Telematics used to be about GPS. It’s still about that, plus a whole lot more.

In 2009, telematics became the technology that was largely credited with helping many commercial fleets survive. Frost & Sullivan reported that it was used by one-third of the fleets with more than 50 trucks and by nearly a fifth of the fleets with fewer than 20 trucks.

Now, 18 months later, Alex Brisbourne, president and COO of KORE Telematics, estimates that more than 50 percent of all long haul trucks in North America-but less than 10 percent of small fleets-use telematics for some level of diagnostics and tracking. The numbers vary by source, yet they all agree that usage of telematics has grown significantly and is continuing to grow as its reach extends into smaller, independently operated fleets. 

The technology is, essentially, a black box that plugs into vehicles’ OBD2 port. Telematics systems are composed of the hardware that records the data, an application that specifies what data to get, a wireless system to transmit data, and an analytics application to make sense of the data. Reliability is paramount.

“No one should be able to massage the data to make it look differently,” emphasizes Emad Isaac, Chief Technology Officer, Morey Corporation.

Telematics systems can provide the data that allows fleet managers to track and analyze key data elements, extracting information by equipment type, user department or function, and track performance and costs in a variety of ways. Those reports, generated from hard data, makes objective decisions more likely by minimizing the influence of gut instincts and personalities from the decision-making process.

At its most basic, telematics technology records mileage. At its most sophisticated, it monitors engine diagnostic codes and tracks authorized and unauthorized usage, and includes a variety of smart phone-like applications and communications capabilities that can be used to optimize routes, perform real-time diagnostics on the vehicles and conduct preventive maintenance based upon actual conditions rather than upon a schedule. Telematics systems also can produce reports for in-house, state and federal use.

 “It’s an evolving space,” says Matthew Menner, Senior Vice President of Sales and Alliances for third-party logistics provider Transplace. Commercial offerings are expanding, and simple implementations are being introduced even for sales fleets. Menner calls this the “Moore’s Law” of telematics, noting the increased capabilities and decreased prices that are making it very affordable for even small fleets.

And while telematics gives fleet operators a deeper level of analytics, it also makes it the companies themselves more attractive to supply chain partners.

For example, Doug Waggoner, CEO of Echo Global Logistics, notes that as a non-asset based provider, it’s definitely helpful to work with carrier partners that utilize advanced tools like telematics, which offer real-time tracking.

“We try and automate with our carriers to the extent that we can,” and if they offer real-time tracking information, Echo Global Logistics can relay that information directly to shippers.

“If we cannot get real-time tracking data from the carrier, we literally use a call center in India to phone the carrier to get status updates, which we then have to manually enter into our system so that our shipper customers have seamless information.”




 

Where's my truck?

BLS Trucking is a case in point. Headquartered in Dayton, Ohio, its fleets deliver building materials from 80 sites in 15 states. Rising fuel costs promted the company to consider telematics. “It paid for itself in less than one year in fuel savings alone,” according to Josh Zimmet, executive administrator for BLS Trucking, Inc. During the first year, fuel costs dropped by nearly 10 percent-a savings of $188,539.

Much of the savings came from curtailing unauthorized usage, which was a direct result of equipping the trucks with GPS transponders. As Zimmet recounts, “The year after we got GPS tracking, we got a call from a local event asking why we wouldn’t let them use one of our trucks for a stage. They said we had done that for the past seven or eight years. We had no idea!”




 

The UPS story

On a larger scale, UPS piloted a telematics installation on 22,000 of its small package fleet and saved millions of dollars. After two years of testing, in 2009 it began a staggered rollout to the entire 170,000-vehicle truck and small package fleet, which it expects to be completed in 2012. 

The savings came mainly through fuel reduction and maintenance optimization, explains Mike Hance, Vice President of Fleet Maintenance.

“UPS drivers log about 2 billion miles per year worldwide,” he elaborates. Telematics helps reduce the amount of time spent idling by 15 minutes per driver per day. That equates to 25 gallons of fuel per driver per year. When fully deployed in the small package car fleet in the U.S., reducing idle time by 15 minutes per day per driver will save 1.4 million gallons of fuel.” Other uses report additional savings by routing vehicles to nearer or less expensive fueling stations.

