Automotive World Briefing: Truck fleet telematics - a world of opportunity

Transcription

1 :

2 Published: July 2014 Publisher Automotive World Ltd 1-3 Washington Buildings Stanwell Road, Penarth, CF64 2AD, UK www. T: +44 (0) Registered number: VAT number: GB Chief Executive: Gareth Davies, Editor: Martin Kahl, Report Editor: Rachel Boagey Copyright statement 2014 All content copyright Automotive World Ltd. All rights reserved. This publication - in whole or in part - may not be shared, copied, reproduced, stored in a retrieval system, or be transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without the prior permission of Automotive World Ltd. Disclaimer This report is the product of extensive primary and secondary research. It is protected by copyright under the Copyright, Designs and Patents Act The authors of Automotive World Ltd research reports are drawn from a wide range of professional and academic disciplines. The facts within this report are believed to be correct at the time of publication but cannot be guaranteed. The information within this study has been reasonably verified to the author s and publisher s ability, but neither accept responsibility for loss arising from decisions based on this report. This report contains forward-looking statements that reflect the authors current views with respect to future events. Such statements are subject to risks and uncertainties. If any of the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. The authors do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made. All the estimates are based on assumptions, the authors calculations and publicly available data. Automotive World Ltd is not liable for misrepresentation or misuse of such information or validity of publicly available information. Table of contents Executive summary Introduction: Using telematics to manage truck fleets Main developments Key drivers of fleet management telematics Commercial opportunities Outlook We spoke to: Wade Long, Director, Product Marketing, Volvo Trucks North America David Lester, Head of Fleet Management, Fleet Management Services, MAN Truck and Bus UK Steve Coffin, Marketing & Operations Director, MiX Telematics Jon Shapiro, Vice President of OEM Business Development, Commercial Vehicle Telematics, Geotab Eric Witty, Vice President, Product Management, Cadec Global Jonathan Hubbard, Chief Executive and Founder, SpeedGauge Raghav Himatsingka, Director, Ideal Movers Jack Levis, Senior Director, Process Management, UPS Nicholas Reed, Senior Principal Human Factors Researcher, TRL Dr. Wolfgang Bernhart, Senior Partner, Roland Berger Strategy Consultants Sebastian Gundermann, Principal, Roland Berger Strategy Consultants Oliver Dixon, Principal, West End Companies

3 Executive summary Fuel represents the highest single cost of any fleet operation, followed closely by driver pay. Controlling these two costs forms the backbone of any fleet management strategy, and truck fleet telematics enables fleet managers to do so accurately, producing data that can be analysed to identify areas of improvement. The convergence of commercial and regulatory pressure, combined with falling technology costs and the availability of Internet and smartphone-based fleet management technology has opened up numerous commercial opportunities. The value of the truck fleet telematics market is set to increase rapidly before the end of the decade. Total cost of ownership (TCO) has long been a key fleet management parameter in mature markets; a growing understanding of TCO in emerging markets is helping to develop the potential for truck fleet telematics in those markets. Much of the value of the telematics market and the potential telematics market lies in the analysis of the data. As this potential becomes realised, the value of the market is expected to increase further; so too is the size of the market. Truck manufacturers are seeing increased demand for more sophisticated vehicles, and improved vehicle uptime. Such requirements can be met with vehicle-specific maintenance and remote diagnostics. Fleet telematics provides fleet managers with accurate driver and vehicle monitoring, ensuring that poor driving or unusual activity can be identified and quickly addressed. Many drivers are concerned about being watched at work, but this can also be used to a driver s advantage, particularly where incentives reward economical and safe driving. Fleets stand to gain through better use of fuel, reduced wear and tear and timely and accurate vehicle maintenance; benefits from reduced or carefully controlled fleet management costs can be passed on to the end customer. The end customer can also benefit from carefully monitored cargo and accurate delivery times. For large fleets, the benefits outweigh the upfront investment required to install fleet-wide telematics; however, the majority of fleets in most markets operate small numbers of vehicles, making the investment in fleet management telematics a more challenging decision. Advances in Internet-based and smartphone-based technology mean that affordable solutions requiring little or no physical installation can be adopted even by small fleets. Automotive World Briefing: 1

