food delivery had not resumed in the largest economy in Southeast Asia due to the fact that people cooked more at home and that most orders traditionally consisted of lunches for office workers, who are now at home.

Aji described the delivery of food to Indonesia for Gojek as a “fight”, with “sometimes 50 drivers for an order”, the drivers from Grab Vietnam recounting similar experiences.

Even in Thailand, where orders have surged for Grab and Gojek, profitability remains distant.

According to an April interview with local media by then head of Grab Thailand, Tarin Thaniyavarn, food delivery increased rapidly but made losses during the pandemic, with increasing costs and fierce competition.

Tarin said Grab Thailand lost more than $ 22 million in 2018, while rapid growth resulted in almost double losses in 2019.

“Imagine that last year’s loss-making activity is growing rapidly in a short time, while the business that made a profit for us has almost disappeared,” he said.

(Report by Fanny Potkin in Singapore and Gayatri Suroyo in Jakarta; Additional report by Tabita Diela, Maikel Jefriando and Angie Teo in Jakarta; Patpicha Tanakasempipat in Bangkok; Phuong Nguyen and Khahn Vu in Hanoi, Sam Nussey in Tokyo; Writing by Fanny Potkin; Editing by Jonathan Weber and Muralikumar Anantharaman)

(With the exception of the title, this story was not edited by GalacticGaming staff and is published from a syndicated feed.)


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