OCTOBER 9, 2006
CEO Guide to Technology
By Rachael King
Tracking Trucks the Telematics Way
Fleet operators are using a combination of wireless, computing, and GPS systems to cut costs and keep better tabs on drivers
Times are tough in trucking. Operating margins are low, driver turnover is high, and fuel costs are through the roof. Consider the expenses associated with truck idling alone. As long-haul drivers rest in their cabs or operate onboard appliances such as microwave ovens and TVs, often they leave the engine running. According to a 2002 study by the Environmental Protection Agency, long-duration truck idling consumes about 960 million gallons of diesel fuel annually.
No wonder it's drivers, rather than fleet operators, who control some 80% of the variable costs associated with trucking. In an effort to rein in expenses, a growing number of trucking companies is investing in so-called telematics, a combination of computing, wireless data, and global positioning system (GPS) technology. The U.S. market for commercial vehicle telematics was $942 million in 2005, and is expected to rise to $2.13 billion by the end of 2010, growing annually at almost 20%, according to consulting firm Global Industry Analysts. The idea behind telematics is to help fleet operators run their businesses more efficiently.
Ryder System Inc. (R), which leases truck fleets to business customers, began testing telematics in the Great Plains this year. The company outfitted 5,000 trucks with special equipment that could track vehicle movement in real time, decrease truck and cargo theft, and help prevent breakdowns and emergencies. "Customers can see where their vehicles are, if a driver is speeding, idling too much, or sitting somewhere he's not supposed to be," says Ryder CIO Kevin Bott.
SAVING TIME AND FUEL. For the trial, Ryder partnered with Cingular Wireless, owned by AT&T (T) and BellSouth (BLS), and Teletrac, which makes GPS tracking systems for fleet management. The resulting product, called RydeSmart, is a compact hardware and software unit that is installed in a truck and connected to the vehicle's existing computer and diagnostics systems. The unit continuously monitors the truck's location, mileage, and speed, as well as other performance and diagnostic data, which businesses can access through a Web portal. Ryder says the system saves customers on average one hour per driver each day and that it reduces fuel costs by about 10% to 15%. After the initial trial, Ryder expects to expand the product to customers across North America in multiple phases in 2007.
In the U.S., there are more than 20 million fleet vehicles, including service and delivery fleets, according to C.J. Driscoll & Associates, a consulting firm that specializes in GPS and wireless technologies. Of those, an estimated 1.5 million to 2 million have GPS tracking systems installed. Qualcomm (QCOM) is the leading provider of commercial vehicle telematics in long-haul trucking, while @Road is the largest supplier of mobile resource management software to local fleets, Driscoll says.
Very often, the motivation for getting a GPS tracking system is driver productivity, but it also can enhance efficiency in other ways, such as by giving dispatchers better information on driver location and helping them better assign routes, says Driscoll President Clem Driscoll. Other incentives for GPS tracking include improved security and customer service.
PAYLOAD SECURITY. Last year, Dow Chemical (DOW) decided to integrate radio frequency identification (RFID) and GPS tracking technology on trucks and rail cars. "If we look at hazardous-material shipments, one of the things we want to do is to get into closer proximity of where that shipment is," says Dave Kepler, chief information officer of Dow Chemical. The company is working on a trial right now of RFID "smart boxes" that contain sensors for light, humidity, temperature, and shock. Those sensors could help Dow identify whether shipments were tampered with or dropped. With truck shipments, Dow is looking at RFID and GPS not only for security, but to help monitor the performance of the drivers as well.
Truck tracking isn't without its critics, particularly among drivers and union representatives who consider it invasive. But proponents say everyone benefits, including drivers, when operators rely on cutting-edge technology.
One area is compliance with state and federal reporting requirements. Interstate drivers have to follow strict rules for so-called fuel tax reconciliation. These require them to keep tabs on where they purchased fuel, how much they spent, and how many miles they drove in each state. "It's a huge paperwork nightmare," says Ryder's Bott.
Truckers also need to record the number of hours they work to comply with federal regulations. With RydeSmart, reporting for both of those tasks can be automated. Bott expects that this feature will not only help Ryder's customers, but it will also help Ryder with its own billing. "Trip records reporting will be beneficial from everybody's standpoint."
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