Demand Forecasting

For NYC Taxi

Project by Nikhil Madhu Belavinakodige

About The Project

Around the world, cities are grappling with the challenge of efficiently managing transportation demand. The effective prediction of taxi demand can help to alleviate congestion, reduce wait times, and improve the overall transportation experience for both residents and visitors.

Although medallion (yellow) cabs are primarily found in Manhattan, they can be called from any taxi stand or raised hand anywhere in the city's five boroughs. Taxis are used significantly more frequently in New York City than in other cities. The majority of New York taxi drivers still pick up people on the street rather than taking phone reservations. Stepping off the curb and sticking out your arm will get you a cab.

Uber which is a taxi giant entered the market in 2011 and has taken the market by storm. "Uber stated in 2011 that it would begin offering its ride-sharing service in New York City, beginning a period of disruption in the taxi service sector." - New York Times

Uber started building a new network of cabs outside of the medallion system by making it simple for anybody to sign up as a taxi driver using their own private vehicle and a mobile phone app. According to recent studies, the competition from these ride-sharing services has caused a significant fall in taxi ridership since 2011.

New York City is a hub of activity, with millions of people relying on taxi services for transportation every day. Accurately forecasting the demand for taxi services in NYC is crucial for taxi companies, policymakers, and city planners, as it helps to optimize resource allocation, reduce congestion, and improve service quality.

Reference: https://www.cnn.com/2022/03/24/tech/uber-taxi-deal-new-york-city/index.html

One important aspect of accurately predicting taxi demand in New York City is the ability to factor in the impact of external events on passenger numbers. For example, major events such as concerts, sports games, and political rallies can cause a surge in demand for taxi services in certain parts of the city. By analyzing historical data and using machine learning algorithms, it is possible to identify patterns in passenger behaviour and anticipate when demand is likely to increase or decrease. This information can then be used to allocate taxis more efficiently and ensure that customers receive timely and reliable service.

Another challenge facing taxi companies and city planners is the need to balance the competing demands of different stakeholders. For example, taxi drivers may want to focus on high-demand areas where they can earn the most money, while passengers may prioritize convenience and flexibility. Meanwhile, policymakers may be concerned with reducing traffic congestion and promoting sustainable modes of transportation. By incorporating multiple variables into their forecasting models, taxi companies can develop more nuanced strategies that take into account the needs and preferences of different stakeholders.

So what if there was a mechanism to forecast taxi passenger numbers that provided taxi dispatchers with useful information, such as how to place cabs where they are most needed, how many taxis to dispatch, and how passenger numbers change over time?

Such forecasting will be of great assistance to dispatchers in making crucial choices that can increase their profit margin.

"Get there in style with NYC taxis."

Goals for this project:

Understanding travel patterns:

Finding traffic hotspots
Travel patterns vary by time of day
How events or weather impact travel

Developing predictive models:

Predict future travel patterns

To Understand the impact of ride-hailing services like Uber, Lyft

is it useful?

This research can be useful for city planners and transportation companies in various ways:

Improving transportation infrastructure like investing in buses or subway stations
Optimizing public transportation services like identifying the areas with the highest demand for transportation services and adjusting their routes and schedules accordingly.
Managing traffic congestion by analyzing historical data, they can identify times and locations where congestion is likely to occur and develop strategies to alleviate it, such as promoting carpooling, adjusting toll prices or implementing dynamic traffic signals.

Q&A

Insights to be Gained from Analyzing Taxi demand in New York City

What is the overall pattern of taxi demand in NYC?

Based on the research conducted on NYC taxi demand, the overall pattern is that taxi demand in New York City varies widely by time of day, day of the week, and location. Some of the observations are:

Time of Day: Taxi demand tends to be highest during the evening rush hour (4-7 pm) and on weekend nights (Friday and Saturday). Demand is generally lower during the early morning hours (midnight-6 am).
Day of Week: Taxi demand is generally higher on weekdays (Monday-Friday) than on weekends (Saturday-Sunday). This is likely due to the higher volume of commuters during the week.
Location: Taxi demand is highest in Manhattan, particularly in the central business districts (Midtown and the Financial District). However, demand is also significant in other boroughs, such as Brooklyn and Queens, particularly in areas with high population density or popular tourist destinations.

