Nowadays in China you can’t help but notice that shared bikes are popping up everywhere. Any pedestrians walking past a subway station or a bus stop in a major city such as Beijing will find themselves surrounded by a flood of shared bikes usually clogging the city’s sidewalks. In contrast, there are often very few shared bikes available in neighbouring suburbs, and sometimes it can be a real headache to get hold of a shared bike during morning rush hour.

Bike sharing companies have to hire additional workers to reposition their idle bikes away from transportation hubs to other locations where they are most needed. The relocation can be costly for those companies, and often they are not doing a very good job.

The equipment repositioning problem is not unique to bike sharing companies. Shipping companies have long struggled to relocate idle containers around the world. For example, a country such as China, which exports more goods than it imports, constantly faces a problem of container shortage. In contrast, a country such as Australia, which imports more than it exports, has a problem of container surplus. Shipping companies use differential pricing to ease this equipment imbalance. For instance, the freight rate is almost always much lower to ship goods from Australia to China than the other way around, in order to facilitate more container repositions back to China.

By comparison, bike sharing companies’ pricing schemes lack flexibility. Companies such as Mobike and Ofo charge an hourly rate for their bikes regardless of the directions they travel. So during morning rush hours on weekdays, people need shared bikes to go the nearest metro station or bus stop in a hurry. However, in the evening when the demand for shared bikes are low, people have no incentive to help return those bikes back to where they came from. Therefore, the responsibility to reposition the shared bikes is entirely on the bike sharing companies themselves.

Those companies could adopt a different pricing strategy to incentivise their customers to help disperse the bikes by offering a discount on future usage or even provide a small payment for whoever return the bike to a more remote location. Although this may increase their administration complexity, it has the potential to increase shared bike usage, and perhaps in the end it may turn out to be more profitable for those bike sharing companies.