4 Introduction: Using telematics to manage truck fleets The constant increase and evolution of truck fleet telematics has gone hand in hand with advances in technology and increasingly challenging commercial and regulatory environments. Telematics is no longer a nicety, but a necessity. The term telematics combines telecommunications and informatics, and involves the integration of wireless communications, monitoring systems and location devices into a vehicle. Telematics in truck fleets can be used to determine a truck s performance and condition, and can have a great impact on its fuel economy, as well as identifying ways in which different truck components, including its driver, can make small adjustments that may have wideranging results. This Automotive World Briefing looks at the likely direction truck fleet telematics will take over the next decade, based on interviews with OEMs, suppliers and users, and input from industry analysts. Automotive World Briefing: 2

5 Main developments The use of truck fleet telematics market has been growing in recent years, but the convergence of commercial and regulatory pressure, combined with falling technology costs and the availability of Internet and smartphone-based fleet management technology means that the size and value of the market is set to increase rapidly before the end of the decade. In October 2013, ABI Research forecast an increase in commercial fleet telematics market revenues from US$7.25bn in 2012 to US$26.8bn in ABI Research expects the lead market to be North America, followed by the Asia-Pacific region and Western Europe. A recent Fleetbeat Report cited MarketsandMarkets data which forecasts the fleet management market growing by from US$10.91bn to US$30.45bn by According to Dr. Wolfgang Bernhart, a Senior Partner at Roland Berger Strategy Consultants, the growth in truck fleet telematics is being driven by a number of different factors, led by advances in technology: Technology is no longer a limiting factor, with M2M communication technology reaching a profound level of maturity. Bernhart also cites customer demand and legal requirements as driving factors. Legal requirements, says Bernhart, call for vehicle connectivity to improve traffic efficiency and safety, and generate environmental and monetary benefits. In mature markets, truck fleet telematics has moved beyond location-based services like track and trace to more sophisticated services like remote diagnostics and driving style monitoring. Hardware and delivery There are three main ways of delivering fleet management services, as identified by Frost & Sullivan: Embedded, such as a fleet box or onboard computer; Portable, such as a handheld PDA or portable navigation device (PND) Smart phone-based solutions Each comes with its own set of benefits, which need to be factored in to the purchasing decision. The embedded route offers the most comprehensive service. Such a method gives fleet management direct access to the vehicle s engine management, for monitoring and diagnostics purposes; portable solutions offer the key benefit of flexibility; and smartphonebased solutions come with obvious cost saving advantages. The overwhelming majority of fleet operators run fleets with low numbers of trucks or vans; these fleets are most likely to opt for smartphone-based fleet management solutions, primarily for cost reasons. Telematics suppliers While the OEMs are prominent in the development of truck fleet telematics, it is the telematics service providers that are currently leading the development of telematics. OEMs and the telecom industry are definitely interested in the technology and the market potential, but that has not been core to their business up to this point, says Jonathan Hubbard, Chief Executive and Founder of San Fransisco-based SpeedGauge. We are beginning to see that OEMs and telecom and internet companies are taking an interest in this business. FleetBoard is a wholly-owned subsidiary of Daimler, providing commercial vehicle telematicsbased Internet services. It says its principal aim is to optimise routes and reduce fleet operating costs. Specifically, it targets at permanent fuel consumption reduction of 10%, and aims to help fleets promote economical driving to reduce wear-and-tear. As well as being fitted as standard in the Mercedes-Benz Actros, FleetBoard can be fitted ex works or as an aftermarket solution. SpeedGauge offers a value-add service that aims to impact the operational costs, safety and driver performance of truck fleets. Increased telematics is an inevitable fact of life for fleets - from both regulation and the competitive advantage that this technology will offer fleet operators, says Hubbard, adding that fleet owners and safety managers should embrace the trend and turn this fact into a business advantage for their bottom line and for fleet safety. MiX Telematics is a global provider of fleet and mobile asset management solutions. Steve Coffin, Marketing and Operations Director, says telematics provides fleet managers with improved operational efficiencies through utilisation, greater visibility and the ability to make pro-active informed decisions. Automotive World Briefing: 3

