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Ride-hailing apps help grow logistics, transportation

Ride-hailing apps help grow logistics, transportation

Pakistan is the 5th most populous country in the world. Resultantly, the transport situation especially in metropolitan cities is a grave issue. Ride-sharing is a novel concept that needs to be regulated by the government if these issues are to be addressed. Presently, there are two factors at play in the transport sector. Riding the digital wave, more and more youngsters are opting for “ride-sharing apps” (Careem, Bykea & Indrive) due to rising fuel costs and unemployment. On the other hand, the salaried class could not opt for car financing through banks because of high-interest rates. This is one of the main reasons why auto sales have plunged apart from price hikes by major automobile manufacturers. For those who could afford it, preferences have shifted from conventional cars to hybrid/electric cars.

While Uber and Careem exist in the Pakistani market since 2015, their presence was somewhat overshadowed by the entry of Airlift and SWVL in 2018. During and after the pandemic, a lot of business dynamics have changed due to which both companies exited the market in 2022. Taking this opportunity, Careem has decided to re-position itself with its “everything app” – from delicious food to super-fast groceries, easy payments to credit transfers. Careem was founded in 2012 in the UAE and since then it has expanded to over 100 cities from Morocco to Pakistan. It has made a number of acquisitions such as RoundMenu and Commut until it was acquired by Uber in 2019 for $3.1 billion. Lately, it has reached an agreement with Uber to buy 50.03% stakes (USD 400 million) in a new company called Careem Technologies. Following the deal, Careem will be broken into two companies, Careem Rides and Careem Technologies.

Careem Rides, which will be fully owned by Uber, will be staffed by 260 people and will focus on its core ride-hailing business under the leadership of Ashish Labroo. Careem Technologies will operate the Super App along with all other verticals. This business will be owned by Uber and Careem co-founders, Mudassir Sheikha and Magnus Olsson. This unit will have 1,400 employees. The latest move shows Careem founders and its new investors see the most potential in services that stretch beyond ride-hailing. The Super App which is available in 10 countries combines all of Careem’s products such as food delivery, bike rentals and financial services that let users send and receive payments and third-party services like cleaning converged into a single platform. According to Mr. Sheikha, this new funding of $400 million will be used to scale the Super App and build category-leading verticals in all their key markets.

It remains to be seen how Careem competes with Bykea, an on-demand platform that connects urban Pakistanis for transport, logistics and payment services. The company was founded with a vision to empower millions to connect, communicate and trade. Bykea’s platform is fueled by a network of predominantly part-time drivers ferrying people, parcels and payments on motorbikes. The platform consists of six categories servicing consumers locally; transport or bike-taxi services, instant delivery, supermarket/nearby store concierge services, bill payments and deliveries originating from classified listings. Bykea also provides payment services by offering cash-on-delivery (COD) and cash-in capabilities to billers and leading wallets in the country.

Pakistan is primed to experience extremely strong growth in internet services over the next decade, with a rapidly increasing middle class. This growth provides immense opportunity for companies like Bykea and Careem that are transforming big societal needs like transportation, logistics and payments through a technology-enabled platform. Both companies have already seen impressive traction in the country and with further investment will be able to expand into and grow e-commerce logistics, food, and payment services, in 2023-24. They offer millions of people the chance to earn an income by tapping into the tremendous opportunity in the country for both transport and hyper-local commerce.

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