Cloud and data analytics are driving the fleet management industry into previously uncharted territory.
Fleet management telematics is by no means a new market; such systems have been around for two decades. Growth started in the long haul truck industry, fuelled by a need to cut costs on expensive vehicles.
Fleet management solutions combine GPS and mobile wireless technology with in-vehicle sensors, displays and back-end software to provide services for commercial fleets.
The industry was pioneered by Qualcomm’s recently sold Omnitracs division, which is still the biggest player in terms of units, selling around 500,000 per year.
But as fuel costs rise alongside increased regulation, the market is growing further still. Analyst ABI Research estimates that there were 13.3 million fleet management units globally at the end of 2012. This will increase to 48 million by 2018 - a compound annual growth rate of around 24%.
With a large number of companies operating in multiple regions, the market is fairly mature, experts agree. Yet it is fragmented: there are ‘literally hundreds’ of fleet management firms operating all over the world, according to Gareth Owen, principal analyst at ABI Research.
Prominent fleet management companies include Trimble, Fleetmatics, Masternaut and Trafficmaster, as well as many other smaller firms.
‘We look at the top 20 players and they only represent a third of the market; this is one of the obstacles to growth,’ says Owen.
North America and Europe make up the main markets for fleet management, but adoption is also growing in countries such as China, where vehicle use is surging.
Vehicles covered by fleet management are often heavy duty. However, as technology comes down in price, fleet management is also filtering down to smaller vehicles.
Some of the technology can cost up to $2,000 per vehicle, says Owen, but it has come down to as low as $20 per vehicle for basic track and trace. ‘Also, some of the technology is becoming commoditised,’ Owen adds. ‘If the application is simple, you can use it off the shelf, driving the price down.’
On top of this, targets such as fuel consumption, vehicle maintenance costs and insurance premiums are driving the fleet management industry. ‘There are strict operational procedures over how a driver is expected to perform,’ says Macario Namie, VP of marketing at Jasper Wireless.
But initial fuel savings do not offset poor driving, says Mix Telematics marketing and operations director, Steve Coffin. ‘You can get the most efficient vehicle but if the wrong person is driving it, it won’t be efficient.’
By analysing data and automating the reporting back, Coffin says Mix Telematics can generally deliver 10% savings on fuel.
In a bid to further cut costs, fleet management telematics has also been moving towards cloud-based solutions over the last five years. Cloud services replace the expense of a black box on the vehicle, Owen says, adding that the company offering the service ‘doesn’t need its own infrastructure when it’s cloud’.
As such, many fleet management firms are in the midst of establishing themselves in the cloud space. Mix Telematics is trying to establish itself as a SaaS provider, Coffin says. ‘It’s not just about hardware, it’s about solutions and software and services. The technology has reached a plateau; the best way to deliver the solutions is off the back of the tech rather than the tech itself. Data storage is cheaper than it used to be and the speed and availability is so much better.’
Cloud is also enabling vehicles to collect increasing amounts of data, allowing fleet management firms to offer tailored solutions to customers. ‘Once you have things in the cloud you can analyse data on a fleet basis and use tools to see how the fleet is running,’ Owen says. ‘You have all this information - how can you use it to improve things?’
LTE is being used on a small scale, but 2G and 3G networks are more than enough to cover most of today’s applications.
Specific applications are prominent in industries such as construction where there are certain parameters to track. Other verticals include oil and gas and mining as well as long haul, regional, local delivery, utilities and the government.
Meanwhile, rising fees for loading time in ports and distribution hubs are increasing demand from the haulage sector, which is ‘highly fragmented and competitive’, according to Sheridan Nye, senior analyst at Informa. ‘Trucking fleet managers have to watch their margins while meeting tough customer requirements for speedy delivery,’ she says.
Owen cites the example of local councils’ winter gritting vehicles, which are now equipped with sensors to prove that gritters have been at a particular location at a certain time. ‘This can help with insurance claims, as the council can prove that they did grit the road,’ Owen says.
Technology is moving on, but what about the drivers themselves? As the industry becomes increasingly efficient at tracking, there is a ‘big brother’ issue, says Joyce Tam, director of product management at Trimble. But tracking is a benefit to the employee if they do their job correctly, she points out. ‘At the end of the day it’s company time, to be able to fairly justify what’s been done can and make things easier for them.’
As the fleet management industry starts to consolidate, cloud and specifically tailored solutions will fuel growth. By using data smartly, fleet management systems will soon allow vehicles - and companies - of all sizes to cut costs.
Smartphones and tablets replace expensive terminals
Smartphones and tablets are replacing expensive screens and terminals, leading to the rise of bring your own device (BYOD) in fleet management.
The biggest change in fleet telematics will be a complete transition from legacy single-purpose devices to a BYOD model, says Christian Schenk, senior vice president, product and market strategy of XRS Corporation. ‘BYOD is becoming the preferred solution because drivers are already using smartphones and tablets for personal use,’ he says.
‘They’re already comfortable and prefer using their own devices versus learning how to use yet another piece of equipment in their daily work.’
He adds: ‘Companies want to avoid the high capital costs of providing devices, so using the driver’s device will address both preferences. The company gets its required compliance solution, but the driver gets to use a preferred device, perhaps with the company picking up part of the tab.’
Mobile operators’ customers save up to 40% in fuel consumption
Mobile operators are seeing customers save up to 40% in fuel consumption after deploying fleet management solutions.
Vodafone says it is seeing average savings of 10% to 15% in fuel consumption. ‘We even have customers who are saving 30% to 40%,’ says Jari Salminen, Vodafone head of business development, M2M.
‘Efficient fleet management is the key to success for companies in many industries,’ adds Jürgen Hase, VP of M2M Competence Center at Deutsche Telekom.
According to Verband der Automobilindustrie (VDA) in Germany, hauliers can save up to €5,000 per vehicle annually thanks to telematics. For example, route optimisation helps to reduce fuel consumption by between 10% and 2%, Hase adds.