Fleet telematics systems offer operators many benefits, from the ability to confirm the location of each vehicle at any given point to the production of reports grading drivers on their driving style. But the novelty of seeing each truck’s position on a screen in the traffic office soon wears off. Telematics systems cost money.
The objective is to save money. It is management action that turns telematics costs into savings. So before embarking on a telematics project it is crucial that you have a clear idea of how you will use the information from telematics to cut costs and generate a return. A system that is unable to justify itself in financial terms is worthwhile only if enhances customer service or because the business needs telematics in order to compete or stay safe and legal.
So already we have the first rule of telematics. If struggling to justify the system along these lines, alarm bells should be ringing. Unless they are properly specified and properly used, telematics can be an expensive waste of time.
Telematics: general principles
Telematics systems use an onboard box of electronics, similar to an aircraft’s ‘black box’ flight recorder, that continually monitors a series of key operating parameters and then transmits this information at regular intervals to a central computer, where it is sorted and presented to the vehicle operator in various ways. Most – but not all –systems use the Global Positioning System (GPS) network of satellites to work out a vehicle’s position and relay data from the vehicle to base by the mobile phone General Packet Radio Service (GPRS) networks.
The host computer may be a machine at the operator’s site but more typically will operated by the provider of the telematics service or a third party of their choosing, in which case end users usually access the data and reports by logging into a website.
Perhaps the most important decision to be made by anyone thinking of investing in such systems is what exactly you want your telematics package to deliver – both now and in the future. Vague notions and the desire to keep up with the Joneses are not sufficient. The first tentative steps towards telematics may be based on a rough idea of the benefits they will be provide but there should be a fully costed business case in place before signing on the dotted line.
Telematic systems can monitor and report on a bewildering range of information. Much relates to vehicle and driver activity such as:
- vehicle position and navigation
- distance covered
- road speeds – maximum and average
- engine idle time
- use of top gear
- use of cruise control
- fuel consumption
- harsh braking
- axle weights
- monitoring vehicle diagnostics fault codes
The key to this wealth of data was advent of first multiplex electrical systems and then CAN (controller area network) circuits, giving access to masses of vehicle operating data whizzing along the vehicle’s CANbus circuits. Ancillary connections extend the list still further, for example to things such as the temperature inside a refrigerated trailer or a record of trailer-door openings. And now we can hook up digital tachographs to the telematics system too, enabling remote downloading of drivers’ hours information that can be used as the raw data for tachograph analysis, the Working Time Directive and the wage system. Streamlining the management of tachograph data could be a big plus for an operator with out-based vehicles.
On top of sending all this back to base, some systems also provide instant feedback to the driver to encourage more fuel-efficient driving.
The presence of mobile phone technology in telematics systems also means they can provide both voice and text communications between driver and base, allowing drivers to communicate with their manager or other parties and send digitally captured signatures confirming delivery back to base. Note, however, that such communications will generally require ancillary equipment such as barcode scanners, telephone handsets or in-cab terminals.
Telematics systems can also interface with other computer systems – both yours and those of third parties such as customers. Comparing the routes and schedules planned by route optimisation software with the actual journey times recorded by your telematics system is now fairly commonplace, for instance, as is allowing drivers to receive instructions from the firm’s order processing software on the move.
Sharing the data captured by telematics systems with other parties is also no problem – many modern systems can generate an automated email or text message telling your customers when your delivery vehicle is about to arrive, for example.
Of course you might not want such sophistication straight away, and many users start with just a simple vehicle tracking package, gradually adding more bells and whistles. So your early sift of what is available should take account of future developments and the ability to interface with other computerised systems.
Note that mainstream telematics systems track vehicles, not trailers. If tracking the trailer and its load is critical you may consider trailer tracking systems that are battery operated, recharged from the tractor unit via the electrical suzie. This is particularly useful if trailers are hauled by other contractors or if you need to keep track of stand-trailers dotted about the country.
Likewise, if you carry high-value loads or use specialist vehicles you may only be interested in the threat of vehicle theft, in which case a covert stolen-vehicle recovery system that can be tracked by police could fit the bill.
In short, resist the temptation to be wooed by clever technology. It pays to draw up a priority list, ranking the many functions under headings such as essential, useful, potentially useful, interesting and superfluous. Work out exactly how your business can benefit from each feature you’re buying and which ones you can do without.
Without contradicting the principle of having a clear vision of what you need, it is also a good idea to leave just a little room for the unknown. Sometimes we are not aware of what we need until we see it provided, so a tight specification and a closed mind can lead to missed opportunities.
