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Integrating solutions from other providers through an app store-like feature to help telematics service providers fill gaps in their fleet management solutions portfolio

The adoption of telematics services – devices which combine telecommunication and informatics – in the transportation and logistics segment is expected to reach the highest total installed base by 2025. Robust growth is also expected in segments such as food and beverages (F&B), construction and mining, and petroleum and chemicals, finds the CV Telematics Opportunity Analysis by Industry, EU and NA, Forecast to 2025.

What are the services?

Telematics services can be broadly classified into six categories, and Telematics Service Providers (TSP) and Original Equipment Manufacturers (OEMs) offer a wide range of services, from basic to advanced, within these broad categories.

  • Fuel management: Monitors fuel levels and issues alerts in cases of a drop in levels; logs all business mileage undertaken by employees
  • Vehicle management: Tracks vehicle status and activity, checks tyre pressure, performs remote diagnostics, maintenance scheduling, and fault monitoring
  • Trailer management: Checks for overloading, temperature inside the trailer, and if doors are opened or closed
    Driver management: Checks for driver ID, behavior, fatigue and provides a driver scorecard
  • Compliance and safety: Helps with tax and insurance compliance, speed locker, and ignition sensor
    Fleet management: Provides geo-fencing, trip management, proof of delivery, performance reports, and fleet analytics

The reasons why operators invest in Fleet Management Solutions (FMS) vary depending on vehicle type and industry. For instance, fuel management is the top reason for investing in FMS amongst F&B, transportation and logistics, retail and parcel, and Hazmat fleet operators. Saving time and increasing revenues are the second and third most important reasons respectively for utilities, F&B, and petroleum/chemicals fleet operators.

Petroleum and chemicals to record 99% penetration

The Electronic Logging Device (ELD) mandate has been driving the significant penetration of telematics in fleets operating in the retail and parcel delivery, logistics and transport, and F&B segments,. Around 41% of retail and parcel delivery fleet owners have 50–74% of their fleets equipped with telematics solutions, according to the Frost & Sullivan analysis.

Meanwhile, 31% of transportation and logistics fleet owners have more than 75% of their fleets equipped with telematics solutions. 40% of F&B fleet owners have more than 50% of their fleets equipped with telematics solutions. Petroleum and chemicals, transportation and logistics, and F&B are expected to be the top industries to adopt telematics-based FMS over the next few years.

Fleets operating in the petroleum and chemicals industry in North America are expected to record about 99% penetration in telematics solutions due to the compulsory ELD mandate for Hazmat-placarded vehicles. Driven by the rise in trailer telematics, especially trailer status and temperature management, the F&B haulage industry is expected to record CAGRs of 20.6% and 18.0% in telematics adoption in North America and Europe, respectively.

Different solutions for different needs

Telematics solutions can be embedded, portable, or on an independent device. An embedded solution is a telematics box that is functionally hardwired into the vehicle, providing access to the connected world. The interface offers access to a range of vehicle management features and integrates multiple features.

A portable solution is a detachable device such as a personal digital assistant (PDA), portable navigation device (PND), or ruggedised computers that maintain contact with the vehicle. This includes a low-cost solution and a detachable device that collects information and then syncs it with other devices through Bluetooth or Wi-Fi, typically a tablet or a phone.

Internet and GPS-enabled phones have become powerful tools for offering telematics features. The growth of this solution has incorporated additional value chain participants such as content providers, application providers for distracted driving, and wireless providers.

Addressing pain points

  • Industry participants, irrespective of their nature of work, have identified five core pain points, areas where telematics services can provide solutions.
  • Driver management is an issue due to the shortage of a trained and skilled workforce and the lack of communication along the route, among other things. Telematics services help manage the working time, plan tasks, check the driving style, and monitor driver behaviour
  • Fuel bills could rise due to the increase in cost of fuel, theft, and the driver taking long routes. Fuel management and route planning services can help reduce costs in this regard
  • Telematics can help cut maintenance costs by conducting preventive vehicle maintenance and by scheduling maintenance alerts
  • Vehicle planning can be enhanced by automating freight management and vehicle stock management
  • Telematics can also help reduce accidents and vehicle thefts

In conclusion, service providers believe there are gaps in their product portfolio, when it comes to addressing pain points specific to certain industries or vehicle models. TSPs and OEMs can look to merge with, or acquire, companies offering solutions/products that can fill the void in their portfolio.

For more information on the CV Telematics Opportunity Analysis by Industry, EU and NA, Forecast to 2025, please write to Krishna Chaithanya Bathala, Industry Analyst – Connected Fleets, at krishnachaithanyab@frost.com

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