Incentive: Powering Cargo Bike Take-up

One of the starting positions for the project was the understanding that unlike cities such as Amsterdam, Munich, Copenhagen… we couldn’t really talk of a cargo bike culture in Brussels. Although there are a few important companies who have made a serious effort to use cargo bikes and some sustainably motivated, small enterprises who champion this mobility or logistic solution, the lack of a biking tradition is particularly characteristic for the city’s business sector.

This Deli/grocery in the municipality of Forest operates a cargo bike as utility vehicle but also as marketing tool.

The project recognised that in order to mainstream cargo bike use, and structurally transform transportation patterns, business and service providers could represent an important mobilising factor. With this logic in mind the project actively set out to bring the economic sector on board as a key stakeholder in the behaviour change process. This meant widening the “catchment area”, not simply being content with capturing the low-hanging fruit exemplified by the convinced cycling community or young families with small children. However it is also clear that a number of (often linked) factors can, positively or negatively, influence decisions on take-up of cargo bikes, i.e.: weather conditions; daily travel distance; travel time; ease of parking; operational, soft or cost benefits; topography; LGV or car substitution; vehicle and tech reliability; battery range; load capacity; vehicle and maintenance cost. While some of these may motivate take-up, such as operational benefits or avoidance of parking restrictions and charges, others may be perceived by some as favourable, by others as doubtful, some may simply represent an obstacle to purchase or adoption. Cairgo Bike has set out to try and address barriers identified in the Brussels context, for instance by looking to deliver secure parking provision but also to facilitate purchase where considerations of price, maintenance cost, specifications and reliability all come together. It was decided that, within a Brussels mobility pattern dominated by private motorised vehicles, a financial incentive would be necessary to encourage purchase by businesses and professionals in what was largely a first step into the unknown, with few developed business models. Cost price was considered a barrier to purchase, (especially for micro-businesses or start-ups) where ultimately the ambition is to replace motorised vehicle journeys by the cargo bike active/clean travel option.

Long John cargo bike in combination with trailer

While the classic non-electric “bakfiets” has a retail cost of around 1.600€ and still offers a good step in option for families, realistically business initiatives (small scale or large) require dependable, tried and tested e-cargo bikes. It is estimated that in Belgium today, the average price for a reliable, solid performance vehicle is  somewhere between 4.500 and 5.000€. The popular Urban Arrow Long John bike retails today at+/- 5.300 , but there are top of the range models on the market  for as much as 9 - 10.000€ depending on accessories and technological extras. The ONO state of the art heavy duty model produced by the German (Berlin based) company ONOMOTION cannot be purchased but leased at between 350 to 500€ per month. It has a weather protected driver cabin, radio frequency identification device locks for the vehicle, batteries that can be replaced in seconds at exchange stations and a load carrying capacity of 200kg. So where the ONO is an exceptional case, cost price is not insubstantial, and after buying a basic model, more investment in terms of insurance (theft +/- 125€, comprehensive +/- 150€), GPS facility, protective clothing, additional trailer… must also be taken into account. It is important to calculate what this means in terms of replacement expenditure where cargo bike activity reduces the traditional vehicle pool (the Cairgo Bike objective), or whether it represents an additional cost to exploit operational benefits for certain activities while the vehicle pool is maintained for other tasks.

courtesy of Onomotion

Many EU cities are now providing grant support to encourage cargo bike purchase. Notably in Germany and Austria, State and Municipal funds are combined to offer a financial incentive for would be buyers.  Here in Belgium the city of Mons has confirmed extension of an existing offer through 2022, to subsidise 20% of purchase cost with a limit of 400€, for as long as the total allocated budget for this year allows.

In Cairgo Bike the objective is to provide financial support for the purchase of cargo bikes within SMEs, through annual calls offering grant subsidy, organised by the administration Brussels Economy and Employment. In order to carry out this activity BEE relies on its network of partners (to spread the word and mobilise applications) such as the 1819 service (leading information service for anyone who is starting or developing a business in BCR), BECI (Chamber of Commerce) and business/circular economy incubators.

The initial plan was to publish calls in 2021, 2022 and 2023. These would be open all year round, supported by vigorous and dedicated communication to maximise participant numbers among SMEs, free-lancers and starters... Funding guidelines are set out and can be adapted each year to specify the selection criteria, explain who can benefit from the grant, the maximum amount and the mandatory documents to be provided. The starting point was an offer to partially cover purchase costs (of cargo bikes/trailers), based on a subsidy of 30% of the total purchase price with a ceiling set at 2,000€ per cargo bike and a maximum of 20,000€ per company. The beneficiary undertakes to keep the cargo bike for a period of 5 years otherwise they are required to pay back the grant. The total budget allocated to this activity within the Cairgo Bike project is 500,000€ which allows, in this initial scenario, for the allocation of at least 250 grants.