6 The OEM perspective MAN Truck & Bus Fleet Management services supplies and fits telematics kits into MAN vehicles. According to David Lester, Head of Fleet Management, Fleet Management Services, at MAN Truck & Bus UK, MAN s telematics offering began with traditional fleet management tools, like reports on driver behaviour and track and trace. Lester reports a growth in telematics device installations. Every vehicle we sell with a repair and maintenance contract now has fleet management as standard, and if a customer doesn t have one he can purchase it or rent it separately. The OEM is also enjoying demand for more advanced telematics. We can integrate forward facing cameras with the telemetry so that every time a driver does something he shouldn t be doing it triggers the camera. That way, it is possible for a short 30 second clip of information to be sent to the operator, so he can see what the driver is doing alongside the report, giving him a clearer picture of how the driver is behaving. Scania reports customers demanding better fuel economy and higher uptime, with growing vehicle fleets and more sophisticated vehicles. As a result, the OEM is focusing on connectivity to ensure optimum use of its trucks and customer satisfaction. Scania s Chief Executive, Martin Lundstedt, has said the OEM expects to sell 120,000 trucks globally by 2020, and is targeting an increase in services to 25-30% of total revenue. Ecolution by Scania Customer case from Spain In May 2014, Scania had 70,922 connected trucks, and the OEM will add up to 35,000 more connected trucks during Scania launched its Ecolution by Scania package in August 2012, and by early 2014 it had almost 4,000 users. Currently available in 18 markets, Ecolution by Scania is a package which combines software, hardware and training to deliver Ecolution customers an average fuel saving of 10%. The OEM promotes Ecolution by Scania as offering fleets improved fuel economy and low CO2 emissions, and focuses on four key areas: driver, vehicle, service and operations. Volvo Trucks utilises telematics to improve vehicle uptime through its Remote Diagnostics connected vehicle platform, which provides fleet operators with real-time diagnostic and repair planning assistance. Wade Long is Director, Product Marketing for Volvo Trucks in North America (VTNA); in the US and Canada, Remote Diagnostics is now fitted in more than 40,000 Volvo trucks. Remote Diagnostics is standard on all new Volvo-powered vehicles and has demonstrated a marked improvement in repair accuracy and efficiency, reducing the average diagnostic time at a service location by up to 70% and lowering the average time of repair by more than 20%, explains Long. In addition to providing proactive diagnostic and repair planning assistance, Remote Diagnostics helps improve parts availability and provides technicians at the repairing dealer with easy-to-read repair instructions before the truck arrives for service. Remote Diagnostics also provides service case communication and documentation for Volvo Action Service, dealers and customers through ASIST, Volvo s web-based service management tool. Source: Scania Long believes OEMs and third-party suppliers are leading the development of telematics within the heavy-duty truck market. OEMs are leading in developing vehicle-centric services focused on supporting vehicle uptime and vehicle monitoring, while suppliers are leading in developing compliance and location-based services. OEMs and suppliers are now also teaming together to provide integrated solutions for the Class 8 market. This trend will continue to develop. Automotive World Briefing: 4

7 Key drivers of fleet management telematics The factors driving the growth in truck fleet telematics include: Fuel economy and emissions reduction Improved operational efficiency Regulatory compliance Cargo and occupant safety Cargo and occupant security Corporate social responsibility (CSR) and green image Customer satisfaction Driver management, training and speed monitoring Improved route planning, improved delivery speed and accuracy, increased productivity Reduced insurance Big Data potential Automotive World Briefing: 5

