School bus operators grapple with up to 30% drop in demand amid rising costs

Key Concepts

• Certificate of Entitlement (COE): A permit required to own a vehicle in Singapore, significantly impacting school bus operational costs.
• School Bus Demand: Currently declining due to falling birth rates and changing parental work arrangements.
• Foreign Worker Quota: A scheme allowing operators to hire more foreign workers, temporarily extended to address driver shortages.
• Bus Fares: Expected to increase due to rising operational costs.
• Singapore School Transport Association (SSTA): Represents the interests of school bus operators in Singapore.

Declining Demand & Financial Pressures in the School Bus Industry

The Singapore school bus industry is anticipating a significant decrease in demand – estimated between 20% and 30% – with the resumption of full school operations. This downturn is attributed primarily to Singapore’s declining birth rate, resulting in fewer Primary One students needing school bus services. A contributing factor is the increased prevalence of parents working from home post-pandemic, enabling them to personally transport their children to and from school. As stated in the report, operators have been experiencing a 20-30% reduction in ridership since 2019, directly linked to these changing circumstances.

Impact on Small Operators

A particularly vulnerable segment of the industry consists of over 500 school bus owners who operate only a single route. A sharp drop in demand for their sole route poses a substantial threat to their livelihoods. This highlights the precarious position of smaller operators within the market.

Rising Operational Costs

Beyond declining demand, school bus operators are facing escalating operational costs. Bus fares are projected to increase by up to 15% in the coming year to offset these rising expenses. These costs are driven by three key factors:

• Labor Costs: Increasing wages for bus drivers.
• COE Premiums: The cost of obtaining a Certificate of Entitlement (COE) for buses has risen significantly, adding a substantial financial burden. The SSTA is advocating for a more favorable COE arrangement specifically for school buses, hoping for a “two-way traffic” solution where COE pricing can be averaged for buses dedicated to school transport.
• Diesel Costs: Fluctuations and overall increases in diesel prices contribute to higher fuel expenses.

Driver Shortages & Foreign Worker Scheme

The industry is also grappling with a shortage of local bus drivers. To mitigate this, the Ministry of Education (MOE) and the Ministry of Manpower (MOM) introduced a scheme in 2023 allowing operators serving two or more primary schools to hire additional foreign workers. This scheme, initially set to expire at the end of 2024, has been extended to November 2026.

As one operator expressed, “We are very grateful that uh MOM and MOE has actually teamed up and allowed us with local school contract to have more foreign worker quarter.” However, the industry emphasizes the need for a more permanent or long-term solution, acknowledging the difficulty in attracting younger generations to the profession. The aging local driver workforce and limited new entrants exacerbate the problem.

Call for Industry Assistance

The report concludes with a call for increased assistance for the struggling school bus industry. Operators are seeking ongoing support to address both the declining demand and the challenges posed by rising costs and driver shortages. The extension of the foreign worker quota is a positive step, but a more comprehensive and sustained approach is deemed necessary to ensure the long-term viability of the sector.