2. What are the hotspots for taxi demand in the city?

The most popular hotspots for pickup and drop-off points in NYC vary over time and are influenced by factors such as tourist attractions, commercial areas, and events. However, based on the available data and research done for this project, here are some of the most frequently cited pickup and drop-off points:

John F. Kennedy International Airport (JFK): JFK is one of the busiest airports in the world, and it is a popular pickup and drop-off point for taxis, particularly for passengers travelling to and from Manhattan.
LaGuardia Airport (LGA): Like JFK, LGA is a major airport in NYC and a popular pickup and drop-off point for taxis.
Penn Station: Penn Station is one of the busiest transportation hubs in NYC, with connections to various train lines and subways. It is a popular pickup and drop-off point for commuters and travellers.
Grand Central Terminal: Grand Central is another major transportation hub in NYC and a popular pickup and drop-off point for tourists and commuters.
Times Square: Times Square is one of the most famous tourist attractions in NYC, with a high volume of foot traffic and many hotels, restaurants, and theatres nearby. It is a popular pickup and drop-off point for tourists.
Rockefeller Center: Rockefeller Center is another popular tourist destination in NYC, particularly during the holiday season when the famous Christmas tree is on display. It is also a popular pickup and drop-off point for visitors to the nearby NBC Studios.

3. What is the impact of seasonality on taxi demand in NYC?

Seasonality can have a significant impact on taxi demand in New York City. Here are some observations about how seasonality affects taxi demand:

Summer: In general, taxi demand tends to be lower during the summer months (June-August) compared to other times of the year. This is likely due to factors such as vacation travel, school being out, and people choosing to walk or bike instead of taking a taxi in nice weather.
Winter: During the winter months (December-February), demand for taxis can be higher due to inclement weather, such as snow and ice, making it more difficult to walk or drive. Holidays, such as New Year's Eve, can also increase demand during the winter months.
Spring and Fall: The demand for taxis in the spring and fall months can be more variable, depending on factors such as weather, events, and holidays. For example, the demand for taxis may increase during the spring for events such as the New York City Marathon or outdoor festivals, while the demand for taxis may increase during the fall for back-to-school activities or the annual United Nations General Assembly meeting.

4. What factors impact the total fare?

Research on NYC taxi data has identified several factors that can impact the total fare, including distance, passenger count, and time of day. Here are some observations based on this research:

Distance: The distance of the trip is one of the most significant factors affecting the total fare. The longer the distance travelled, the higher the fare will be. This relationship between distance and fare is usually common in any transport, meaning that the fare increases proportionally with the distance travelled.
Passenger count: The number of passengers can also affect the total fare. In general, taxis charge an additional fee per passenger after the first passenger, which can increase the fare. However, this additional fee is usually a small percentage of the total fare, and the impact of passenger count on the total fare is typically less significant than the impact of distance.
Time of day: The time of day can also affect the total fare. Taxis in New York City charge higher rates during peak hours, which are typically weekday mornings and evenings. This higher rate is known as the "peak hour surcharge" and can increase the total fare significantly.

In addition to these factors, other variables such as tolls, traffic congestion, and weather conditions can also affect the total fare. For example, tolls can increase the fare, while traffic congestion and poor weather conditions can cause the fare to increase due to longer travel times. These are some of the general trends found from this research.

5. How does the demand for taxis vary by day of the week?

Research on NYC taxi data has shown that the demand for taxis can vary by day of the week. Here are some observations based on this research:

Weekdays: Taxis in New York City tend to have the highest demand on weekdays, especially during peak hours when commuters are travelling to and from work. The demand for taxis is usually highest on weekdays between 7-9 am and 4-7 pm.
Weekends: On weekends, the demand for taxis is generally lower than on weekdays, but there are still peak periods of demand. For example, the demand for taxis can be high on weekend evenings when people are going out to socialize or attend events.
Holidays: The demand for taxis can also vary on holidays. For example, the demand for taxis can be high on New Year's Eve when people are travelling to and from parties and events. Similarly, the demand for taxis can be high during major events like the Super Bowl.

