Telematics for Fleet Management Europe 2013: Day Two

Telematics for Fleet Management Europe 2013: Day Two

The good news just kept on coming on day two of Telematics for Fleet Management Europe 2013, a two-day Telematics Update conference in Amsterdam.

According to Mark Licht, president of the wireless and location consultancy Licht & Associates, the mobile resource management (MRM) industry has reached “an inflection point” with the global installed base projected to more than double over the next three years  from 13.8 million units in service today to around 32 million by 2016.

And while growth areas will conform to local specifics, Licht predicted strong gains in all major parts of the world. “There is no European market, it’s a market of specific countries,” he said, adding that the same went for Asia or Latin America. “You have to look at each of these. It’s a very complicated space, but the trajectory is certainly very positive across the globe."

MRM goes global

According to Licht, the MRM industry is now global with emerging markets projected to account for almost 50% of the world's installed units by 2016.

China will dominate Asia. Already, five of the world’s top 10 truck manufacturers are Chinese. In Europe, Turkey, Russia and Central and Eastern Europe deserve special attention. In Latin America, Brazil will continue to lead with preparations for mandatory vehicle tracking and immobilization.

How fast Europe grows as a whole will depend on whether eCall and the European Electronic Toll Service (EETS) get off the ground. 

While eCall is expected to launch in the second half of 2015, or sometime shortly thereafter, EETS is already certain to fall well short of meeting its original goal: establishing a pan-European road-charging network that would guarantee international trucking companies a single provider, a single interoperable box, a single contract, a single administration fee and a single bill for all 27 member states. 

To be sure, EETS was a tall order to start with, requiring some 100 different toll chargers across the continent to come under a single umbrella within three years. 

Hence, noone was really surprised when an October, 2012, deadline for implementation came and went, and plans for a scaled-back version replaced it. Called Regional EETS, this version will cover only seven European countries with important international traffic and extensive electronic road-tolling systems in place already. 

Still, not everyone likes the delays. “There is too much carrot and too little stick to make [EETS] happen,” said Marc Billiet, head of EU goods transport at the International Road Transport Union (IRU). “There is a need to rebalance.”

Cost reductions to drive MRM in Europe

In the meantime, commercial telematics in Europe will be driven by other factors, such as high fuel prices or efforts to reduce insurance premiums through driver training and monitoring. Both have very compelling business cases.

Erik van Duin, manager for fleet & subcontracting Benelux at TNT Express, said his fleet achieved 10% fuel savings after deploying on-board computers that monitor driver behavior and driving style. He added that he believed up to 17% fuel savings were ultimately possible.

But already, at 10% fuel savings, the return on investment  was 16 months, he said. And he was not counting other benefits, such as less downtime and fewer accidents.

Rory Morgan, general manager for national logistics at Iron Mountain, a United Kingdom-based provider of information storage and management solutions, reported impressive gains on four fronts since his company teamed up with Zurich in 2008 to implement driver monitoring as a way of preventing Iron Mountain’s insurance premiums from going through the roof.

Incidents were down 70%, own damage and third party costs 57%, fuel consumption 7% and maintenance costs 4.5%. According to Morgan, this helped Iron Mountain save £2.1 million off the bottom line. “It’s very pleasing,” he said.

U.S. MRM comes of age

In the United States, local fleets will lead the growth in telematics, according to Clement Driscoll, principal of C.J. Driscoll and Associates. 

At the end of 2012, there were roughly three million local fleet tracking units in service in the United States, plus over one million cell phones, smartphones and tablets that were being used to manage workers and mobile assets when out in the field.

Some 700,000 long-haul trucks were also using commercial telematics, bringing total market penetration to about 25 percent.“To some degree, it’s no longer necessary to convince [companies] of ROI,” Driscoll said. “Demand is getting self-sustaining.”

Efforts to mandate electronic onboard recorders to monitor the amount of time commercial drivers spend behind the wheel promise to add several million tracking units more. But it won’t be in 2014 as originally envisioned by the Federal Motor Carrier Safety Administration (FMCSA).

After suffering a setback at a United States Court of Appeals, the FMCSA has been forced to revise the proposed rules to address concerns over driver privacy and harassment. It now plans to present the revisions in September, and if successful, roughly two years will be required for implementation, Driscoll said.

Innovation remains key

But “just because a market is growing doesn’t mean that you will grow,” Licht warned. “With maturity comes more competition and fragmentation.”

According to him, “silo-driver products and services” will most certainly not fly. Nor can companies continue consoling themselves that the market is not big enough for the Googles of the world.

“Google is actually in telematics, already thinking about it seriously,” Licht said. “Telematics is big enough for Google, and if you think about both the commercial and consumer market, it is absolutely big enough for them.”

What’s more, “old economy is getting involved,” he said. “Progressive insurance … is one of the largest telematics providers [today].”

He added: “Even the very old economy is getting involved. Sears, the massive retailer in the United States, they are involved in telematics. … This is the new world of MRM. It’s all of these companies and much more.”

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