The detailed analytics application UPS developed for its telematics installation makes maintenance a just-in-time activity that is based upon real-time monitoring, sophisticated predictions, and data mining. The objective, according to Jack Levits, Director of Process Management at UPS, is to determine what will fail tomorrow and fix it before it fails, thus minimizing on-the-road breakdowns.

Before telematics, “if a driver encountered any difficulties, he wrote up an inspection report for the mechanic, who evaluated it that night, and performed any routing maintenance. It was a reactive approach,” Hance says. Now, telematics gives UPS mechanics detailed visibility of vital mechanical and electrical functions on each vehicle daily, without removing the vehicle from service. Therefore, it allows the company to improve reliability and reduce the maintenance costs by moving from a scheduled maintenance program to a condition-based program.

For example, Hance explains, “We used to replace a starter every year-and-a-half, whether a vehicle made 150 stops per day or 30 stops per day. Telematics allows UPS mechanics to base the decision instead on things like the actual cycles of each starter and the amount of voltage it draws when it’s used. Early testing also helped us determine that, in some cases, we were replacing fuel injectors when all we needed to replace were inexpensive O-rings.” Because information is more comprehensive, maintenance can be proactive and more tightly targeted. “That decreases the number of parts we consume,” adds Hance.

The reports generated by telematics systems also allow a check against charges attributed to each vehicle. The County of San Bernardino, California, for example, checks the work needed against warranties to lower repair costs, and then reconciles the work authorizations against the actual invoices, as part of a broad fleet information system.

At UPS, telematics also has improved the package flow technology. As Levits says, “UPS was best-in-class already, but telematics allowed further improvements.” For example, “A pick-up starts before the package is ready and ends after it is dropped off,” Levitz notes. Installing comprehensive telematics solutions, including communications, into vehicles lets customers’ messages that schedule or cancel pick-ups to be routed immediately to the relevant drivers. That saves time and money, as well as fuel and emissions, by eliminating regularly scheduled stops that are unnecessary on a given day, and routing unscheduled pick-ups to the nearest driver as they are scheduled.

The ability to re-route vehicles en route is also helping fleet managers minimize dead-heads-or trips without cargo. In talking with users, Menner reports that trips with empty trucks have been reduced by 30 to 50 percent. Customers also cite an overall reduction in total route miles thanks to more efficient routing and the ability to pinpoint the location of fueling stations. 

Customer service improves, too. In-route communications even allows shipments to be interrupted and re-routed after pick-up, without human involvement, Levitz says. The technology is integrated into customers’ businesses through the UPS software, and also through its Web site, so it appears seamless to users.




 

Expanding uses

As telematics becomes more thoroughly integrated with operations, its capabilities expand. Already, the reports generated by fleet management systems can be used to file fuel tax reports under the International Fuel Tax Agreement, which requires fleets to document dates of travel and total miles traveled in each state or province. Networkfleet, for example, recently added state mileage reports to its offerings, which tracks miles traveled in each state, including toll and non-toll distance and date of entry and exit. The Internal Revenue Service (IRS) accepts reports from mileage trackers as documentation. In addition, border crossings are being streamlined as drivers send updated manifests to border agents before they arrive, using the cellular network.

Telematics is expanding to provide detailed information about cargo as well. This is particularly important for temperature sensitive goods. In those cases, sensors can track temperature inside the truck or cargo container and trigger an alert when a specific temperature is reached. Other options include noting when and where the cargo area door is opened, and for how long, which has implications for loss prevention.

After-hours alerts are another arrow in the quiver of loss prevention. Real-time alerts sent to cell phones or other devices when vehicles are moved outside of normal business hours can reduce unauthorized vehicle use and alert authorities to thefts in progress.

Geofences also may be erected to identify vehicles that enter or leave specific areas-like the metropolitan area or a given distance from home. Although it can be used to pinpoint vehicles that stray from their appointed rounds, it also can be used to increase customer satisfaction, according to Craig Lis, Director of Marketing and Communications for Carrier Logistics. For example, he says a geofence could be erected in a way that automatically alerts customers when the driver is within 20 minutes of the delivery point.

Summary reports also can be generated after-the-fact, that specify which vehicle is being used, its speed, location, date of usage, and the first and last times the vehicle was in violation of the usage policies. Therefore, unauthorized usage may be linked to events or personnel.