8 Fuel represents the highest single cost of any fleet operation, followed closely by driver pay. Controlling these two costs forms the backbone of any fleet management strategy, and truck fleet telematics enables fleet managers to do so accurately, producing data that can be analysed to identify areas of improvement. Fuel Although fuel consumption is primarily a commercial issue, it is also, alongside rules governing drivers hours, a key regulatory factor underpinning the rise in truck fleet telematics. As future emissions regulations focus on CO2 and greenhouse gas (GHG), fuel consumption will become an increasingly important factor. Safety will play an increasing role to protect the driver, but also to protect other road users from inappropriate driver behaviour. Security, too, plays a key role - not only of the drivers but also other road users. A commercial opportunity still in the background, but likely to become more prominent in the future, is the generation of anonymised Big Data for sale to third parties. In Europe, fleets are preparing for the possible need to install electronic road toll payment technology that works with the road toll technology of numerous European countries. Drivers hours are carefully monitored, too, and in the US, electronic on-board recorders (EOBR) are expected to be mandated to track fleets hours of service (HOS) compliance. Driver management: Driving a change in behaviour No matter how much vehicle technology changes, one key factor has remained constant throughout the history of motorised vehicles: the driver. The focus of fleet management is shifting to safe driving habits. For this reason, despite telematics being used to assess and reduce truck fleet fuel consumption, companies are (increasingly) using telematics to monitor safe driving habits to improve the safety and efficiency of their fleets. Telematics makes it easier to identify and reward the good drivers of trucks in fleets, to find bad behaviours and habits, and to correct them prior to more serious issues developing. Logistics companies, among others, work to ensure that the data they collect helps them make the best decisions for customers and drivers. However, in order to realise the full potential of fleet telematics, the entire fleet requires compatible systems, says Sebastian Gundermann, Principal at Roland Berger and an expert in the commercial vehicle market. This creates full transparency and enables smart, real-time fleet management, and offers significant financial benefits to fleets. The positive effects for fleets will be monetary savings and efficiency gains based on changes in driver behaviour. This will include reduced fuel consumption, increased employee motivation, reduced administration, and entertainment. Volvo s Long suggests that fleets are utilising telematics to help ensure compliance with federal regulations and improve fleet safety. Carriers can utilise telematics systems for commercial routing, delivery confirmation using geo-fence technology, auto-invoicing and more. Integrated telematics data is helping fleets monitor driver, vehicle and service costs and performance. Through vehicle monitoring, fleets can identify high-performing drivers, vehicles and service facilities. They can also identify their low-performing drivers and provide targeted training. Driver training, combined with telematics monitoring, is proven to reduce accident rates and improve operational efficiency. UPS uses its truck fleet telematics to measure many driver behaviour factors, including seat belt usage, reverse driving, rear door positioning and truck idling, all in a bid to improve fleet safety. These measurements are used in discussions with drivers to improve driver safety and change behaviour. Jack Levis, Senior Director, Process Management at UPS, explained to us that most unsafe behaviour stems from a lack of awareness or a loss of focus. UPS employs telematics as an awareness tool which then acts to reinforce a driver s focus on critical safe driving techniques. Telematics measures seat belt usage, driving in reverse, rear door positioning and truck idling. All of this data helps to improve driver safety and behaviour. Driver behaviour is one of the easiest things to control for fleet managers, says Hubbard of SpeedGauge, which monitors hundreds of thousands of drivers on a daily basis. Drivers want to maximise the number of hours they can drive each week. When they understand that safety and efficiency standards can help them do this, they embrace the monitoring tools that optimise their performance. The result is an almost obvious, no-risk benefit to drivers, fleet owners and managers, and ultimately the general public. The goal is to increase the safety and productivity of fleets and drivers, says Eric Witty, Vice President at GPS fleet management company, Cadec. Telematics is the tool for this. Information is available faster and is more accurate, and therefore critical operational and safety decisions are made more timely and with better data. Coffin, of MiX Telematics, cited percentage improvements that clearly emphasise the direct and positive impact of driver monitoring: In trials with and without the use of driver behaviour monitoring, we saw a 3% improvement without a driver feedback device and 11% with one fitted, this was on similar vehicles in the same fleet. MiX Telematics first warns drivers of events, giving them an opportunity to respond, before recording the event should it indeed occur: Our in-cab RIBAS device warns a driver when he is approaching a preset parameter. If he reacts to the warning, no event is recorded. Otherwise, it is recorded and forms part of the driver scoring calculation. It s a little like subliminal messaging, like having a driver trainer with you at all times. Automotive World Briefing: 6

