This article is an excerpt from Telematics-Driven Transformation, available for free download here.
In Part Three of this series, we look at what key actions fleet owner should take to extract value from their investments. Here in Part Four, we discuss specific telematic uses cases to generate value.
Telematics and ELD Mandates
Telematics has become increasingly important due to federally-mandated adoption of ELDs (Electronic Logging Devices) by US motor carriers and drivers, and soon by Canadian carriers as well. Carriers and fleet owners are figuring out how to leverage their investment in these devices to create considerable new value, once these systems are in place. There are many high-value use cases being implemented. Here we discuss some of the most common ones being implemented across the industry.
What Are ELDs and HOS?
An Electronic Logging Device (ELD) connects to a commercial motor vehicle to record the hours driven by each driver, to ensure compliance with Hours of Service (HOS) regulations. HOS regulations limit the number of hours per day and per week a driver can drive and defines the minimum breaks and hours of rest between shifts. The main purpose of HOS is to reduce the number of accidents caused by driver fatigue.
Use Cases and Value Drivers
Fuel is the single largest operating cost for most carriers (even eclipsing driver pay), often accounting for more than a third of the total annual operating costs of each vehicle. There are several ways ELDs can help reduce fuel consumption:
- Discover drivers with excessive acceleration and speeding. Correct that behavior with training.
- Identify excessive/unnecessary idling and retrain drivers to reduce it, possibly with financial incentives. Consider installing heating and cooling systems that work independently of the engine, so drivers can remain comfortable in the cab, without idling the engine, in hot and cold weather. Consider providing auxiliary power, independent of the engine, to provide drivers with power for their devices while the vehicle is parked.
- Identify and fix vehicles that are getting poor mileage due to engine or other vehicle issues.
Taken together, the savings from these efforts can be significant. Some research has shown that improving driving behavior can reduce fuel costs (for that driver) by as much as 37%.1Overall fuel reduction from telematics-driven efforts can be up to 25%.2 This can equate to thousands of dollars per year for class 8 long haul vehicles and many hundreds of dollars per year for medium and light-duty short haul vehicles. It can also be a significant tool to help companies meet carbon footprint reduction goals.
Safety, Security, and Driver Assistance
It goes without saying, accidents are costly, both in dollars and human lives and injury. According to OSHA’s Guidelinesfor Employers to Reduce Motor Vehicle Crashes, “The average crash costs an employer $16,500 — an on-the- job crash that results in an injury, cost $74,000. Costs can exceed $500,000 when a fatality is involved.” An ELD can be used to identify hard acceleration, hard braking, and speeding. If the ELD has an accelerometer, it can also identify aggressive cornering. That data can provide precise KPIs for each driver which can be used to identify drivers that need improvements. By making these KPIs available to each driver, they know exactly where they stand and how they can improve. Sometimes this is enough to improve the driver’s behavior. Drivers needing further improvements can be coached and put on a program to improve their driving habits. In addition, real-time in-cab alerts can also inform the driver that they should slow down, stay in their lane, maintain safer distances from the vehicle ahead, warn of an imminent collision ahead, or otherwise modify their driving.
A good program can be used to turn an unsafe driver into a good one, which is usually much less expensive than trying to hire a new driver. According to Driver’s Alert, a well-run telematics safety program can result in 45% fewer accidents, 75% reduction in speeding, 90% improvement in seat-belt usage, and 80% reduction in aggressive driving. In addition, insurance costs can be reduced by 5% to 25% by such a program,3 with some sources reporting an average 10% reduction.
Geofencing and vehicle motion monitoring can provide alerting when a vehicle is stopped where it shouldn’t be or deviates from the planned route. The dispatcher or network center operator can contact the driver to find out if they need help. This alerting capability can help detect and respond to thefts in progress, mechanical issues and breakdowns, or accidents where the driver needs help. The dispatcher has all of the necessary information, including exact location, and can share it with law enforcement, roadside repair services, or towing companies as needed. With these capabilities in place, some thefts can be averted and the goods recovered. Trucks can be repaired and put back into service sooner. Drivers and accident victims can receive the help they need more quickly.
According to the OECD, telematics programs can reduce maintenance and repair costs by up to 14%.4This is achieved through improved driving habits and predictive maintenance programs. As described in Safety, Security, and Driver Assistance above, ELDs can help reduce aggressive driving behaviors. This not only reduces accidents, it also reduces wear and tear on vehicles.
In addition, ELDs enable predictive maintenance programs. This is predicated on specific ELD’s ability to work with a wide variety of engines and diagnostic codes, which varies from one ELD providerto another. The SAE maintains a list of over 700 different generic diagnostic codes. In addition, many manufacturers’ engines generate their own proprietary codes. If the ELD understands and translates most manufacturers’ proprietary codes into a uniform canonical set of diagnostic codes, then an even richer set of information is available for analysis. Depending on the richness of codes and engine status data available, analytics, and even machine learning algorithms, can be run to predict failures before they happen. Maintenance programs can shift from a usage-based maintenance (e.g. based on number of miles driven) to condition-based maintenance (based on actual condition of the powertrain and other vehicle systems). According to a DOE survey, implementing a functional predictive maintenance program can reduce equipment breakdowns by 70%-75%, while simultaneously reducing maintenance costs.
Customer Service/Customer Experience
Telematics can improve the customer experience with more precise visibility into order status and better intra-day rerouting, adjusting to changing circumstances, so that customers are less disrupted by your disruptions.For businesses that have a vision to run an autonomous supply chain, real-time visibility from their carriers is not a luxury, but a ‘must have’ (see Digital Supply Chains, Autonomous Supply Chains in Part Five).
Visibility/Precise, Dynamic ETA
When a customer calls or checks online for the status of their order or service call, which is better: “they’re supposed to arrive today sometime” or “the truck is 57 miles from your facility and with current traffic should arrive around 1:20”? ELDs can provide customers and other stakeholders visibility into current location of shipments and a more precise, up-to-date ETA, especially when combined with other information such as traffic and impending events (e.g. a big ball game is about to let out). This helps the customer better plan their day.
Dispatching, Route Replanning, Driver Communications
When ‘stuff happens’ to disrupt the plan for the day, carriers and fleet owners have to respond and adjust. Without real-time visibility, the dispatcher resorts to trying to contact the various drivers to find out their status. With real-time visibility that ELDs provide, combined with data from other systems, dispatchers can have a map with a complete view of the current location and status of all currently available resources (drivers, vehicles, equipment, and supplies). Real-time visibility is a requirement for planning and routing engines to do intra-day rerouting well.
The visibility provided by ELDs can also help dispatchers in their communications with drivers throughout the day. They no longer have to bother drivers to find out their current status. In addition, they can be more proactive about spotting situations based on the driver’s location and proactively alert the driver.
In Part Five of this series, we look at several other value-generating use cases for ELD.
1 According to the Telematics Wire article Telematics to save fuel costs, “A road test performed by Edmunds.com determined that restrained driving behaviors achieve up to 37 % of fuel savings compared to hostile driving strategies and staying within the speed limit generates up to 14% of reduction in fuel consumption.” — Return to article text above
2Source: Driver’s Alert – ttention Fleet Manager: Fleet Safety is Important Too! — Return to article text above
3Source: Increasing Profitability With Telematics — Return to article text above
4OECD Observer — Towards smarter supply chains — Return to article text above
To view other articles from this issue of the brief, click here.