Hot opportunities for Asian TSPs

When it comes to fleet management, Asia has long been considered a ‘hot-spot’ for the overseas telematics service providers (TSPs). The adoption rates for fleet telematics systems in Asian countries have also been on the rise primarily as a result of better end-user awareness (at least in large fleet operators) and understanding of the telematics value proposition coupled with competitive pricing.

But understanding the Asian market as a whole has never been easy. Why? “The Asian market is heavily fragmented and it's hard to describe it as a single market in a way that the EU or USA could be described,” said David Henderson, CEO of DRVR − a Thailand-based fleet telematics start-up.

Asiais like a jigsaw puzzle of different countries− there are economies like Japanat one end and Afghanistanat the other. “While some markets are ready for mass-deployment of fleet telematics i.e. Singapore; others are still at their drawing board − like Myanmar but equally exciting,” added Henderson.

Pravar Gautam, vice-president of Asia & EMEA at Scope Technologies agreed: “The technology and infrastructure in US and EU are more advanced and uniform and the awareness of telematics is higher, however Asiais catching up.” He estimated a two-fold increase in the penetration rates of telematics across the board in all major Asian economies including China in coming years.

Challenges ahead

The 2016 Global Fleet Guide to Fleet Management called Asia“a challenging but rewarding market”. Caroline Thonnon, CEO of Global Fleet and business development head said: “Asia is the region where the local fleet operators have the least information and where they want to increase their knowledge the most.”

But awareness is not the only issue facing the operators in Asia. For example, the automotive industry in ASEAN countries is largely dominated by Japanese automakers. The vehicles manufactured there do not have the necessary hardware such as the on-board computers or OBD-II port to support telematics services. Henderson told that various south eastern Asian countries are currently phasing out 2G services in favour of 3G but these are expensive and that prevents a widespread adoption of telematics. Then there are several country-specific hurdles. “In markets like Myanmarand Indonesia, the telco infrastructure can be an issue,” he added.

Despite the predominant administrative hurdles, fleet operators are increasingly looking to enhance their productivity and control their operational costs and both of these needs can be optimised with telematics, according to Gautam. “Telematics-enabled stolen vehicle recovery solutions can help operators address vehicle theft and security related issues in countries like Malaysia,” he assured.

The rise or fall of small FMS players

The market is becoming more commoditised and cost-competitive with large players like the vehicle manufacturers making inroads into the market, explained Gautam. “Smaller FMS providers will increasingly have a challenging time because of this.”

In coming days, the Asian telematics space will witness a consolidation taking place in the service provider space as it becomes more efficient for larger players to control both the demand and supply sides.

Yet this could be an opportunity disguised as a threat for the ‘fly-by-night’ players. According to Henderson, many automaker solutions are not localised for the specific needs of the Asian markets and that is where the start-ups play. “Solutions that are designed in Detroitor Wolfsburgare not suitable for the SE Asian market,” he said.

This gives a welcome opportunity for innovative TSPs to design products tailored to vehicle owners in ASEAN. For example, DRVR embeds the concept of ‘gamification’ and the Thai Concept of Sanook into its services for the customers in Thailand. In order to achieve a mass-scale adoption of its fleet analytics services, it is also partnering with the automakers.

Socio-economic and political backdrop in Asia

Can government legislations drive a mass uptake of telematics? According to Gautam, legislation could be helpful as it has been in China where telematics is made mandatory for taxis and public buses in many of the big cities. The same may not be true for other Asian countries. “We believe that with changing consumer demand and business need there will be a gradual mass adoption without legislation.”

The large fleet operators already understand and acknowledge the economic benefits of implementing telematics programmes. However, for the smaller Asian fleet operators a mandate like ‘ELD’ can help them and drivers log the hours of service, without having to fill out a lot of paperwork, said Gautam.

Henderson, too, believes that it’s far too early for Asiato adopt any government mandate on telematics. However, he outlines certain areas where government policies need improvisation, without stifling innovations. For example, the long queues and delays at border checkpoints can be avoided through online scrutiny of paperwork and centralised data collection. This can expedite the cross-border trade between countries.

Henderson has met several regional government heads and officials of EU and Asian development bank and proposed new solutions like telematics to cater the problems facing the commercial transport industry in Asia.

“Key to success in the Asian market is having local partnerships and a presence in the region.”

He gave example of a UK-based TSP that has invested millions and spent years on telematics projects in India− one of the largest transport markets in the world, without any significant returns. “This is the fastest growing market for the world of telematics but not for the faint-hearted. It’s tough but if you have the right product, the right timing and the right partners; success is possible,” he concluded.

[Tele.Ghosh.2016.10.27]