9 Nicholas Reed, Senior Academy Fellow at research and consultancy company TRL, has researched the data available from vehicle on-board telematics devices and studied how this may be used to understand behaviour. Traditionally, driving has been a skill with relatively little objective feedback, he says. However, telematics can help to improve driver behaviour by giving drivers reliable information on their performance. This may provide guidance to an individual driver on how to improve, and can also assist the fleet manager in identifying drivers who would benefit from specific training. The feedback from such systems also creates discussion points for drivers, trainers and managers to have informed conversations about driving styles and practises. Reed also believes an increase in truck fleet telematics should lead to greater reliability of journey times, reduced fuel costs and more efficient journey planning. The knowledge that fleet managers have more information about trips should mean that drivers are less stressed because changing trip conditions can be accounted for in fleet management systems, said Reed. Telematics systems may help newly qualified drivers to perform better sooner by giving repeated guidance on key behaviours and easy benchmarking of performance against experienced colleagues. Jon Shapiro is the Vice President, OEM Business Development, Commercial Vehicle Telematics at Geotab. Changing driver behaviour, such as speeding or unsafe driving, can be monitored via the use of GPS, and then with proper training and follow up the drivers can become more effective employees. In some cases, he adds, GPS information could prove highly useful in determining crash data as well as crash information and liability. Overcoming concerns: embrace Big Brother Despite the benefits provided by fleet management telematics in terms of driver safety and fleet efficiency, there is some concern among drivers of what could be seen as intrusive technology. There are cases when fleets that have not used fleet management in the past feel like Big Brother is checking up on them, says MAN s Lester. However, successful implementation of fleet management systems can keep drivers informed on their driving patterns and habits, and draw attention to their strengths areas, as well as weaknesses. MAN s Safe and Economic driver reports provide data to show all key parameters influencing vehicle fuel economy. If a driver delivers a 10% saving in fuel, it s a huge saving to the operator, explains Lester. Some fleets will reward their drivers for doing so, and they will be happy the system is monitoring them and proving they are doing a good job. This could even result in drivers demanding their report and figuring out where they are strong and weak. No driver wants to be at the bottom of the table. They will work on their weaknesses to move up the league table and get bonuses and commission payments for those improvements. The fleets that do really well are the ones that involve the drivers quite closely. Agreeing with Lester, Geotab s Shapiro says that although drivers may initially be put off by the technology, When fleet telematics becomes the norm, drivers will use these systems daily with the same ease as using a cell phone. Reducing accidents, lower insurance costs and better fleet management will mean an increase in customer satisfaction, more business and more dollars for the drivers as the fleet grows while reducing operational cost such as insurance. Eventually, he says, resistance tends to dissipate and drivers learn to exploit and appreciate the benefits that such a system can provide. MiX Telematics Coffin believes that concerns about telematics can be allayed by ensuring the correct solution is selected. Telematics can only add value. The decision is not whether a company will benefit from telematics but which is the best solution. Himatsingka of Ideal Movers notes that in India, just as in Europe and the US, drivers do not like tracking devices on their vehicles. However, with increased adoption and better use of the technology, he believes this attitude will quickly change. There are various benefits for the driver as well as for the fleet owner in using GPS solutions, but currently these benefits are not being fully exploited. Fuel consumption benefits Rather than simply being a measure in its own right, fuel consumption correlates directly with how a vehicle is driven, and can be affected by driving