Bikeshare

Capital Bikeshare in Washington, D.C. Source: Mario Roberto Duran Ortiz

Introduction

Cities are increasingly recognizing the potential of bicycle transportation to reduce congestion, improve environmental and public health, increase accessibility, and complement transit.^[1]^[2] Along with infrastructure improvements, bikeshare is one of the best ways to encourage cycling in a city. The number of bikeshare systems around the world has grown exponentially in the past decade. The Institute for Transportation & Development Policy’s Bike-Share Planning Guide offers a comprehensive look the process of developing and implementing a bikeshare system.

First Steps

Once a city has decided to consider bikeshare, the first step is performing a feasibility study. The most basic, but important, part of the feasibility study is outlining objectives for the system. Specific objectives (e.g. providing first-mile last-mile service, alleviating transit crowding) are necessary to guide the study.

The feasibility study itself is comprised of three main elements:

Demand analysis - Starting from current demand, the organization needs to predict future demand, establish the system’s coverage area, and decide what performance metrics to focus on.
Financial feasibility analysis - A detailed budget cannot be created until later in system development, but the feasibility study should include a high-level estimation of the capital and operational costs of the system.
Risk and barrier analysis - It is important to identify early any potential barriers to implementation, such as political opposition, traffic laws, and advertising contracts.

Metrics

Two main metrics are used to judge the performance of bikeshare systems: average number of daily uses per bike and average daily trips per resident (of the coverage area). These two metrics tend to have an inverse relationship. A system with a low number of bikes could have high per-bike usage because demand is high, but fail to meet that demand and therefore have a lower number of trips per resident. On the other hand, a system could have a high number of trips per resident but also a very high number of bikes, and therefore a low number of trips per bike. Both of these extremes are inefficient; a sustainable system should find a balance of having just enough bikes to satisfy demand with around 4 daily trips per bike.

System Coverage

A successful bikeshare system needs to be large enough to serve a range of destinations and have stations close enough to each other to make them easily accessible. A system should start out at least five square miles, but station density is even more important than system size. Bikeshare systems become exponentially more effective as stations get closer together, with 28 stations per square mile being a good goal. Keeping stations no more than a couple blocks apart ensures that there is always a station near a potential destination. ITDP recommends a system have 10-30 bikes for every 1,000 residents and 2.5 docking spaces for every bike so that there is always somewhere to return a bike. Besides station-based systems, dockless bikeshare systems are also growing in popularity, which allow users to park their bikes at any location in a geographically defined area. Companies such as these - including Mobike, Ofo, Spin, and Limebike, remove part of the burden of siting stations.

Financial Analysis

The initial financial analysis should include estimates of capital costs, operational costs, and revenues. It is also important to consider funding mechanisms at this stage. Cost-per-bike is a common metric; while it might be useful in the planning stages, cost-per-bike is a flawed long-term metric because of the way the number of bikes in service fluctuates. Looking at operating costs per trip is a better metric, in line with the way traditional transit systems are evaluated.

Planning and Design

Once the feasibility study is complete, system planning can begin in earnest. This involves specific station siting and choosing hardware and software.

Siting

Bikeshare stations should be placed near major destinations like San Francisco's Ferry Building. Source: Mario Roberto Duran Ortiz

Proper station siting is crucial to the success of a bikeshare system. Docks should be close together and concentrated in dense, mixed-use areas where there will be consistent demand. Placing stations near transit help bikeshare interface with the larger transportation ecosystem. Stations should be placed in sunny, well-trafficked areas and not block pedestrian movement. Picking station locations will typically require community outreach so as to build support for the project.

Station Type

In the US, virtually all bike share stations are automated and use docking spaces as opposed to bike parking areas. While some stations are permanently installed into the ground, modular systems are increasingly common. Modular stations are built on a base that can be bolted to the ground, making them relatively easy to move. Rather than being connected to a power source, they run on solar energy.

