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Using telematics to boost profitability

In today’s environment, leveraging telematics to reduce costs can be easier than passing on a rate increase



CONCORD, Ont. — Trucking companies that could only dream of getting a 20 cent per mile increase from their customers, may be able to achieve the equivalent in cost savings by harnessing the power of telematics.

That was the message from Mike Ham, vice-president of Shaw Tracking, when speaking at the Canadian Fleet Maintenance Seminar on June 18.

Ham said the figures were based on a 100-truck fleet averaging 120,000 miles per year each truck at 7 mpg, paying $4.25 per gallon of fuel. The savings come in the form of greater safety and compliance, fuel and driver performance enhancements and productivity gains, and assume that the company was using no telematics at all to begin with.

Telematics has evolved since its inception when it was focused solely on locating assets and facilitating communication between drivers and dispatch.

“Telematics, in my mind, has morphed into, how much information can we provide and how can we help customers look at it to make good decisions?” Ham said. “In the last four to five years, the world has changed drastically. We have a very high-powered piece of technology in the truck and now it’s all about the information that flows back and forth.”

A fleet that wants to achieve the full potential of telematics can realize the following savings, according to Ham:

  • Navigation to reduce out-of-route miles: 7 cents/miles
  • Vehicle inspection reports to eliminate paper and improve accuracy: 0.5 cents/mile
  • Automated fuel tax reporting: 0.3 cents/mile
  • Vehicle maintenance management to save time: 1 cent/mile
  • Hours-of-service monitoring to reduce costs and improve compliance: 1.4 cents/mile
  • SpeedGuage to identify speeding drivers: 0.5 cents/mile
  • Performance monitoring: 4.5 cents/mile
  • Driver scorecards: 1.2 cents/mile
  • In-Cab scanning to expedite billing process, reduce errors: 1.2 cents/mile
  • Driver workflow, to increase efficiency and reduce manual data entry: 2.4 cents/mile

There’s 20 cents a mile, which for the above-mentioned fleet would result in $2.4 million in savings per year. Of course, there are implementation costs to consider and these results are based on “best case scenarios,” in fleets not currently doing any of the above, Ham acknowledged. Still, the potential savings are difficult to ignore.

Vince Tarantini of Carmen Transportation, said he realized his company needed to leverage the power of telematics to improve its safety record after a couple “rough years.”

“I realized that if we were going to stay in this business and grow, we had to leverage technology, not just for visibility and clarity, but we want to make sure that if we’re going to play this game, we’re going to do so within the context of the rules – from road rules to moral rules,” Tarantini said.

He admitted carriers historically subsidized 20-hour workdays and downloaded inefficiencies onto the drivers instead of turning away unprofitable business.

“Today, I’m able to use the data that I get from the trucks to adjust. That may mean spec’ing my trucks differently or turning away business opportunities,” he said. “Just because a customer wants to give me freight doesn’t mean it’s going to fit my business model.”

Arming himself with the data generated by telematics has helped Tarantini show his salespeople why certain jobs are not worth accepting. It also allows him to remotely monitor the performance of drivers and equipment and intervene early with either when necessary.

It has allowed him to reduce operating costs, which in this environment, is easier to do than to get a rate increase, he added.

However, Tarantini cautioned it’s not enough to simply deploy a telematics system across the fleet; you also have to invest the time in training so that it’s properly utilized if you hope to see the benefits.

 

10 Tips on Implementing a Successful Telematics Program

Mike Ham, v.p. of Shaw Tracking, provided this list of 10 tips on how to effectively deploy telematics in your fleet operation:

  1. Get internally aligned
  2. Train, train and support
  3. Responsibility: Whose job is it to get the info?
  4. Consistency of managing information
  5. Commitment to take it to the next level: Once you’ve reached your KPIs, re-tool the program to achieve new targets.
  6. Build your corporate reputation: Demonstrate you run compliant
  7. Focus on process: “Take that information and build it into processes; make sure it feeds the engine.”
  8. Share with your customers to create knowledge and relationships
  9. Drivers want it, need it and expect it: “Drivers want this information; they want to improve their own productivity.”
  10. Create a new culture: “It’s very refreshing to have conversations with owners of trucking companies who know their metrics.”

 

 

 


James Menzies

James Menzies

James Menzies is executive editor of Truck News and Truck West magazines and equipment editor of Motortruck Fleet Executive. He has been covering the Canadian trucking industry for more than 13 years and holds a CDL.
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