About Developing a Vanpool System

Below is the information I wish I had before setting up a carpooling project recently in Philadelphia. Our task was to use a Federal Transit Administration grant to assist workers living in the city get to jobs unreachable by public transit.

WHY POOL?

Obviously the primary reason for sharing the ride to work is financial. When people come together to use a resource they can afford something better than as individuals. When it comes to transportation that can mean driving a new (or new-er) fuel-efficient vehicle with all the latest safety equipment, full insurance, and timely maintenance. Logistically it can mean driving in the HOV lane, arriving on-time consistently and, with enlightened employers, parking by the front door (after all – the pool is probably freeing up several parking spaces).

There are other pluses, harder to quantify but potentially just as valuable to an employer. Any pool at some level is a community, and communities are stronger than individuals. Members of a (healthy) community support each other. They trade information, they keep each other accountable, and let each other blow off steam after a tough day at work. All this can foster better performance, retention, and attitudes toward work.

The broader community benefits as well. Pools take cars off the road at peak travel times, pollute far less and are proven to be safer than individual drivers.

OTHER COMMUTING SOLUTIONS

POOLS WITH PAID DRIVERS

A few years ago a large, multi-city (US) project to provide home-to-work “pools” was undertaken with disappointing results. The project used paid drivers in vans driving commuters to remote, low-wage jobs. A post-mortem study on the project cited constantly changing routes, performance problems with paid drivers and intolerably long commutes times as the big reasons. As soon as workers could find work closer to home, even for reduced pay, they dropped out of the pools, which changed the pool routing, which frustrated more commuters into dropping out.

Commuter-driven pools:

  • Eliminate the massive expense and complication of employing drivers
  • Give commuters more control over and responsibility for the resource for which the are paying
  • As with market-rate pools, put safe, legal vehicles in a neighborhood for the limited use of pool drivers

RIDESHARE DATABASE

If you simply want to promote pooling without getting involved with offering vehicles you can set up a regional rideshare database. Before you reinvent the wheel take a look at a couple third-party sites already offering slick ride-sharing tools: GoLoco (http://goloco.org/)

COST

Depending on an agency’s mission, costs can range from merely administrative to that plus a gross operating cost of up to $15K per vehicle per year. Obviously, some companies operate pool fleets at a profit (which speaks well of the overall economics of pooling) and while their audience is limited to those who can pay higher fares, many of their practices should be emulated by non-profits serving those needing a subsidy.

The most important aspect of running a pool operation is having a system for people come together to use a resource. You can help commuters start carpooling merely by connecting them and giving them the framework for cooperating, procedurally and financially.  Other essentially free help you can offer would be to point toward pool-friendly vendors and negotiate as a fleet for all operating expenses. Also the framework you offer commuters could include the ability for other entities to subsidize pools. For instance – a neighborhood group may want to sponsor a pool, and with your help could be alerted when their desired contribution could close the funding gap in starting a pool or keeping one going after individuals drop out.

HOW MUCH SUBSIDY IS APPROPRIATE FOR A POOL?

You may not have any subsidy money for pools; if so skip this. If at least part of your mission is serving lower-income commuters you will probably be covering some of the pool operating costs (in addition to your administrative costs). Offering a subsidy can feel like “losing money”, especially if one comes from a for-profit background, so it’s important to have a clear mission and communicate the value of the resource to commuters.

SUGGESTIONS FOR RULES FOR SUBSIDIZED POOLS

Jobs should:

  • Pay a decent wage
  • Have benefits

Commuters should:

  • Be generally dependable and able to be part of a group
  • Pay a fare on a weekly basis, just like a transit pass
  • Be able to deal with driving issues on their own, including holidays, sick days, etc.

Pools should:

  • Have backup drivers
  • Not travel more than 1:15 in each direction

Employers should:

  • Contribute at least a nominal amount
  • Facilitate payroll deduction of fares
  • Support the logistics of the pool by letting commuters work similar hours

FUNDING SOURCES

In an especially enlightened area like Seattle and suburban Chicago you can approach the van-pooling division of the local  transit authority for pool vehicles. Riders simply pay a monthly fare, typically subsidized to some degree.

In some regions money is available for traffic congestion management and/or pollution mitigation. These funding streams are known as Transportation Demand Management (TDM) and Congestion Mitigation and Air Quality (CMAQ), respectively.

The Federal Transportation Administration (FTA) may provide Job Access and Reverse Commute (JARC) funding. This comes requiring a 100% match from non-federal sources and is paid out as a “rebate” after an agency spends qualifying money. The match can come from several sources:

  • “in-kind” contributions of time and/or equipment (including administrative work space)
  • rider fares
  • employer subsidy
  • agency subsidy
  • funding from state or local Departments of Transportation, Labor, and/or Public Welfare

Another way the FTA provides funding is through their Section 5307 Urbanized Area Formula Program. In exchange for reporting (FTA-funded) vanpool commute mileage to the National Transit Database (NTD), a per-mile amount is paid to an area’s local transit agency. While a substantial amount (a 20 pool program might generate yearly mileage worth about $60,000), the money takes a while to come and can only flow to an area’s FTA-designated transit agency.