style and behaviour. If we can save just 10% in fuel, explains MAN s Lester, we can almost double the bottom line profit of the vehicle. There is no use in doing that if the driver isn t driving the most efficient route. To deal with this effectively, says Lester, We are starting to sell more solutions in what we call Journey Management to allow fleets to achieve greater fuel economy, which has been the focus in the past through different types of telematics and behavioural reports. Telematics systems similar to MAN s Journey Management use track and trace and geofences to ensure the driver drives in the sequence that will be the most fuel efficient, rather than the order in which he wants to drive. We can then compare planned time against actual time, planned miles against actual miles, explains Lester. We can also provide real-time visibility for the operation in terms of where their trucks are at a particular time on a single screen, how many drops have been done, are late, or have been missed. There is much more visibility and this is the way the industry is going now. Automotive World Briefing: 7

10 Commercial opportunities The real value lies in the data Despite the obvious use-cases for the data obtained from truck fleet telematics, a key aspect for fleet management to consider is the growing complexity of this data, and the most efficient way of analysing and leveraging it. Capturing the data is not the challenge, explains Steve Coffin, of MiX Telematics. Analysing and focussing it through the use of our consultants is where real tangible value can be added. Roland Berger s Bernhart concurs: The value of the data sourced from fleet telematics has also increased, with innovators and pioneers in other industries proving that data does have intrinsic value. Case study: UPS Telematics and proprietary routing technology enabled UPS to avoid driving more than 85 million miles (136 million km) in 2011, saving 8.4 million gallons of fuel and 83,000 metric tonnes of CO2. Over the eleven years from 2001 through 2011, telematics has also allowed the company to avoid driving 268 million miles by combining its efficiency strategies. UPS collects data from more than 200 engine sensors from every UPS delivery truck worldwide and uses this data to improve driver safety, optimise engine parts, and save fuel. Jack Levis, Senior Director, Process Management at UPS, says an increase in the use of truck fleet telematics can lead to major operational efficiencies and cost savings, as outlined in the cutaway box. He also notes, however, that, The challenge for companies increasing the use of truck telematics comes with the processing and managing the data from the field, and a key problem is how to make the data impactful to improve business processes and efficiencies. Data analysis adds a level of sophistication to fleet telematics that illustrates the difference in potential between mature and emerging markets. A comment from Himatsingka on this matter: The benefits of telematics are countless, including better fleet management, route planning, driver training, a better rewards structure for drivers, measurement of fleet performance and safety training, among others, but it all depends on how well a company is able to use the data. MiX Telematics RIBAS It s all about the money Telematics, like any other technology, comes with capital costs, as well as monthly data and cell costs, all of which must be weighed against the fuel savings potential and improvements in safety. According to Geotab s Shapiro, the main benefits in increased telematics for truck fleets in the future will be better operational efficiency, more productivity, and lower operating costs: Fleets will also be able to increase safety because applications such as Hours of Service (HOS) and Driver's Vehicle Inspection Report (DVIR) which will be automated and the data can be shared within each fleet department. Telematics has become less expensive over the past five years, not only in terms of hardware, but also data and cellular cost, says Geotab s Shapiro, while at the same time increasing in complexity. As a result of this the cost of telematics cost will continue to drop as more fleets adopt this technology, as well as being able to be managed by anyone within the fleet operations and the fleet is not required to hire specialised people to manage these systems. Cadec s Witty believes that fleets will continue to find new ways to make better decisions using real time data, and as the technology evolves, telematics systems will evolve, helping to reduce costs. Nonetheless, the main benefits of adopting such technology, he says, will always be improved fuel economy, fleet visibility through real time data to make better decisions, improved hours of service compliance, and increased productivity due to driver management. Automotive World Briefing: 8