Depending upon the application, reports also may be generated by model-year. That lets fleet managers examine usage and maintenance issues and determine which vehicles should be replaced or eliminated, as well as changes that may prolong the life of the fleet.




 

Fleet reduction

Monitoring vehicle usage can help fleets reduce their size by at least 5 to 10 percent, according to Networkfleet. Reports can be generated to determine which vehicles are sitting idle much of the time, as well as to identify unnecessary or wasteful commuting. Monitoring engine status provides detailed information on each vehicle’s usage for specific periods of time, including miles traveled, engine hours, days used, number of trips, idle time, etc. That information can be used to help fleet managers determine whether vehicles can be shared, whether they are used for personal reasons, and which vehicles to eliminate to maximize fleet productivity.

This kind of information is becoming increasingly important as states trim their fleets. Many governors have called for fleet reductions of at least 10 percent, citing high maintenance and fuel costs and, in some cases, the lack of accountability for the vehicles and how they were used. In 2009, Connecticut, Delaware and New Jersey each ordered a 20 percent reduction of the number of cars and trucks in its fleet. California ordered a 15 percent reduction.




 

Analytics

Commercial telematics solutions tend to be relatively small boxes that plug into the diagnostic sensor under the steering column. UPS adopted a different approach, installing more than 200 sensors on vehicles. Those sensors report the fault codes that occur, which often are hidden from the driver. The codes are analyzed by an analytics application that UPS developed in-house.

UPS designed its own analytics program to make sense of the data. Hance says that engineering and IT departments established parameters for components, and implemented algorithms to determine what data should be acted upon immediately and what could be deferred. “That took several years to develop, and we are currently fine-tuning the fault codes,” to make them more valuable, Hance adds. 


 

How it works

For most organizations, putting a sensor on the major components of a vehicle is cost prohibitive, Morey Corporation’s Isaac acknowledges. Instead, most telematics systems monitor select engine components or conditions, mine that data and quickly infer whether components are performing within specifications or whether something requires maintenance. “It monitors key variables that indicate a trend,” he explains.

Exception-based diagnostic reports are then generated, adds KORE Telematics’ Brisbourne. “If the data is within the established parameters, the telemetric device may store it, but otherwise does nothing.” If conditions are outside accepted parameters, the exception is reported. That way, the data moved across the airwaves per vehicle is not very high-about 1MB per month, he says.




 

Convergence

“There are three enabling technologies that are coming together,” to drive the telematics market, Brisbourne continues. “The cellular network is ubiquitous. In the past 18-24 months, it has been possible to travel coast-to-coast on the major highways and have cellular reception.” And, he adds, cellular devices have become inexpensive. Finally, third-party applications abound. They have coalesced around wireless technology to add real value without significantly adding to the costs of the devices.

Consequently, telematics has grown from the now-mature machine-to-machine market of ATMs and healthcare devices, to global positioning satellite (GPS) tracking for long-haul truckers, to the system that is prevalent today, with more sophisticated communications and real-time diagnostics.

“Now, applications are getting richer and are becoming more tightly integrated with IT applications,” Brisbourne observes. For example, current telematics systems that are linked with communications allow a customer to sign a work order or bill of lading and pay on the spot, reducing transcription errors and speeding payment.


 

Driver behavior

The next step is to monitor driver behavior. “It can be quite ‘big brotherish,’” Brisbourne admits. He says at least one bus company has a pilot project to monitor drivers to map good driver behavior. It tracks events like swerving, rapid acceleration, hard braking, use of turn signals, etc. to develop a profile of a safe, efficient driver. The data will be used to train all of that company’s drivers, with the goal of improving driver response, reducing the number of accidents, and lowering insurance rates. Eventually, it could use its program and (presumably) improved safety record as a marketing tool.

In a similar project, “A major oil company wants to improve the social aspects of its tanker delivery trucks, to improve driver behavior,” Brisbourne recounts. After tracking 700 tractor-trailers for 12 months, it reported a 48 percent drop in accident rate, along with decreases in personal injuries, and time off the road for damages and repairs. “At a cost of less than $1,000 for each device and a monthly charge of about $25, it completely paid for itself,” he says.