6. What is the impact of weather on taxi demand?

Research on NYC taxi data has shown that weather can have a significant impact on taxi demand. Here are some observations based on this research:

Rain and snow: In general, rainy or snowy weather tends to increase demand for taxis in NYC. This is likely due to the fact that people are less willing to walk or use other modes of transportation when the weather is bad. As a result, taxi drivers may see an increase in business during rainy or snowy periods.
Heatwaves: Extremely hot weather can also impact taxi demand in NYC, but in a slightly different way. During heatwaves, people may be more likely to use taxis to avoid walking in the heat, but there may also be fewer overall riders as people may choose to stay indoors.
Mild weather: In contrast to rain, snow, or extreme heat, mild weather conditions may lead to lower demand for taxis. When the weather is mild, people may be more willing to walk or use other modes of transportation, which can decrease the number of people using taxis.

7. How do pick-up and drop-off locations affect the total fare?

Research on NYC taxi data has shown that pick-up and drop-off locations can have a significant impact on the total fare. Here are some observations based on this research:

Distance: As expected, the distance of the trip is a key factor in determining the total fare for a taxi ride. Longer trips generally result in higher fares, while shorter trips result in lower fares.
Neighbourhoods: The pick-up and drop-off locations can also impact the total fare due to variations in neighbourhood demographics and demand. For example, fares are often higher for trips to or from certain neighbourhoods or tourist destinations, such as Manhattan, due to higher demand.
Bridges and tolls: Taxi fares can also be affected by tolls and bridges. When a taxi crosses a toll bridge, the toll is added to the total fare, increasing the overall cost of the trip.
Time of day: The time of day can also affect the total fare, as fares can be higher during peak hours when there is more demand for taxis.

Overall, the pick-up and drop-off locations can have a significant impact on the total fare for a taxi ride.

8. What factors contribute to taxi driver earnings in NYC?

Research on NYC taxi data has identified a few factors that contribute to taxi driver earnings in the city. They are:

Hours worked: Taxi drivers who work longer hours tend to earn more money than those who work shorter hours.
Experience: Experienced taxi drivers tend to earn more money than newer drivers, as they may have a better understanding of the most profitable routes and how to provide good customer service.
Tips: Tipping is common in the taxi industry, and drivers who receive larger tips can earn more money overall. A few factors may influence the size of tips such as driver behaviour, cleanliness of the vehicle, and quality of the ride can all
Location: The location where a taxi driver operates can also impact their earnings. Drivers who work in areas with high demand and frequent fares, earn more money than those who work in quieter residential areas.

Overall, taxi driver earnings in NYC are influenced by a variety of factors, including hours worked, experience, tips, and location.

9. How has the introduction of ride-hailing services like Uber and Lyft affected taxi demand?

This is one of the questions which this research couldn't dwell into in much deeper thought. By just looking from the top, this research finds that the introduction of ride-hailing services like Uber and Lyft in New York City had a significant impact on the demand for traditional taxi services. This can is because,

Decrease in taxi demand: During the timeframe of the introduction of ride-hailing services, one can observe that there is a slight decrease in the demand for yellow cab services.

This is just an observation which might need much more research on what is causing the dip in demand for the yellow cab. Also, this research doesn't have appropriate data from Uber and Lyft to make a comparison btw these ride-hailing services and yellow cabs. As a result, this question remains vaguely answered and requires further research to come to proper conclusion.

10. How can these findings contribute to the improvement of the transportation experience in NYC?

As a concluding question, the findings from research on the taxi industry in NYC can contribute to the improvement of the transportation experience in several ways. Here are a few ways:

Improved taxi services: By understanding the factors that impact taxi demand, pick-up and drop-off locations, and total fares, taxi companies can work to improve their services and provide a better experience for customers. For example, by using the data on popular pick-up and drop-off locations, the taxi company can ensure that there are enough taxis available in those areas at peak times.
Improved transportation planning: The research findings can also inform transportation planning in NYC, such as the development of public transportation options and the allocation of resources for transportation infrastructure. For example, data on taxi demand can be used to inform the development of new bus or subway routes in areas with high demand.

Overall, the study's conclusions about the New York City taxi sector can help the city's transportation system become more effective, practical, and customer-focused. Policymakers, transportation providers, and drivers may collaborate to enhance the entire transportation experience for both locals and visitors by utilizing the data and insights from this research.

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