11 Outlook An emerging technology in emerging markets The continued potential for truck fleet telematics services in mature markets lies in its increased complexity; in emerging markets, the potential is more basic, with services like track and trace and location leading demand. In terms of the BRIC markets, India is seen as lying behind Brazil, Russia and China, where the professional logistics services are better developed. Nonetheless, Raghav Himatsingka, Director of Indian logistics solutions company, Ideal Movers, says he has witnessed a great increase in the use of telematics, mainly GPS-based tracking, in India in recent years. Himatsingka attributes this increase to three primary reasons. While his comments were specific to India, they provide an indication of activity in this area in similar emerging markets. Increased competition in general has led hirers of transport services to insist on GPS tracking to provide better service to their customers; The costs of tracking devices have fallen considerably, making it easier for transporters to adopt the technology; The next generation supply chain professionals have grown up in the Internet age; they are now joining the work force and find it easier to not only adopt, but also make use of the technology in meaningful ways. Automotive World Briefing: 9

12 Himatsingka believes that the question in India over telematics is not over development of the technology itself, but over the adoption of the technology, and suggested that in the country, the first step is to get fleet owners to start using basic telematics like GPS tracking. Using telematics is an additional investment, not only for the cost of the tracking device but also in terms of manpower to monitor the data. The resultant benefits are not immediately visible to fleet owners. While telecoms and service providers are making a big push for adoption, fleet owners are usually reluctant to incur that additional cost. However, the push is being provided by the hirers and clients of transportation services who are forcing fleet owners to adopt the technology. Although its development has been slower than other BRIC markets, that adoption of basic telematics in India will become a necessity for fleet management in India. Despite this, Himatsingka has some reservations regarding the superiority of the telematics available in the region over the next ten years. I don't foresee telematics such as tyre pressure monitoring, wear and tear, or advanced safety systems in India in the near future. India is a very cost sensitive market where freight cost is given more importance than intangibles like timely deliveries, safe handling, and so on. We are seeing a push towards higher safety standards, but there is still a long, long way to go. The fleet telematics sector s potential in emerging markets is considerable. This was highlighted by the recent acquisition of Brazilian digital truck-fleet management company Sascar by Michelin. Sascar is the leading fleet management company in Brazil, with a 23% market share in the country. Fleet management and monitoring is a fast-growing market in Brazil. Currently only 4% of vehicles are tracked in Brazil, but the country s telematics industry is expected to grow by 15% annually over the next four years. However, the potential for truck fleet telematics is considerable even in mature markets. According to Frost & Sullivan, only 12.5% of the commercial vehicle fleet in the US and Canada uses fleet management solutions. The next ten years While the truck industry has started to realise the benefits of telematics, the speed of its development ultimately depends on the speed of the market. Hubbard believes the development of telematics over the next ten years will be marked in certain countries, and less so in others: While fleet telematics is in many ways an established market, in particular in the well developed and highly regulated markets such as Europe and to a lesser degree the US and Canada, the technology of location-based services and GPS capabilities is constantly evolving and improving. MAN s Lester expects telematics technology developments to follow vehicle technology developments: We are going to have vehicles with adaptive cruise control as standard that are going to be braking as they get too close to the vehicle in front. As the technology of the vehicle improves, the demand on the telematics and fleet management solution will be geared to monitoring that. Volvo Trucks Long believes that seamless integration and robust connectivity will be enhanced over the next ten years: I anticipate that telematics will enhance the overall truck experience, from vehicle status monitoring to ultimately servicing the vehicle. MAN Telematics Telematics is constantly evolving, says Coffin of MiX Telematics. I have seen huge changes over the last 20 years and see no reason why the same rate of progress will not continue into the future. MiX invests millions every year, with an 80-person R&D team continually evolving the product. Further integration and interaction with the drivers will be a key game changer. Automotive World Briefing: 10

