Why green means ‘go’ for fleet telematics

Why green means ‘go’ for fleet telematics

By Andrew Tolve

The fleet management industry is going green.

Firms across the sector are rolling out green fleet programs and analytic reporting tools, including the GreenFleet program from PHH, EcoWheels from Wheels, the Keys to Green program from Enterprise Fleet Management, ARI’s EnviroFleet, and GE Capital Fleet Service’s Environmental Performance Solution.

“This is a win-win for companies to take advantage of telematics technology,” says Doug Peters, analytics leader at GE Capital Fleet Services.

“It has both a dollar impact as well as that soft benefit of reducing CO2 emissions.”

Getting an ROI

Part of what’s spurring interest in green fleet solutions is the elevated cost of fuel.

Advanced telematics solutions can calculate more efficient routes based on real road speeds and traffic flow.

Mounting anticipation for a cap and trade or carbon tax, another potential economic upside of green telematics, has accelerated adoption as well.

“Most companies today have to look real hard and close at every penny spent,” says Peters. “Telematics is no different; it’s a technology they need to justify and have an ROI around.”

Trial it; you’ll like it

GE Capital Fleet Services runs trial programs to prove the value of its green solutions to customers.

One customer in the cable and telecommunications industry, which has a fleet of 634 light-duty trucks, wanted to reduce fuel costs while improving safety and driver compliance.

GE’s telematics solutions allowed the customer to monitor the impact of idling, speeding, and off-hour usage on fuel consumption and emissions.

GE recommended that the customer use telematics to find the most effective routing as well as introduce a zero-tolerance policy for speeding and an All Star list for excellent drivers.

As a result, the customer was able to reduce idling across its fleet by 40 percent, which lowered fuel expenses by 30 percent and carbon emissions by 404 metric tons.

“The whole point of our trial programs is to get companies to recognize where the value comes from,” says Peters.

“There are multiple drivers: fuel and CO2, but also safety, maintenance, and productivity. From our perspective, we’re helping companies become more efficient across the board.”

‘When’, not ‘if’

Despite industry enthusiasm for green fleet solutions, Peters says that only roughly five percent of his clients have implemented green programs or analytic tools.

Those clients, in turn, represent only a small percentage of all corporate fleets, many of which haven’t adopted any telematics solutions, let alone green ones.

Part of the problem is that GE Corporate Fleet Services and other fleet management companies still can’t monetize green benefits.

There’s no cap and trade or carbon offsets to generate the ROI.

Trial programs are a way to illustrate value, but in the current economic climate many companies are wary of additional services, even if they’re free to begin with or cost less than a cell phone per vehicle.

“It’s something that many companies are looking at in terms of not ‘if I should do it’, but ‘when I should do it,’” says Mark Smith, strategic consulting services leader at GE Capital Fleet Services.

Lack of understanding

In addition to the recession, a lack of across-the-board understanding about telematics has hindered adoption rates.

Smith and Peters say that often fleet managers are excited about telematics solutions as a way to reduce fuel costs, or safety directors like the safety benefits, or operations managers like the efficiency benefits.

But rarely are all of them on board or even informed about what telematics solutions entail.

“Part of our value proposition is to try to pull all those stakeholders together,” says Peters.

“A lot of what we’re doing is connecting the dots. Once that comes together, it’s easier for companies to embrace telematics because they’re sharing the ROI across multiple groups in the organization.”

Getting greener all the time

Though the uptake of green fleet telematics may not match that of, say, Apple’s new iPad, it’s inevitable that more companies will gravitate to solutions that can cut fuels costs, reduce emissions, and improve company perception.

A large percentage of fleets have already done some greening, like shifting from six-cylinder vehicles to four, adding hybrid vehicles to their fleets, or moving from mini-vans to sedans.

For industry insight on telematics and EVs, see ‘How telematics will drive the uptake of electric vehicles’by clicking here

In addition, OEMs are coming out with new vehicles that have a positive impact on emissions, like the Ford Transit Connect, which can reduce emissions by 30 to 40 percent from traditional full-size cargo vans.

As telematics solutions become more mainstream, their green benefits will resonate with these initiatives, says Smith.

“When you layer on top of that the types of telematics solutions we offer,” he says, “you can start to see your way to a 40, 50, 60 percent reduction in emissions.”

Andrew Tolve is a regular contributor to TU.

Mark Smith, strategic consulting services leader at GE Capital Fleet, will be speaking at Telematics Update's flasghip show Telematics Detroit 2010, June 8 and 9. For more information, click here.

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