EMPLOYER SUBSIDY

People in the pooling business often stress the desirability of employer involvement. Managers who are supportive of pooling will help keep poolers on the same schedule, point new hires to the pool’s existence, and often provide preferred parking to pools. After all – each pool can free up several parking spaces.

LIABILITY CONCERN

Some employers are troubled by the question of liability if they subsidize commute costs. If an employer is on the fence about pooling because of liability, they should contact their insurer and ask what additional coverage for this would cost. It should be nominal, commensurate with the nominal risk.

VEHICLES

TYPES

Of the universe of vehicles available in the US some make much better pool vehicles than others. American vehicles are most popular, mostly because of the economics. For a fleet buyer (operating at least ten vehicles) – especially one funded with at least 50% government money – Chrysler, GM and Ford have the best deals, often several thousand less than similar models from Japan, Korea, and Germany.

In general, different pools put very different loads on vehicles. Vehicles can depreciate so many ways – mileage, abuse, accidents, all three – and a pooling agency should have a replacement plan. Also, vehicle technology keeps moving forward and – especially with safety equipment – there is benefit to keeping current with late model vehicles. Keeping a vehicle for years with careful maintenance is a smart thing for an individual, but often not for a service provider.

Also, a homogenous fleet is easier to support that a motely one. Southwest Airlines figured this out – they operate only 737s (until recently) and that simplicity is a major part of their on-going success.

Possible pooling fleet vehicles are:

8 to 15 passengers (all capacity numbers include the driver):

  • Ford Econoline – by far the most popular.
  • Chevy Express and GM Savannah – essentially identical.
  • Mercedes Sprinter – with it’s fuel-efficient diesel and Mercedes quality the Sprinter would be in broader use if it was cheaper and/or discounted for fleets, but it isn’t.

7 passenger:

  • Chrysler and Dodge minivans; perhaps available with “government” pricing.
  • Hyundai and Kia minivans – recently redesigned, much bigger and better, still less expensive than Japanese minivans, but no “government money” (see above), fewer dealers (important for ease of service) and uncertain resale value.
  • Neither Ford nor GM make minivans. Both may be importing their European models soon; the Turkish-built Ford Transit Connect could be a great wheelchair accessible pool vehicle if Ford adds a third row of seats.
  • Honda, Toyota and Nissan mini-vans are well-built and fuel-efficient, but they carry a big cost premium (about $5000), including on-going costs of repair and maintenance. Plus, there are still fewer “import” dealerships.
  • Mazda 5 – substantially smaller than all the others but well-built and fuel-efficient.
  • Volkswagen Routan – built by Chrysler.

5 passenger:

  • Chevy Impala, Malibu
  • Ford Taurus, Fusion

ACQUISITION

LEASING

Leasing, especially full-service leasing takes advantage of the expertise of others in areas where an organization may have little in-house. A good leasing company can recommend appropriate vehicles based on auto industry knowledge; they’ll know factory order cut-off dates (one dis-advantage of fleet buying is typically having to order during the scheduling period for a model, not from dealer stock), and they can probably take over a lot of fleet management tasks, such as warranty and accident follow-up.

WHOLESALE AUCTION

Another way to build a fleet is through wholesale auctions. These are scattered around the country and the larger ones can move thousands of vehicles in a day. The vehicles are mostly from rental fleets, well maintained with lots of warranty left. One tip – look for mini-vans with extra window tinting as these were probably delivered and driven in the (typically) snow-free south. Only registered auto dealers can bid but you can probably find someone locally at an independent used-car lot who will buy for you for a flat fee.

WHEELCHAIR ACCESSIBILITY

If you are operating in an area currently served by paratransit, you can probably point commuters to that resource. Regardless, you may want to have a wheelchair accessible vehicle, and there are a few sources easily searched. New wheelchair accessible minivans can cost $40K to $60K. Some accessibility-conversion companies start with late-model used minivans purchased wholesale, yielding a more affordable vehicle.

PROGRAM STRUCTURE

HOW PEOPLE ARE PICKED UP

Pickup cycles should be as compact as possible to keep mileage and costs down, offer comfortable commutes, and to make it easier to react to driver and route changes. Ideally commuters should be picked up close to their homes (not at, as this typically leads to pools having to wait for riders), and should not have to pay for a transit trip to get to a pickup point. Bicycling to a pickup point is one answer; Seattle’s vanpooling operator provides bike racks on pool vehicles.

MULTIPLE EMPLOYERS

A pool works best when commuters are traveling to a single employer. Any difference in work schedule creates problems when commuters work different places. Also, pools traveling to multiple employers have less of a constituency at a given employer for subsidy, payroll deduction, etc.