13 Automotive World Briefing Opportunities Key Fleet Management Market Trends Regulatory mandates and infusion of investments are likely to boost the market in North America and Europe; Venture capitalists see huge opportunities in Telematics industry OEMs offer FMS as standard M/HCV dominant FMS vendors focus shifting to LCV ; Vendors focus shift to under-penetrated market Focus on service, retail and parcel delivery in LCV; construction & mining in M/HCV Independent Smartphone to gain more attention New value chain partners to enter as FMS vendor EOBR mandate to push adoption of FMS in the coming years Non-automotive participants to enter market Vendors combine expertise to create higher capability products OEMs partner with third party vendor to offer FMS Shift from 2G to 3G Service vehicles to install telematics in Turkey Big shopping malls demand telematics installation FMS vendors to make partnership with OEMs European strongholds to enter the Turkish telematics market through direct operations Market is expected to shift towards scalable subscription model Source: Frost & Sullivan Realising the benefits Fleet tracking systems are now benefiting many companies in helping them keep operating costs down, eliminating unnecessary fuel consumption and unauthorised use of vehicles. Despite this, similar to usage based insurance and other Big Data technologies, it may take a while for users to accept and fully understand the benefits that can be gained, as well as the understandably worrying concept of their data being used. Hubbard also notes that ten years is a long time and at the moment, the true benefits of existing solutions are not being fully realised. Climate change will have a powerful effect on how technology and commercial transport evolve - perhaps more than any other factor. No matter what happens, you can bet that the roads will be safer, more commercial vehicles of various sizes and descriptions will be on the roads, and fleet operations will be more efficient and cost effective. Automotive World Briefing: SpeedGauge, along with offering truck fleet telematics, is a speed management analytics company, and Hubbard notes that the developments in telematics over the next ten years will increase market demand for speed monitoring and other value-added services: The method in which the technology is provided and through which channels will provide an interesting new market opportunity with many new players and companies - not just traditional telecoms and commercial fleet OEMs, but telematics providers and other new companies and technology providers. Increased functionality will become more commonplace across the fleet, with future telematics systems playing a much greater role in vehicle activity. With reduced data costs and greater wireless network bandwidth, we may see high quality live video providing an audit trail of activity and supporting evidence in the event of a collision. Future telematics may also have greater capability to account for traffic and environmental conditions in monitoring driver and vehicle performance and in optimising routing and scheduling, based on information from a range of networked sources. Shapiro from Geotab envisages telematics becoming more affordable and therefore more widely used by a much larger portion of the transportation market by all fleet sizes. I believe the truck OEMs will work more closely with the telematics service providers to make telematics standard on every heavy-duty vehicle in North America. There will be more third party applications integrated with the on board-telematics systems, and compliance (HOS) and safety (DVIR) will become standard. We may even see applications like T2T (truck to truck) systems which will be helpful in avoiding accidents and fatalities. Oliver Dixon, Principal at WestEnd Co, sees a number of factors, including regulation, compliance and an increasingly tough operating environment, as the driving factors behind the increased adoption of telematics: Ultimately, a truck is an enabler of revenue and, as such is not a product in isolation but a component part of a broader system that seeks to maximise profit through TCO and operational efficiency. Telematics offers a very valuable means to achieving this, and it s clear that in the future this will become one of the key competitive differentiators deployed by OEMs not just in the Triad markets, but increasingly in the emerging markets as well. As the global telematics industry continues to develop and mature, the need will grow for increasingly sophisticated data. The true benefits of truck fleet telematics are to be found not in the collection of data, but in the analysis and application of that data. The crucial next step is to turn data into useable information that can enable fleet managers to make the best decisions for their fleets, their drivers, their customers and, ultimately, their bottom line. 11