COSTS AND CONTRACTS
How much does a telematics system cost? How long is a piece of string? Telematics systems are generally sold in one of two ways. First, you can purchase the hardware and pay for installation up front, with a relatively small monthly fee for the website reporting and service provision thereafter. Second, and reckoned to be the more popular route, is leasing the whole package and paying a single, all-in monthly charge.
Where you buy the vehicle hardware, expect to pay around £250-£1,000 per truck for it (including installation) with a monthly fee of £10-£30 per vehicle thereafter. An all-in leasing package, meanwhile, will typically cost £15-£50 per vehicle per month, including the data transmission costs. Those price ranges are unavoidably large because so much depends on the extent of the system.
Buying up front will almost certainly save money in the long run but exposes you to the risk of your supplier going under, in which case you are likely to be left holding a largely useless asset. Leasing your equipment avoids this risk but may cost more on a monthly basis.
Contract periods also affect the price you pay, with lower monthly charges for longer periods. Typical contracts run for three or five years, though some suppliers offer shorter periods.
Installation of a telematics system on your vehicles is a relatively quick affair. Older systems requiring direct line of sight with satellites used to require an aerial on the roof as well as a black box inside the truck; more modern systems integrate the aerial into the black box and ‘bounce’ signals off the road surface, removing the need to drill into your cab roof.
Be aware that you will probably need to get permission from the vehicle owner – the contract hire company, for example - to install the hardware and that you may face charges for any damage caused by the installation or subsequent removal. Drilling holes in the dashboard for in-cab terminals can be an issue. Check with the telematics supplier exactly how they intend to install their hardware and make sure the vehicle owner is happy with this.
Be aware also that the way the telematics system is wired into the vehicle’s electronics system in order to collect data can cause problems. Vehicle manufacturers are understandably wary of third parties tapping into vehicle CANbus electrical circuits. For this reason European commercial vehicle manufactures in 2002 adopted a standard protocol known as the FMS (Fleet Management System) standard to allow third-party telematics systems safe access to a limited range of information on the CANbus. This acts as a filter, allowing certain pre-determined information (vehicle speed, fuel level, etc) to be gathered while protecting safety-critical aspects of the truck’s electronic systems from interference. Make sure your telematics service provider uses it: anything else is likely to invalidate the warranty.
It is often claimed that telematics systems can pay for themselves within a year. Some of the most tangible savings are likely to come from better fuel consumption. Analysis of telematics reports allows operators to focus their attention on the drivers and vehicles that offer most scope for improvement and help establish how and why the fuel is being wasted. Preventing excessive engine-idling is an example of this, or finding out why drivers are departing from the best routes. Managers who take time to study reports citing time spent in top gear, time spent outside the engine’s most fuel-efficient speed range, use of cruise control, harsh braking and so on will gain a useful insight into driving styles. Addressing these factors may call for nothing more than a one-to-one chat with the driver. Systems that provide instant feedback in the cab give the driver the opportunity for self-improvement. Maybe formal driver training or technical intervention such as re-setting the road-speed limiter are the solutions. However they are achieved, fuel savings of 5-10% are plausible, provided companies respond to what the telematics are telling them.
Telematics systems that raise awareness of driving style, harsh braking and acceleration etc. should also help reduce wear and tear and thus vehicle maintenance costs. Putting a figure on this is difficult, but to demonstrate the principle, Mercedes-Benz says that in countries where truck safety inspection/maintenance intervals are not determined by O-licence rules as they are in the UK, intervals can be extended by up to 30,000km for its new Actros tractor units if fitted with FleetBoard telematics.
Operators using telematics to manage their vehicles’ movements and allocate work more effectively should definitely see significant benefits. These are likely to be better fleet utilisation, more deliveries for fewer kilometres, reduced overtime costs, more on-time deliveries…
Telematics may even reduce vehicle insurance premiums, too. Some insurers offer discounts or rebates on premiums for fleets using telematics – Aviva, for instance, recently launched a new policy rebating up to 15% of a fleet’s premium upon renewal, if the fleet achieves certain telematics-measured claims targets. But once again, it is not the telematics system that is the key to this: addressing poor driving and reducing accident costs is what really matters.
