You have either started reading this blog because you know about telematics or you have no idea and want to find out.
So, starting with the latter:
Telematics is the branch of information technology that deals with long-distance transmission of computerized information. Put in simple terms, telematics is the blending of wireless telecommunications like GPS, and computerized information technology.
The applications are limitless, but here I will stick to the application of this technology to vehicular usage, and specifically as telematics can be used with truck fleets. Starting with the vehicle itself, the technology allows monitoring of all operating systems. Some prime examples of what can be monitored include a vehicle’s speed, idle time, engine RPMs, oil pressure, air pressures, unusual swerving and hard braking in real-time. Information is instantaneously transmitted to a computer for evaluation, and potential problems are reported to the driver and dispatchers. If air bags become deployed, the computer notifies emergency services in the area. Of course in order to do this, the vehicle location also has to be a piece of the data that is transmitted.
When the location is known, the computer can also help with truck routing. If a dispatcher gets a call from a customer needing product, he or she is able to identify the nearest loaded truck to respond to that need, thereby improving the company’s level of service. Since the data being transmitted from other vehicles allows the computer to develop live-time assessment of traffic conditions on your fleet’s planned routes, telematics can help redirect vehicles if needed, saving your company both time and fuel. Of course, it is simple for the system to supply weather information for the route to the driver, too.
What is the business case for installing and using a telematics system on your vehicle fleet? The average price for a tractor trailer rig is $150,000 — having a telematics system would allow the company to identify minor mechanical issues before they necessitate a major and costly repair. However, the primary reason most fleets install such a system is to increase fuel economy; the average reported savings is 4%. This savings comes from two areas: reducing idling time and increasing efficient routing. Using averages taken from a couple of websites, the average miles per gallon for tractor trailers is 6 miles per gallon and the average miles driven per year is 100,000. The math is simple — dividing 100,000 by 6 miles per gallon, the truck would burn 16,666 gallons of fuel. The average cost of diesel fuel this morning was $4.02. $4.02 times 16,666 equals $66,997 per year. A 4% savings would be $2,680. The cost of renting the telematics system hardware and using a monthly monitoring service is only $420 per year on average.
The fuel savings seems to provide enough return on investment to make the decision to install an easy one, but that’s just the tip of the iceberg. Increases in business revenues are also substantial. It is more difficult to put average numbers around this principle since companies who gain the advantages in routings and other usages aren’t likely to help competitors by providing data. Over years of listening to dozens of stories about companies who learned how to effectively incorporate telematics systems into their businesses, my estimate is that such a company gains approximately 2.5% in productivity. The savings range varies depending on the type and usage of the fleet, from large trucks pulling trailers 100,000 miles per year to an incidental fleet for an HVAC contractor. Regardless, it is far greater than $420 per year.
Certainly, potentially increasing profits by 6.5% sounds like a good deal, and we haven’t even mentioned the safety and accident prevention benefits of telematics. However, to make telematics a successful part of your accident prevention plan, you should choose a device and system which can provide additional data (to evaluate behaviors), beyond simply transmitting location and speed. Many times, companies will buy the equipment, but do not develop an effective plan for the data interpretation and usage, so they end up becoming barraged with data, not getting actionable data or not acting on the data provided. The best methods for effectively changing driver behaviors by using the telematics data include positive reinforcement, group participation and behavior coaching as close in time to the errant behavior as possible. Case studies presented by companies using the data in this way demonstrate a 60% reduction in loss frequency and over 70% reduction in loss costs.
Are you ready to buy a telematics system, or do you already own one, but aren’t getting these results? There are currently about 200 vendors selling telematics equipment, and some provide a better experience than others. Maybe it’s time to contact your Acadia Insurance Company loss control consultant? We will be able to help you sift through vendors, to evaluate your current system, and to help you plan a program that could enhance your loss prevention activities. Does increasing profits by 6.5% sound like a good idea to you and your business?
Acadia is pleased to share this material with its customers. Please note, however, that nothing in this document should be construed as legal advice or the provision of professional consulting services. This material is for general informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness. Distribution of this information does not constitute an assumption by us of your obligations to provide a safe workplace. Maintaining a safe workplace in accordance with all laws is your responsibility. We make no representation or warranty that our activities or recommendations will place you in compliance with law, relieve you of potential liability or ensure your premises or operations are safe. We exercise no control over your premises or operations and have no responsibility or authority to implement loss prevention practices or procedures.