Telematics for Fleet Management Europe 2014: Day One

The penetration of GPS fleet management systems in the United States stands at 25% to 28%, according to Clement Driscoll, founder and principal of C.J. Driscoll & Associates. By way of comparison, Mark Licht, a participating partner in C.J. Driscoll & Associates, puts GPS fleet management system penetration in Europe at mere 6% to 7%.

Why is Europe lagging so far behind?

Early on, on day one of the Telematics for Fleet Management Europe 2014 conference in Amsterdam, participants in a panel discussion on end-user requirements discussed the possible reasons.

According to Erik van Duin, manager fleet & subcontracting Benelux at TNT Express, mobile resource management (MRM) “has a low market share in Europe because the technology is still unknown by the consumers.” In addition, shipping companies are smaller, so they are not as keen on making the investment. “We must prove the business case,” he said. “Often the business case is cost avoidance rather than new benefits.”

For Clive Taylor, director, fleet management & commercial solutions for truck, van & car, EMEA/APAC, Garmin, there is too much confusion in the market. “There are multiple telematics solutions within a single company, and there is no real leader that can serve as a benchmark,” he said. He also cited what he called the fear factor. “There is a fear of [fleet telematics] because a lot of potential customers are not IT specialists,” he said.

In a market like this, simplicity is vital, Taylor continued. For Garmin, this means the need “to bring solutions to market that are simple and easy to use; to be using products that are also suited to vans and cars, not just trucks,” he said.

Simplicity of solutions was also touted by Karin Rådström, director of vehicle and driver services at Scania.

She described her company’s change of strategy after the unsuccessful years-long attempt to sell Scania’s first fleet telematics solution, which was apparently ill-timed and too complex. “We never reached big volumes on that product,” she said. “It had quality issues. And we were too early on the market, when customers were not demanding it. I turned off the last [unit] one year ago.”

Instead, starting in 2010, Scandia adopted a new strategy, a black box system with far lessdriver interaction. “We were focused on simplifying the service,” Rådström said. “It was a simpler product with fewer functions. It made us much more successful.”The product was launched in a handful of key countries at first, and is now available in 33 countries.

Simplicity and integration

There was also a widespread recognition that too many disconnected solutions on the market were alienating potential customers.

Frederic Bruneteau, managing director of Ptolemus Consulting Group, addressed the subject with a vengeance in the final presentation of the day. “How do we integrate if we have so many devices?” he asked rhetorically. “How can we integrate all of them together?” The answer he posited was: “We must move to another paradigm.”

According to Bruneteau, fleet managers currently need about 20 screens to do their work. “With integration, we will have one or two,” he said. “To reach the tipping point, we need a more simple proposition.”

He went on to list several strategies to achieve integration effectively. Chiefly among them was allowing interaction with other players by, for example, adding APIs to an existing platform or changing the channel distribution model. As an example of the latter approach, Bruneteau cited insurance giant Zurich working with the likes of TomTom and Trimble. “They have the data that will allow [Zurich] to price more effectively,” he explained.

The smartphone: Golden or superfluous?

As in all other segments of the telematics market, the smartphone is being considered as a potential boon for MRM solutions. But will it be of long-term importance for the market or just a short-term fix?

According to Driscoll, a C.J. Driscoll & Associates survey on the state of the MRM market in the United States found last year that 45% of respondents said some of their drivers use smartphones.

Jörg Lützner, director of online services, Continental Automotive, said the device had many potential benefits for all players in the fleet. “You could have an app that reads out driving information,” he said. “The smartphone is a better interface for reading this. This is a great benefit for the driver.”

In addition, the smartphone could handle things like tachograph data uploads. “That would be of benefit to the fleet,” he added. According to Lützner, Continental recently launched a community app for the smartphone to inform drivers about the availability of parking spaces. “If we can build up a community so that drivers inform other drivers, they will know very quickly where the best place to park is,” he said.

Fredrik Callenryd, senior business analyst at Scania, noted that application development occurs much more quickly with the smartphone. “In-vehicle application development takes years,” he said. “It takes only a few weeks with smartphones and could eventually evolve into an in-vehicle solution.”

Cost is another factor favoring the smartphone, said Peter Adams, program manager for smart transport at Shell Global Solutions. “You’re able to provide multiple services to an end user without additional cost, because they already have the asset,” he said.