Bikes

You of course can’t have bikeshare without bikes. Modern bikeshare systems use robust, one-size-fits all bikes with lights, storage, and features like fenders and chain guards to keep riders clean. Most bike-share bikes are made with distinctive, non-standard parts to deter theft.

Traditionally, most US bikeshare systems have used a “smart dock” system where bikes are stored at docks containing the system’s electronics. However, “smart bike” systems in which all the technology is stored within the bikes themselves have become popular. This system, used in cities like Portland, Oregon, is cheaper and lets users lock bikes anywhere. On the other hand, smart bikes are more maintenance-intensive and the systems generally require a smartphone to be used to their full potential.

Business Model

Bikeshare should be thought of like other transit; it is aimed at providing a public service rather than generating profit. Most successful bikeshare systems are public-private partnerships, with the government entity leading the project and a private firm running operations.

Organizational structure

There are two main entities involved with a typical bikeshare system: the implementing agency and operator. In some cases these are the same, but more often there is a division of labor. The implementing agency is typically a government group such as a department of transportation or parks department and oversees the entire system. Departments of transportation have an advantage running bikeshare systems because they have authority over the roadbeds and sidewalks where stations will be placed. Day-to-day operations of a bikeshare system are the responsibility of the operator, which could be either a government agency or private company. Government agencies have the advantage of being closer to the implementing agency and are committed to working for the public good; private companies can be more efficient, but their profit motives might run counter to the government’s goals for the system.

Contracting

Running a bikeshare system requires coordination between multiple groups. In some cases the implementing agency will only have to contract with a single supplier, but often times separate specialized vendors are used for each component. In either case, contracts are important. There are three main contracting structures to consider:

Publicly owned and operated - In this system, the government implements and operates the whole system and takes on all the risk involved. Keeping everything in-house is simple, but parts of a bikeshare system might be operated more efficiently by the private sector.
Publicly owned and privately operated - Bringing in a private operator diffuses some risk and responsibility while allowing the government to maintain control over the system’s assets and direction.
Privately owned and operated - Private systems built to government specifications require no public funding, but there is a risk that the profit-minded operator will not act in a way that makes the system as publicly beneficial as possible.

Financial Model

Bikeshare systems are complex and expensive to set up. Source: Richard Masoner

Bikeshare is a large investment, and for a system to be successful it must be started with a clear picture of the costs and revenues that will be associated with it.

Capital Costs

Setting up a bikeshare system means purchasing bikes, stations, IT systems, maintenance equipment, and redistribution vehicles. In the US bikes alone typically cost more than $4,000 each. There is also a large amount of labor necessary before a system can open.

Operating Costs

Operating costs vary widely depending on the size and sophistication of a system and involve generally staffing, redistribution, maintenance, customer service, marketing, and insurance. Operating costs are best represented on a per-bike basis to reflect that fact that a larger system serves the public better (assuming that the trips per bike number is high enough).

Revenue Streams

Funding for bikeshare usually comes from some combination of advertising, sponsorship, membership fees, and/or taxes. Given that bikeshare is a public service just like transit, it is reasonable to expect the government to subsidize it to some degree. Government funds are often used for initial capital expenses. Sponsorship is also a major funding source; Citigroup spent more than $40 million dollars for six-year naming rights to New York City’s system. Revenue from subscriptions, single rides, and overage fees do not fully fund any US system; Capital Bikeshare in Washington, D.C. comes closest with 97% farebox recovery, but most systems have a significantly lower percentage.

Implementation

Once the contracts are signed, the process of actually launching the system can begin. While working on procuring hardware and software the implementing agency should begin a public outreach process to register members and teach people how to use the system. Good customer service is critical for getting public support. Once the system goes live, it should be constantly monitored and evaluated. There will be issues, and coordination between the implementing agency and operator can help ensure that any problems are solved quickly.

The Bike-Share Planning Guide

The ITDP Bike-Share Planning Guide is the source for the original Bikeshare article.