As a result of the pandemic, in fact, the grant offer only became operational in July 2021. In the interim, further discussions between the Regional authority and project partners concluded that it would be more effective to raise the financial attraction of the grant for what were recognised as very "new" client groups. The subsidy level was thus changed to allow for 50% of purchase price cover (excl.VAT). Accordingly the ceiling was adjusted to 4,000€ (cargo bike) and 2,000€ (trailer), while the 20,000€ limit per business was maintained. On top of this the Covid crisis resulted in significant delays in cargo bike supply (more than a year delivery backlog), making it impossible to pay the grant within the same year as the application. No invoice proof of purchase could be presented by the beneficiaries within the year. As consequence it was decided to step back from the organisation of annual calls, and conversely allow applications to be made at any point in time. An invoice was no longer required to support the application approval, only to unlock the grant payment after conclusion of the purchase. The architecture of the scheme operating now is represented below.

Following the launch of the grant offer in July 2021 there has been considerable interest from within the potential user community, and enough concrete applications to allow a “state of play” analysis to be made for 2021. A total of 156 applications were submitted in 2021, which is evaluated as a first positive result in terms of impacting on air quality improvement. 70% of these applications resulted in the awarding of a grant. This relative success however means there is a risk that the global budget previewed will be quickly exhausted (therefore in five months 50% of the sum set aside has already been distributed). If this trend continues at the same rate it is probable that by June 2022, all funds, the whole 500,000€, will have been allocated to applicants. Here then, it becomes very important to be sure that the grants awarded are indeed reaching the desired target groups and so achieving the project objective for this action. This monitoring of progress suggests that it could be interesting to again explore adjustment of grant conditions, for instance to favour specific professional/business activities which maximise substitution of vans and cars by cargo bike use. So far the large majority of beneficiaries are to be found in the catchment group of micro-enterprises and the self-employed, with wide variation in activity sector.

During 2021, 30% of applications have been made with the intention of purchasing a Long Tail model which raises some questions about the real purchase motive. Long Tail models are very popular for transporting children, shopping and recreational journeys. If for example an architect or a GP submit an application for a Long Tail Cargo Bike is this really a work-related decision? - say to transport samples of construction material or an electrocardiogram device. On the other hand during the test sessions organised by Urbike it is clear that the Long Tail version does have a utility for many professional activities while in the business as usual situation, drivers of LGVs also use their vehicles for transporting children or for other reasons than work in the evenings, weekends, holidays etc. Furthermore  a number of new users, also in the construction sector, have reported that the Long Tail version is more easy to operate and safer. Professionals only have limited time to spend on training and learning to ride - so a well, transport-equipped Long Tail is often regarded as the most easy and quickest purchase solution.

One option here might be to lower the rate of subsidy provided. In comparison with other cities the grants are relatively generous (this reflects project ambition to  break through business as usual practice and perception) and the socio-economic profile of beneficiaries suggests a relatively financially comfortable client group. On the other hand the Region has taken a decision to broadly maintain the existing offer in terms of levels of funding, and instead focus more on better targeting the most appropriate sectors and activities. In this sense new eligibility criteria will be introduced from April 2021.

There are certain schools of thought which suggest that (financial) incentives generally: make little or no difference; are often unfair or don’t reach the most deserving or targeted; impacts are not durable and simply represent a symbolic political statement. Cairgo Bike seems to demonstrate that, in fact, where an initiative is developed from a position of unfamiliarity, no tradition, a zero starting position then, incentive can be an effective tool in combination with an integrated package of measures. The take-up by businesses and one-man enterprises in Brussels as a result of grant for purchase is not insignificant in the context of a virtually non-cargo bike culture. Of course the question moving forward will be how will the oil spill spread out and mobilise further an effective take-up in the wider community when subsidy ends or is reduced - for instance after the end of the project when considering funding assistance without the support of EU subsidy. In this respect but also as a general rule, review of take-up and real use patterns is essential to make relevant operational adjustments. If take up is low it may be necessary that cities re-appraise target groups or raise the amount of grant support. If take-up is high it might be interesting to lower the amount of subsidy allowing the pot to be spread wider, to more valid candidates. This is not an option being considered at the moment by Brussels Capital Region, but there is recognition of the importance of monitoring effectiveness of measures and project progress, and this evaluation aspect will be followed up in one of the coming web articles.

The question still remains of how to break through and reach/convert actors fixed in traditional mobility, logistic and operational mindsets (non-cyclists, remember even Policemen on bikes are a relatively new revival in our city centres). An important lesson here is to identify up front, and focus on, the most susceptible target groups in terms of economic activity. Organisations with a wide operational range (kms) are obviously less likely to change unless an alternative transport, mobility or supply model can be envisaged. For obvious reasons the manufacturing and construction sectors will feel less adapted to cargo bike adoption, but even in these sectors Urbike has uncovered that there are activity segments to be explored and which are eminently suitable for cargo bike operations. In terms of mainstreaming it is necessary to consider introduction of new ways of working, a change in the business as usual culture, where hubs, micro-consolidation centres, re-organisation of client service provision planning and operator service areas... come into the mix of a more integrated active travel solution.

So finally the argument can be made that incentives are capable of tipping the balance within an appropriate policy framework and with necessary safeguards in place, which include detailed cost-benefit analysis and establishment of an effective monitoring system. However the mix of carrot and stick probably remains the most potent recipe for success.

"Organisations which utilise cargo bikes to substitute a higher number of vehicle trips during the trial phase are more likely to purchase  cargo bikes. Therefore, policies that deteriorate conditions for conventional vehicles could be effective to shift current car users"[1]