Uber Technologies Inc yesterday warned that proposed restrictions on batching orders and minimum wages could prompt a NT$20 delivery fee increase in Taiwan, as lower efficiency would drive up costs.
Uber CEO Dara Khosrowshahi made the remarks yesterday during his visit to Taiwan. He is on a multileg trip to the region, which includes stops in South Korea and Japan. His visit coincided the release last month of the Ministry of Labor’s draft bill on the delivery sector, which aims to safeguard delivery workers’ rights and improve their welfare.
The ministry set the minimum pay for local food delivery drivers at NT$45 per trip, the draft states. The hourly pay should not be lower than NT$245, which is 1.25 times higher than the minimum hourly wage of NT$196.
Photo courtesy of Uber Technologies Inc
Delivery workers should be paid for each trip, rather than paid at one go, it states.
Khosrowshahi said that Uber supports most of the draft bill, but is concerned about some parts, such as rules linked to batching orders, which consolidate multiple orders into a single delivery for efficient processing.
“The proposed rules will reduce the benefit of batching and will force us to pass on the incremental costs to consumers, resulting in additional delivery fees, tentatively at NT$20 per delivery, which is significant,” Khosrowshahi said. “Even though on-demand delivery is very popular around the world, it is subject to the laws of supply and demand. Higher prices mean lower delivery, fewer trips for delivery partners, and less business for merchants.”
Uber can provide higher earnings for batch trips than a standalone trip, if the incentives for batching orders are not removed entirely, he said.
Batching orders is essential in Taiwan, particularly in Taipei, given the market’s population density, Khosrowshahi said, adding that batching is important to the growth of businesses and allows Uber to make delivery more affordable.
The delivery sector is a highly price-sensitive market, with a 5 percent price hike likely resulting in a loss of 34 percent of overall delivery service users, a survey released last year by the Fair Trade Commission showed.
The National Delivery Union yesterday wrote on Facebook that batching order payments tend to be less than one-third of standard standalone trip payments if those orders were divided into several trips.
In some extreme cases, the payment even dipped to a mere NT$45, it added.
The union said it would hold a news conference today to rebut Uber’s claims and clarify the issue.
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