Parked dockless share bikes offered by competing companies – I took this pic in Shanghai earlier this month, but they’re in all the major cities in China. They’re not always parked as neatly as this

Shortly after the Victorian Government threw another $4.9 million at struggling Melbourne Bike Share (MBS) in this year’s budget, Singaporean company oBike commenced a pilot in Melbourne of its dockless bike share system.

Dockless bikes are now a common sight in a number of places e.g. China, Singapore and a handful of US cities. Multiple companies in Chinese cities compete for the custom of travellers (see exhibit). What distinguishes dockless bikes from conventional bike share like MBS is they don’t require docking stations; the bike is left wherever the journey finishes. Travellers find available bikes (wherever they might be) by an app on their smartphone.

It seems courageous to introduce another bike share system in Melbourne given the lacklustre performance of MBS, but oBike has a number of advantages for both riders and governments. The key one is flexibility. Provided there are enough bikes in the fleet – and oBike says it’s looking to provide as many as 10,000 – travellers in the inner suburbs should theoretically have little trouble finding one within a reasonable walk.

Having a big fleet with what is effectively an infinite number of stations will address one of the main problems with MBS; it only has 600 bikes and 50 docking stations, confining it to the city centre. From the public’s point of view, oBike has another big advantage over MBS; it doesn’t require a direct government subsidy. The cost of setup and operation is carried by the company rather than taxpayers.

There are nevertheless serious risks for oBike. The key one is Victoria’s mandatory helmet law. The company is providing helmets with each bike, but it’s not clear if Melburnians are prepared to tolerate such intimate body contact with strangers. It might be telling that providing free helmets didn’t give much of a boost to MBS or to Brisbane’s similarly underperforming CityCycle scheme.

That suggests the helmet law might not be the only potential problem. Even if oBike were exempt from the law, there mightn’t be enough customers brave enough to cycle on Melbourne’s streets. There’re too many thoughtless drivers and not enough infrastructure to make cycling in Melbourne a fear-free exercise for less experienced riders.

Melburnians also differ in a number of ways from the residents of places like Beijing where dockless schemes have been implemented on a big scale. For one, the tradition of cycling for transport in Australia is relatively weak. Another is those most interested in cycling tend to have their own bikes. And the relatively dense and frequent network of tram services in the inner suburbs (trams are free in the CBD) might make bike share less useful than it is in other places.

The oBikes themselves look good but they’ve got some design problems that could limit their appeal. They’re very heavy and they’re surprisingly small, making them uncomfortable for taller riders. Astonishingly, they don’t have gears (share bikes like MBS usually have three). It’s as if no one from oBike bothered to look at Collins St or Exhibition St.

So, it’s far from self-evident that oBike will be a winner. The criterion for success isn’t simply attracting a lot of riders; had MBS done that it would’ve been hailed a great success. oBike has a much more demanding test; it must be commercially viable. And if it turns out to be a goer, it might well face competition from one or more rival operators. I think the company is wise to do a pilot, although I question how much it can learn from a mere 200 bikes.

Dockless bike share is very new and it’s not clear yet that the model works commercially even in large Chinese cities where the cost of other modes is relatively high (high levels of venture capital funding do not necessarily mean it will be viable). In Melbourne, oBike will have to address the liklihood of high rates of damage and loss in its fleet, as well as the problem of imbalances i.e. bikes tending to left in large numbers at a few key destinations (subsidised schemes like MBS geographically redistribute bikes on a regular basis).

If it succeeds in Melbourne, oBike is likely to create a problem with parking of bikes. The company appears to have shifted much of the cost of storage onto local government, who’ll have to manage the problem of how to accommodate so many bikes without unacceptably compromising the quality of public spaces. That task will be even harder if other operators enter the market. I don’t think it’s necessarily a deal-breaker, but it will be a hot political issue that must be dealt with.

If it proves to be commercially viable, oBike will obviously be providing private benefits for users. However I don’t think the social benefits will be particularly high because the experience with successful bike share schemes elsewhere suggests they don’t reduce car travel by much; bike share mostly replaces trips that would otherwise be made by public transport or walking. On the other hand, it would give the Government the pretext to stop pouring $1 million a year down the MBS greenwashing hole. And anyway, the social costs shouldn’t be very high either.