BLS Trucking also saw changes in driver behavior. “We track speeds and send out warnings,” Zimmet explains, so drivers know there are consequences to their actions. “I think it changed the way our drivers drive.” BLS took it a step further, though. “We also rewrote our safety procedures to try and reduce insurance claims. Our losses were reduced significantly,” Zimmet notes. 

Before implementing telematics, BLS used a spreadsheet and had drivers phone in their mileage, which is naturally subject to rounding errors as well as to number transpositions. “We still do this to some extent, as a double-check,” Zimmet says, but the telematics system is the primary source for such information. Because it tracks mileage automatically, human error is removed.

Although telematics can be used punitively, these systems are also being used to provide incentives for drivers, Isaac says. For example, rather than reminding drivers not to slam on the brakes, employers can provide incentives to drivers to stay within certain performance parameters. Such good driver programs are objective, because the telematics system can monitor such details as braking, speeds and idling time.

“Hopefully,” says Transplace’s Menner, “telematics will make driving more attractive. It’s never an easy job, and few people are coming out of school dying to become a truck driver.”  Access to information on-the-fly, coupled with reduced accidents and fewer breakdowns, could make the job a bit easier and truckers more productive, whether the haul is across the country or across town.

The benefits of telematics systems are all based upon action and the intelligence they provide. Collecting data is pointless unless it is used. Organizations’ reporting improvements were all actively engaged in monitoring exceptions and communicating with drivers to encourage them to improve their performance. Brisbourne admits a desire to please could also have contributed to the improvements. In other words, drivers may-at least initially-have driven more carefully than they normally would simply because they knew they were being monitored.




 

Small fleets

Telematics is still used mainly by large fleets, with usage by fleets with fewer than 100 vehicles estimated at approximately 5 percent, according to Frost & Sullivan. They can be cost effective for small fleets, too, however, but on a pared-down scale.

Some applications are designed specifically for small- to medium-sized fleets and individuals using their own vehicles for business. Those users may not need the detailed reports required by larger operators, but they can still benefit from telematics, according to Jennifer Funkhouser, founder and CEO of CarCheckup. A device that plugs in below the steering wheel records mileage, trips, speed, and engine conditions (like revolutions per minute, emissions or engine temperature). It can be added and removed without tools, making it a good solution for people who use their personal vehicles for business. “As a mileage recording device, it’s sufficient documentation for the IRS,” Funkhouser notes. Reports can be generated for business and personal use, and may be annotated. It does not perform GPS tracking, she adds.

Meanwhile, VOIP phones using the Internet are improving communications for Premier Transfer Storage in Richmond, Virginia. According to John Phillips, president, his company links its three facilities and 20 drivers for less than half the cost of upgrading its previous phone system. Now, calls for all of its facilities are centralized in one location, optimizing scheduling, routing, and customer service as well as other administrative functions, and presenting a cohesive image to customers. Route changes are relayed to drivers’ cell phones.




 

Standards

So far, most telematics systems have been rolled out on a national basis. But, Brisbourne, emphasizes, the notion that telematics data can be acquired and turned into actionable information is becoming global. With that mindset, “Customers can deliver a common service around the world.”

For example, Brisbourne says, “Caterpillar and John Deere have been developing products to be much more proactive.” They are using telematics in their equipment throughout the world, throughout its lifecycle, to improve the customer experience. This, for example, allows data to be collected from heavy equipment and transmitted to a central facility, which then can alert equipment owners about maintenance issues for specific machines, based upon actual usage and diagnostic information. That can be particularly beneficial for mechanics operating in remote locations.

To make that capability a global reality, the m2mGlobal Alliance (www.m2mGlobal.com) is being developed to facilitate a global telematics network based around open standards. It expects to announce satellite capability in the first half of 2011 that will make a global communications hub a reality. With that, Brisbourne says, remote diagnosis will become possible regardless where the equipment is at the moment.

Fleet management systems are allowing fleet managers to track more data than ever before and mine that to identify trends and analyze costs, performance, effectiveness and many other factors that contribute to effective fleet management. Turning data into actionable information, and then acting upon it, is a key factor in determining which fleets thrive in this constrained economic climate and which merely survive. wt



Contributing writer Gail Dutton specializes in reporting on the intersection of business and technology.