BENCHMARKS [table]

[AREA] [AGENCY/program name ]      [OPERATOR]                   [APPROX # OF POOLS]

Seattle KC Metro                                       in-house                           >1000

Chicago suburbs PACE                             in-house                           600

Connecticut CT DOT/Easy Street           2-Plus                               300

Michigan Michigan DOT/Michivan         VPSI                                ???

Philadelphia PUP/Commuter Options   in-house                           30

North Carolina NC DOT                              2Plus                               25

OPERATIONS

FUEL CARDS

There are several fleet fuel card companies in the US but Wright Express (http://www.wrightexpress.com/) is the big dog. You can use their billing to analyze quickly drivers’ fuel use, and see in real time where drivers are buying fuel for how much and what kind. Some drivers have to be broken of the unnecessary habit of using premium gas for pool vehicles. Of course you can track each vehicle’s mileage if your drivers enter data correctly. The cards can have a variety of limits and work at any gas station you’d want to go to.

INSURANCE

Insurance cost can range an order of magnitude between different areas of the country. One way to save is to go with a specialty insurer who has made a business in the vanpool industry. Lancer has done this; I’m not aware of any others. The limits are substantial – only vans and mini-vans that get used for the same routes each day – but the rate was substantially less than general business use insurance. Lancer knows that pools traveling consistently with the same drivers and routes present less risk that the general population.

Another way to save on insurance is to pool your risk with other, similar entities and self-insure. States have regulations for self-insurance, and there may be incremental steps to being fully self-insured. Periodically raising your deductible is a move in that direction, too. An insurance agent should be able to guide you through the options.

TRACKING

You might not need tracking for all you vehicles; different pools have different levels of risk. However,  if a vehicle does go missing tracking can help you avoid having to report it stolen, which could make a criminal out of your former driver and perhaps needlessly raise a flag with your insurer.

Also, tracking systems which link to a vehicle’s On Board Diagnostic port can be very helpful with maintenance scheduling. GM’s OnStar does, too, but without the geographic tracking. Lastly, tracking offers fast visual confirmation of expectations for a busy manager and an automatic heads-up when a vehicle strays or exceeds the speed limit (depending on the system). One provider is Networkfleet. Some systems allow tracking based on cell phones, which users allow to be tracked. Obviously this does not necessarily track the vehicle.

3RD PARTY OPERATORS

An agency tasked with quickly building a carpooling operation may want to avoid the learning curve and outsource to a 3rd-party company. Some of these providers offer vehicles only through employers. A few larger private for-profit companies in the pooling industry are:

  • VPSI – the oldest
  • 2Plus – running programs in Connecticut and North Carolina
  • Enterprise – San Diego

FARE PAYMENT

With a conventional, market-rate pool the riders pay the vehicle provider with one check each month. Each pool is encouraged to have a designated banker in addition to primary and backup drivers. The banker opens a checking account just for the pool.  If the rider-ship drops then the remaining riders simply pay more individually to make up the difference.

With non-market rate pools fares are typically paid individually and remain largely steady, perhaps with nominal increases with rider-ship drops, since charging the full vehicle cost defeats the purpose of a subsidized pool.

DEPOSIT ONLY ATM CARDS

In Philadelphia drivers also typically act as bankers and collect the fares (often cash) from riders each pay cycle, then deposit the fares in the agency’s bank account with a deposit-only ATM card or by going into a branch.

IMPORTANCE OF PAYROLL DEDUCTION; COMMUTER BENEFIT

Ideally, fares are paid through payroll deduction effected by the employer. This not only streamlines processing fares, but allows commuters to take advantage of having their fares taken out pre-tax (up to $230 per month).

USING CAR SHARING (ZIPCAR, PCS)

There has been a pioneering project in the Seattle area to use JARC funding to cover car share costs for commuters receiving Temporary Assistance for Needy Families (TANF – formerly called welfare) benefits. While commuting is not a great fit with car sharing (payment is by the 15 minute increment), it is a great alternative to pools for traveling to pre-employment training and interviews. Drivers need to be approved by the car sharing company and reservations need to be made for usage, but in general car sharing is a good thing for people to learn about and adopt. Often commuters see the pool as a way to save money to buy their own vehicle, which typically adds thousands to a yearly budget. If a commuter’s off-hours driving needs can be met with car sharing, they can save money, maintenance and accident repair frustration, and always have a late-model, insured vehicle.

GUARANTEED RIDE HOME

Often pooling agencies offer a “Guaranteed Ride Home” (GRH), to help commuters who have emergencies during the work day. Typically a taxi is called and payment is made or subsequently reimbursed by the agency. An agency may want to set up accounts with taxi companies in advance. Also – it’s important not to undermine the concept that the pool is a commitment from both commuters and the operating agency. Providing transportation outside the pool can be very expensive and should be limited. One scheme for providing GRH involves a standing contract to provide free or subsidized rental cars to participants. The problems with this approach make it a poor choice, however. The commuter must have a license and decent driving record, be pre-registered with the rental company, they must wait for the car to be delivered by the rental company and then return the car to the rental company when they are done. If the need is a true emergency, said emergency will probably be over by the time the commuter gets the vehicle.

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