Simply proving that your truck was nowhere near the scene of an alleged accident, made a delivery on time or maintained a load’s temperature within the prescribed range are just a few of the other ways in which telematics can prove worthwhile. Some telematics systems can even calculate gross vehicle weight by comparing acceleration and retardation with engine torque demand and braking forces, perhaps saving the cost of an on-board vehicle weighing system.
ISSUES TO CONSIDER
Managers with long experience will recall the whole ‘spy in the cab’ furore that accompanied the introduction of tachographs 30 years ago. Telematics has the potential to re-open this can of worms. Tread carefully: heavy-handed use of telematics data can lead to friction, industrial unrest or even an employment tribunal.
The simple strategy of using telematics information to praise drivers – especially those who improve their driving style over time – rather than berate the weaker drivers can do a power of good. Driver league tables and incentive schemes are frequently recommended, but need to be used with care. For every driver who feels pleased to sit near the top of the table or feels motivated to move upwards, there may be another lower down who feels thoroughly dispirited and alienated. Driver comparisons made on the basis of fuel consumption figures fail to take account of differences in vehicles and duties and can prove misleading, unfair and divisive. Driver performance analysis using algorithms based on a wider range of criteria are preferable.
Telematics systems are not infallible
Bear in mind also that the telematics system are not infallible, either. GPS signals can be deliberately blocked using cheap jammers or accidentally blocked by tall buildings or other obstacles, for one thing. Remember too that GPRS networks do not provide 100% coverage or 100% reliability.
If you access your data via a third party’s website, meanwhile, remember that you are dependent on their systems and servers and your own company’s internet connection. Check supplier claims on website uptime.
Then there is the issue of data security. If data is going to be stored on your own computer, it’s vital that you have a through backup procedure (ideally with regular offsite backups) in place. If your service provider is storing the data, satisfy yourself that they have proper backup arrangements and decent levels of data security in place. Is data encrypted? Do they have a disaster recovery plan?
There are also legal issues to consider. Since telematics involves the collection and retention of information about drivers, it can bring you into conflict with laws on data protection and privacy. Using a telematics system to monitor a van driver outside of working hours who is required to take his vehicle home at night could put infringe privacy laws in the Human Rights Act. Providing data to a third party like an insurance firm about a driver’s speeding habits, meanwhile, could see you falling foul of the Data Protection Act.
Operators should consider carefully how they store and use the information and take proper advice on the implications. They should also amend contracts of employment to ensure their staff consent to data about them being collected and used as intended.
Finally, managers must be prepared to devote time to understanding and acting upon the data generated by a telematics system. Well-structured exception reports help focus attention where it is needed but time still must be set aside to deal with the issues highlighted.
CHOOSING A TELEMATICS SUPPLIER
There are dozens of independent telematics service providers on the market and it can be hard to distinguish between them. Some are relatively small and may not be particularly financially stable. Others’ core focus is really outside the truck business (or outside the UK) and may not be fully committed to this market in the long term. And some telematics companies have a reputation for high-pressure selling techniques. If the system works as well as you hope then it will soon become crucial to your business. It all points to the need to ask some tough questions and get some fulsome answers - in writing.
Getting a useful response
The prioritised list of must-haves mentioned earlier is the starting point. Reeling off the list to a potential supplier is likely to elicit a response along the lines of “Yes, we can do all that.” So it is better to ask the supplier to rank its system’s functions and features in order of competency: that could provide a more useful guide to how closely the system matches your needs.On top of this, you should:
- determine what training will be required to use the system and how much it costs
- establish what levels of support are available and at what cost
- understand all charges, the basis for future price rises, the scope of the contract and the exit terms
- find out about how your supplier intends to store, back up, use and share your data • check the supplier’s disaster recovery plan
- check the supplier’s company accounts to establish their financial standing and trading history
- obtain and check any user references to ensure the system has delivered for others: beware of casually quoted savings rather than properly measured ones
- check that the supplier has experience in fitting the hardware to your type of vehicles
- check your vehicle manufacturer and ultimate owner (eg contract hire company) does not object to the intended equipment and system supplier • check GPRS coverage in the geographical areas that are important to you
- check the ability to interface with other business systems such as load planning software and sales order processing
- consider setting some realistic key performance indicators or a service level agreement such as a minimum uptime level
TRUCK MANUFACTURERS' SYSTEMS
It is tempting to source telematics from a truck manufacturer. And why not? Truck manufacturers speak our language. We are comfortable with them. They are stable, global companies. There should be no compatibility or warranty issues. Some such systems have been developed by the truck manufacturers while others are really re-badged systems provided by independent suppliers.
