Efficiency, new technology, compliance drive growth of fleet management solutions

Sept. 8, 2017
The number of fleet management systems deployed in commercial fleets in North America reached 6.7 million in the fourth quarter of 2016. The market is expanding with a CAGR of 15 percent, and the number of deployed systems will reach 13.5 million by 2021.

Fleet operations have become more challenging. Costs are rising, shippers are under increasing pressure to deliver goods faster, and there is a shortage of qualified truck drivers in the U.S. As a result, interest in fleet management solutions is growing rapidly as firms look for ways to reduce costs and provide higher levels of service with fewer resources.

According to Berg Insight’s “Fleet Management in the Americas 2017” report, the number of active fleet management systems deployed in commercial fleets in North America reached 6.7 million in the fourth quarter of 2016. The market is expanding with a compound annual growth rate of 15 percent, and the total number of deployed systems will reach 13.5 million by 2021.

In Latin America, the number of active fleet management systems will increase from 2.5 million in 2016 to 4.7 million in 2021, a compound annual growth rate of 12.9 percent.

“There are several key growth drivers for fleet management telematics, including new dongle technologies that have reduced the initial cost and eliminated installation charges; government regulations in the form of requirements for [electronic logging device] ELD systems to be implemented by December 2017; and enhanced OBD communications that offer faster diagnosis and repair, significantly reducing down time,” says Mike Fitzgerald, executive vice president and general manager of Innova Telematics Solutions.

Rickard Andersson, senior analyst at Berg Insight, agrees that regulatory compliance is an important driver in North America, along with advanced technology.

“The traditional market drivers such as increased efficiency, security, environmental performance and control of fleets are still very much relevant, especially for companies which have not yet adopted fleet management solutions or fleets which have previously opted for basic systems with limited functionality in terms of performance enhancements,” Andersson says.

The leading fleet management vendor in the region is wireless carrier Verizon, which acquired Telogis and Fleetmatics, adding their capabilities to its own Networkfleet offering. The company’s installed base outnumbers its closest competitor by a factor of three, according to the Berg report.

Trimble, Geotab and Omnitracs have all surpassed 500,000 active fleet subscribers in the Americas.

Andersson says that all the major wireless carriers now offer their own fleet management solutions, and Verizon has provided a template for expanding that business.

“While other operators offer solutions from independent telematics partners (in many cases branded white-label solutions), and are primarily expected to continue using this partnering strategy, it is also possible that other operators may follow suit if Verizon’s active participation in the fleet management industry turns out to be a successful strategy,” Andersson says.

Growth in this sector also has been fueled by agreements between vehicle OEMs and solution providers to offer fleet telematics systems as a standard option in their vehicles. For example, Telogis works with Ford, Volvo Trucks, Mack, GM, Isuzu and others.

According to the report: “The OEM telematics initiatives in the Americas have intensified in recent years. Large installed bases of OEM telematics systems are now found on the North American market, not the least for systems powered by established aftermarket fleet management solution providers. The volumes are so far substantially smaller in Latin America. The adoption is however expected to take off also in this region. Solutions supplied by the OEMs are anticipated to increase in importance across both continents in the Americas in the coming years.”

OEMs also have developed their own in-house telematics systems, but Andersson says that partner strategies will likely overtake those efforts.

Other types of partnerships also are developing. TMW Systems, for example, has integrated with service relationship management software provider Decisiv Inc. to offer real-time industrial asset service management. Users of TMW’s fleet maintenance management software can improve visibility of external service events.

Remote diagnostics capabilities are an important part of the OEM-based solutions and those developed with fleet management partners.

“Several OEMs have extended their remote diagnostics offerings in recent years and integration with aftermarket systems has become increasingly common,” Andersson says. “The market has seen an increasing number of partnerships between vehicle OEMs and established telematics providers. Such partnerships are often initially focused on the introduction of truck-centric features, such as remote diagnostics functionality for a truck brand powered by a third-party aftermarket provider’s hardware or software solutions.”

Technology improvements also are helping drive this growth. Hardware costs have fallen, and deployment is much easier thanks to cloud-based or web-based options. Fleet Complete, as an example, now offers a web-based platform that includes vehicle tracking, driver performance, big data analytics, and crash detection via the cloud. Managers can access fleet data from anywhere, as well as business intelligence and analytics tools.

There is, however, a growing gap between the capabilities of fleet solutions and the technology available on the vehicles themselves.

“Most [fleet solutions] still only check the powertrain computer when many vehicles have as many as 70 different computers,” Fitzgerald says. “By not checking ABS, SRS, TPMS, and so on, these very limited software systems deliver an incomplete picture of the status of the vehicle. Eventually, a network test where all vehicle computers are checked for codes will become a basic requirement of fleet management telematics systems.”

Andersson says that limited IT experience and undercapitalization remain barriers to adoption in this market, particularly for smaller fleets. “SaaS offerings with low or no upfront capital costs and significantly easier deployment processes – including self-install plug-and-play solutions coupled with web-based back-office access charged only by recurring fees – have become increasingly common, thus lowering the barriers to adoption for fleet customers of all sizes,” Andersson says.

Fitzgerald cites new technology, cost and data management as potential barriers. “However, overcoming these stumbling blocks is not difficult with a system that provides a quick return on investment; is quick and simple to install and implement; and provides data in a clear format that is easy to understand,” he says.

Fitzgerald adds that companies often underestimate the value of the data provided by these systems and focus primarily on location tracking or driver behavior.

“That is only part of the story,” he says. “By reviewing the complete set of data provided allows fleet managers to have better insight into the overall management of their vehicles, including required and anticipated service information that helps reduce unexpected, costly downtime and repairs. There can be a lack of understanding on how to access and manage all the data available to implement meaningful changes to fleet and driver management, so that is why it is important to implement a system with a dashboard of data that is easy to understand.”

Shift in focus in Latin America

In Latin America, asset tracking and security are far more important drivers of growth, although implementation is often slowed by the steep learning curve required there.

“As many countries in the region are continuously plagued by alarming levels of theft, the primary focus among many adopters of fleet monitoring solutions has been on risk management and security measures,” Andersson says. “Basic track and trace solutions are common in the region, with special features such as panic buttons and remote immobilizers.”

When it comes to more advanced systems, there tends to be a steep learning curve.

“An educational process is often needed in order to extend the perception of fleet management beyond security-related aspects,” Andersson says. “The Latin American fleet market has started to evolve from the traditional emphasis on security to also focus on optimization of fleet operations through management of logistics processes and improvement of driver behavior.”

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About the Author

Brian Albright

Brian Albright is a freelance journalist based in Columbus, Ohio, who has been writing about manufacturing, technology and automotive issues since 1997. As an editor with Frontline Solutions magazine, he covered the supply chain automation industry for nearly eight years, and he has been a regular contributor to both Automotive Body Repair News and Aftermarket Business World.

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