Housing Complex

Sale of Supplier Could Throw Capital Bikeshare Expansion Plans Into Disarray

bikeshare3Call it the butterfly effect of bike sharing: A bankruptcy and sale in Montreal could mean no new Capital Bikeshare bikes for a while here in D.C.

In January, the Public Bike System Company, known as Bixi, filed for bankruptcy. Bixi supplies bikes for bike-sharing systems in 15 cities, including the District. On April 12, the Washington Post reported that the bankruptcy had halted purchases of new bikes and docking stations that could have expanded the Capital Bikeshare system in the District and into College Park.

The system's limbo was left unresolved on Tuesday, when a court approved the formal transfer of debt-plagued Bixi to the city of Montreal. Meanwhile, Bixi's international arm was sold to Canadian furniture mogul Bruno Rodi. But the Montreal Gazette reports:

Most of Bixi’s contracts with other cities will be cancelled. Rodi will only retain two contracts with cities that have yet to receive bikes.

One, worth about $500,000, is for a small system in Dubai. The other, in Guadalajara, Mexico, is for 1,200 bikes and is worth about $5.5 million.

That would imply that Capital Bikeshare's contract with Bixi will be voided—potentially precluding the purchase of any new bikes and stations for some time. I asked District Department of Transportation spokesman Reggie Sanders about the potential impact, but he did not provide any details. "Obviously this is a very fluid situation and we and our other Capital Bikeshare partners will have more to say once we have more information," Sanders said.

h/t WashCycle

Photo by Darrow Montgomery

Comments

  1. #1

    how could something so popular have such a horrible business model?

    having gov't fund these things is ludicrous, they should allow competitive corporations to bid for the branding contracts, not that cities have created the opportunity and call it a day

  2. #2

    Having corporations bid for the branding contracts hasn't worked very well in NYC. Only Miami Beach has a 100% private model, and the downside of that is they only put stations where they can make money. They won't serve poor neighborhoods. This isn't a business, it's transportation. And transportation is something that needs to be subsidized for the good of the people. It's the reason we started building roads in the first place.

    Besides, what went bankrupt here was not the bikeshare operations (Alta, CaBi), it was the bikeshare manufacturer(Bixi). And it did so because of mismanagement.

  3. #3

    It's not the business model that is flawed. The problems arose from mismanagement at Bixi, specifically from their attempt to take over the software provider who wrote the software for earlier Bixi systems. That provider, 8D, rejected the takeover bid and parted ways from Bixi.

    Bixi tried to write new software (or used an inferior product). That faulty software was used in newer Bixi-based systems, such as Chicago and NYC. The software problems caused significant delays, leading those cities to withhold significant sums of potential payments. That led to the cashflow problem for Bixi that resulted in the bankruptcy filing.

    Alta, the operator of Capital Bikeshare and several other bikeshare systems in the U.S., has now partnered with 8D to provide systems for existing systems and for potential new cities. Details haven't been provided yet.

    The Alta-8D partnership could provide competition to the new Bixi International, which could be good for Capital Bikeshare. There could be two equipment providers in the future. If the parts are compatible, then CaBi can get place orders with a different supplier, if there are delays in equipment deliveries with the first supplier.

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