Unlike Hangzhou's striking cab drivers, morale is slightly higher among their counterparts in Shanghai. On July 9th, the fixed fare rate was raised to 13 yuan, one yuan up from the previous starting fee. Passengers also pay an additional one yuan fuel surcharge. But as Tom Fearon tells us, higher taxi fares has not translated into higher profits.

13 yuan for a three-kilometer journey plus a one yuan fuel surcharge- That's what Shanghai taxi passengers have paid for almost a month now. Red labels like this are a common sight on taxis across the city.

The adjustment means passengers have to pay an extra two yuan when taking a taxi. There were initial concerns the rising taxi fares would prompt people to choose other means of transport.

However, that's not the case according to some cab drivers. One taxi driver said, "I don't think the taxi fare hike has changed people's habit. In the past, I had about 40 customers daily. Now, it's almost the same."

Rising fares coupled with the same number of people taking taxis should mean higher incomes for cab drivers. However, some taxi companies are suffering from declining profits.

For Shanghai's largest taxi company, Dazhong Transportation Group, its highest profit margin is 6 percent. That's expected to decrease in the near future.

Yang Guoping, Chairman of Dazhong Transportation Group, said, "In the past, taxi drivers had to pay more than 10-thousand yuan per month for renting the taxi. Now, that amount has declined by a fifth."

Dazhong Transportation Group currently owns about 7-thousand taxis. If every cab driver pays the 8,200 yuan monthly rental fee, the company's total monthly income should be 5.7 million yuan. A 6 percent profit equates to more than 3 million yuan per month. This means the company has to spend the remaining 50 million yuan.

Yang Guoping said, "Recently, the cost of running a taxi company has risen rapidly. We have to train staff and increase their salary. Meanwhile, we also have to cover insurance cost for cab drivers. Most importantly, the rental costs are increasing sharply."

As taxi fares continue to rise in Shanghai, how these cab companies can increase their future profits remains an ongoing challenge.

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