When fitting telematics systems to their own vehicles truck makers may not restrict themselves to data available via the standard FMS interface so can often provide more information than other systems. Equally, the systems can be still be used on other makes of vehicle, even though the data could be restricted.
If you are considering going down this route it is important to do so for the right reasons rather than just because it is the easy, low-risk option. Does the system really suit your needs? If you switch vehicle supplier in future will the reasons underpinning your choice of telematics system still hold strong? Be aware that the vehicle manufacturer may also use the data to monitor a contract hire deal or repair and maintenance agreement, for example. It could be that you can turn that to your advantage, arguing that full visibility of your fleet’s performance lowers their exposure to risk and should lead to keener prices if the data is favourable.
TOP 10 TELEMATICS TIPS
- Justify the economic and business reasons for having a system
- Be prepared to act on the information provided by the system
- Think long term: it can be painful and costly to change telematics systems and suppliers
- Introduce and use telematics sensitively – engage the workforce
- A good telematics system will become a key part of your operation so a low-risk supplier makes good sense
- When choosing a system focus on the operational benefits rather than differences in cost
- Be conscious of driver overload: establish messaging procedures etc. that do not distract a driver’s attention
- Be prepared to question and interpret telematics data wisely: electronics are no substitute for a brain or experience
- Use an objective scoring system to assess potential system suppliers
- Plan the implementation of the system carefully, preferably doing it gradually to reduce risk
- Freight Best Practice Guide FBP1042: Telematics for Efficient Road Freight Operations: www.freightbestpractice.org.uk
- Advice on Data Protection Act: www.ico.gov.uk
- Advice on Human Rights Act: www.direct.gov.uk/en/governmentcitizensandrights/
- Advice on employment contracts: www.direct.gov.uk/en/Employment/Employees/EmploymentContractsAndConditions
- FMS standard: www.fms-standard.com
Other operators' experiences of telematics
· ETS DISTRIBUTION SERVICES
· JOHN LEWIS PARTNERSHIP
A success story
In its first three years of using a telematics system, Loughborough-based ETS Distribution Services enjoyed a 16% improvement in fuel consumption, a 30% reduction in road accidents and a 16% fall in its insurance premiums.
ETS has been using the MiX Telematics Fleet Manager system across its entire fleet – now 28 strong – of artics and rigids since 2008. It is used to track vehicles and monitor driver and vehicle performance, including such areas as engine idling, harsh braking and accelerating, over-revving and excess speed. This has not only helped saved fuel but also led to lower levels of wear and tear and some reduction in overtime claims, confirms Elliott. The system paid for itself within six months, he adds.
ETS’ approach included taking on an in-house driver trainer at the same time as the telematics system to ensure its data could be used to drive real bottom line improvements. It also introduced weekly driver league tables and regular awards such as ‘best driver’ and ‘most improved driver’ to help incentivise staff. The firm chose MiX Telematics after considering several alternatives – both from independent suppliers and vehicle manufacturers – and after consulting with other fleets.
In the end, says Elliott, MiX won the contract as it was one of the only suppliers at the time who could provide all the vehicle and driver performance reporting the firm wanted alongside straightforward vehicle tracking. “We wanted the drivers to win; we wanted the company to win; and we needed one system to do it all,” he comments. “It has been absolutely wonderful.”
On the road to expansion
After a year-long trial of two possible systems John Lewis Partnership last year chose Daimler’s FleetBoard telematics system for its fleet of 430 trucks of 18-tonnes gvw and above. FleetBoard has also gone into the 70 vehicles operated by Kuehne + Nagel on behalf of John Lewis. The choice of a Daimler’s telematics system may seem at odds with John Lewis Partnership’s fleet – most of the vehicles are DAFs, the Kuehne + Nagel units are from Iveco – but fleet engineer Ray Collington says FleetBoard was selected after proving to be reliable and because of the quality of its vehicle and driver performance reports.
“Our approach has been to view telematics as an investment which over time will have both positive environmental and cost benefits,” says Collington. The initial target set for FleetBoard is to achieve a carbon reduction of 4% against a 2010/11 baseline.
“The detailed management information provided by the new telematics system has enabled us to see that our drivers already follow good driving practices,” observes Collington. “It has also highlighted areas where we can do even better.” Savings in maintenance and repair costs are expected to emerge over time, together with a reduction in the accident rate.
John Lewis Partnership is considering additional FleetBoard functions for the future, including vehicle tracking and remote digital tachograph downloading.