Modern fleet management began pioneering telematics systems in the 90s. Today, they’re essential to getting the most out of your fleet, streamlining management at every level. Here’s how fleet telematics works, and why it’s so useful.
What is Telematics?
Telematics systems are designed to give fleet managers visibility on their fleet’s activity and status at all times.
By collecting engine data and sending it to a central location in real time, telematics is the single best tool for fleet management both for day-to-day management and when looking years down the road.
Definition
Telecommunication refers to the process of sending and receiving information electronically.
Informatics refers to the practice of gathering, organizing, and managing data and records.
Stick those two terms together, and you have telematics: The practice of using an electronically powered system to collect and preserve data. Technically speaking, telematics is a broad category, but the term is typically used to refer to the biggest commercial industry to use telematics, vehicle fleets.
What Are Telematics Devices?
A telematics system only works if a hardware unit is installed in each vehicle in order to record the data and wirelessly send it to the central software system. These units are telematics devices.
Some telematics devices may need to be wired into a vehicle’s dashboard by a professional who knows how to install them, but most of them can be plugged directly into a commercial vehicle’s OBD-II port. There, it can directly collect the information it needs from the vehicle’s onboard computer, including:
- Location
- Speed
- Movement (in relation to geofenced regions)
- Driver activity — speeding, idling, rapid acceleration or braking, and harsh cornering
- In-vehicle movement — open doors, lowered liftgates, airbag status
- Trailer temperature — this specialized ability is useful for vehicles with refrigerated cargo
The devices can vary in size and function, but they tend to be fist-sized or smaller.
How Do Telematics Systems Work?
A complete telematics system gathers information from each vehicle in a fleet and sends it to a central location. This requires two components: Telematics devices to record the data and a centralized software system that can receive and catalog that data.
While data collection is the main benefit to a telematics system, the best fleet management systems (FMS) will include more features. With driver mobile apps, an FMS can open up a channel for two-way communication, allowing drivers to register their hours of service easily, track fuel consumption by manually entering the gallons, and receive routing and dispatch orders that can be updated in real time thanks to telematics data.
How Much Do Telematics Systems Cost?
A complete FMS solution is typically paid for on a per-month, per-vehicle basis. Costs range widely. While a stripped-down vehicle tracking system might cost as little as $5 per month per vehicle, a more typical range is between $30 and $35 per vehicle per month.
The wide range of costs extends to higher end services as well, with some costing as much as $80 to $150 per vehicle per month.
Telematics Insurance
Fleet insurance policies may go up between 20 and 25 percent for all carriers renewing their policies across 2020, according to Bert Mayo, Vice President of Risk Solutions for insurance broker TrueNorth Companies, who delivered a keynote on the topic at the 2019 CCJ Solutions Summit.
Telematics can help lower those sky-high premiums.
What Is Telematics Insurance?
With data from telematics systems, insurance companies can deliver assessments with much more accuracy: They can estimate what accident damages to anticipate, and they can better detect fraud.
And with a lowered risk, the cost of your fleet’s insurance drops as well.
How Does It Work?
Fleets can use telematics information to improve their insurance in two ways:
- They can share telematics data that their FMS is already collecting
- They can install black box telematics units that will record data solely for the insurance company’s use.
Many insurance providers will offer premium discounts to fleets that agree to share their telematics data. In these cases, the FMS collects the data, which is then shared with insurance companies through an automated process while remaining available for fleet managers’ daily use as well. Some insurance companies will partner directly with an FMS vendor to offer deals.
More advanced FMS systems may include dash cam footage, which is very popular with insurance companies, as it can often clearly indicate which vehicle is at-fault for a collision.
Black box telematics refers to insurance companies that skip the FMS step. They will instead send black box units to fleets, which can be easily installed out of sight. These units will record telematics data from the vehicle’s onboard computer just like an FMS hardware unit, but will only send the data to the insurance company, typically via SIM card.
This form of telematics insurance is popular with non-commercial vehicles, since they have little use for the data, and it’s an option for fleets that don’t plan on upgrading to an FMS anytime soon.
How Much Can Telematics Insurance Save?
In practical terms, the benefits of telematics to your insurance will vary widely, depending on what your telematics data says about your fleet’s safety habits and general risk.
For example, pick the Samsara FMS and agree to share your data directly with Progressive, and your fleet will get a discount of between 5% and 18% on your insurance premiums. While the 5% discount is guaranteed, you’ll only climb towards that impressive 18% if your drivers can keep their incident rates low.
Different insurance companies and FMS vendors will have an impact, as will the total size of your fleet.
Example: Moore Food Distributors
In the case of an accident, your claim may benefit from an FMS: Samsara’s dash cam footage proved a driver wasn’t at fault for one major accident, saving Moore Food Distributors’ 14-vehicle fleet more than $250,000.
Telematics and…
Fleet Maintenance
Telematics systems can allow managers to set up automatic alerts for preventive maintenance needs like tuneups and oil changes. It can also improve routes, reducing wear and tear, and by tracking driving habits, it can reduce wear further.
Depending on its lifecycle needs, a fleet may even be able to downsize while still hitting its targets. One LTL operator in the US reported a 10% reduction in their pickup and delivery vehicle fleet due to greater efficiency after adapting a telematics solution.
Route Management
With a telematics-powered FMS, managers can not only deliver routes directly to drivers’ mobile devices, they can also update in real time to adjust to changing conditions including weather and traffic.
And since all the data is recorded and saved with auto-generated reports, managers can glean insights about how effective their planned routes were in execution, further reducing transit time in the future.
Fuel Management
Telematics systems can reduce fuel costs in two big ways:
- By reducing idling
- Improving route efficiency
Curbing poor driving habits can add up fast: According to EPA and the DOE (Department of Energy), aggressive driving lowers a vehicle’s gas mileage by between 15% and 30% when at highway speeds, and every 5 MPH driven past the 60 MPH mark may cut fuel economy by 7%. Plus, more accurate data regarding fuel costs per mile can help a manager put together better budgets for the future.
Fuel costs are one of the biggest single expenses a fleet deals with, so a good FMS can save even a small fleet tens of thousands per year.
Fleet Insurance
An effective telematics system can reduce premiums and cut payouts. Samsara has even found a reduction in payouts of as high as 80% for some clients. Those in higher risk industries like construction will likely see more advantages, as they’ll face a higher incident rate, and can use their telematics data to prove a history of safe practices or even dash cam footage of the incident itself.
Risk Management
Theft can be combated easily with a GPS-powered tracking device in every vehicle: When one car dealership adapted a Spireon telematics solution, it was able to recover $100,000 in stolen assets.
Telematics can also reduce a fleet’s accident rate and overall incident rate, thanks to better visibility and encouragement of safety habits. One fleet telematics solution, Azuga, claims to have reduced its clients’ citation rate by an average of 57% and cut accident rates by 30% on average as well.