Another advantage of the smartphone, cited by both Lützner and Callenryd, was the ability to contact drivers even when they are not working. “A lot of use cases with fleet telematics are outside the working day,” Lützner said. And he urged other players to avail themselves of the device. “You can say I don’t like it and that I don’t want it,” he said. “But it’s out there. Use it.”

At the same time, Lützner joined other speakers at the conference in noting the device’s limitations. “There are certain applications [in fleet management] where factory-installed solutions are irreplaceable,” he said. “You won’t use a device that costs $9.99 for a dangerous-goods transport.”

Callenryd, for his part, suggested that the days of the smartphone may be limited as more and more commercial vehicles leave the factory with embedded connectivity. “I don’t know if we’ll even have the smartphone in five years,” he said.

The rise of emerging markets

Geographically, while the United States and, to a lesser degree, United Kingdom are currently driving MRM expansion, Licht said emerging markets, such as China, Russia and Latin America, will rapidly grow in importance.

He sees China becoming the second-largest market for fleet management solutions by 2016 and predicts the country will have more than six million MRM units in service by that year. “Safety is a big issue in China,” he said. “Driver fatigue and distraction are not currently measured there. But it is widely known they are responsible for many crashes.” As a result, the market will grow “dramatically, largely driven by regulation,” as the Chinese government tackles highway safety.

According to Licht’s prognosis, there will be substantial growth as well in Russia (1.2 million vehicles with MRM units by 2016) and Latin America (3.3 million). Regarding the latter market, Licht cautioned that the belief that most of that growth will take place in Brazil, because of the Contran 245 mandate, is mistaken. “Two-thirds of the MRM market will come from outside Brazil, notably from Mexico and the Andean countries,” he said.

His advice to MRM service providers? “Look at the markets beyond your own borders.”

As further proof of the robust health and outstanding prospects of the global telematics market, Licht pointed to the very livelymerger and acquisition (M&A) activity that has taken place in the fleet telematics industry over the past two years. “Of the top 25 global MRM service providers, only four have not done M&A,” he said. According to his calculations, some 2.5 million tracked vehicles changed hands in that period, for a total of $3.5 billion.

As one example among several, he cited the sale of NexTraq to global fuel card provider FleetCor Technologies. He called NexTraq a local fleet MRM provider. “But [FleetCor] wants to take telematics solutions to other parts of the world,” he said.

According to Licht, global penetration of fleet management systems will nearly double, to 15%, by the year 2016, and reach nearly 50% four years later in places like the United States and the United Kingdom.

Does EETS have a future?

Although there was lots of good news for fleet telematics, not everything heard on the first day was upbeat.

The bearer of the ill tidings was Jan Willem Tierolf, ITS coordinator at the Dutch Ministry of Infrastructure and Environment and chairman of the Stockholm Group, an informal platform of national authorities that has been driving adoption of a pan-European tolling system called the European Electronic Toll Service (EETS).“EETS should have been operational in October 2012,” he said. “But here we are in March 2014, and it is not operational anywhere.”

Then he counted off a long list of problems. To start with, there were too many unclear requirements – “at least 100 different sets of requirements” – and there were different procedures and different legislation in individual member states, he said.

But perhaps the most important barrier to EETS adoption is that most of the risk is supposed to be carried by service providers. He said attempts were under way to try and balance the risks more equally among the different players. “But there is no point of the horizon when we will start,” he said.

At the moment, tests are under way to initiate a regional version of EETS with a handful of countries. “On June 14, there will be an evaluation to see if participants will commit to start contract negotiations,” he said. But he was not hopeful.

In the meantime, Germany and Austria have launched TOLL2GO, an interoperable tolling system that uses the same onboard unit for both countries. Similar cooperation was being developed between Spain and Portugal, and among several Scandinavian countries, such as Sweden, Denmark and Norway.

“But it involves only two bridges in Sweden and a few bridges in Denmark,” Tierolf said.

(Return tomorrow for our coverage of day two of the event.)

Siegfried Mortkowitz is a regular contributor to TU.

For all the latest telematics trends, check out Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany, Insurance Telematics Europe 2014 on May 6-7 in London, Telematics India and South Asia 2014 on May 28-29 in Bangalore, India, Insurance Telematics Canada 2014 on May 28-29 in Toronto, Telematics Detroit 2014 on June 4-5 in Novi, Michigan, Advanced Automotive Safety USA 2014 on July 8-9 in Novi, Michigan, and Telematics Munich 2014 on Nov. 10-11 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.

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