fleet management Archives

Telematics and Fleet Insurance

Mobile Technologies | By Steve Banker • 07/30/2012

A few years ago I did some research on telematics. At the time, an insurance underwriter in the UK was exploring the idea of using telematics data to price automotive and fleet insurance. Since then, underwriters have started using GPS/telematics to price automotive insurance. Progressive Insurance has a program called Snapshot where it mails a telematics device to a customer who then installs it in his car and Progressive tracks the data for 30 days. If the data from the device shows the customer is a safe driver, the driver is eligible for discounts of up to 30 percent.

A few weeks ago, one of my colleagues handed me a brochure he had received in the mail for a trade show called Insurance Telematics USA 2012. One of the keynote speakers was James Noble, the Line of Business Director for Motor Fleets at the Zurich Services Corporation. Jim’s job is to provide fleet operators with products and services aimed at identifying and reducing losses.

Insurance coverage for a fleet is based on the overall risk, including drivers, equipment, and company practices. In order to obtain a good risk profile, the data from telematics needs to be combined with other data, including CSA data and motor vehicle records that document the behavior of individual drivers (speeding tickets, violations for not wearing seat belts, etc.), past crashes at both the fleet level and the individual level, and even driver observation data. So, for example, if the trucks have writing on the back that says “How is my Driving?” and provides a 1-800 number for people to call in, this data can be used as well.

But telematics is an exciting new source of risk data. Historically, when insurance companies tried to predict which drivers were dangerous, they used lagging indicators – speeding tickets, a crash occurred. Telematics data is more immediate; you can monitor how drivers are actually behaving. And here again, more data is better. A telematics device that can provide data on hard braking, hard cornering, hard acceleration is better than a device that only provides data on speeding. Even idling data might be useful one day; it might show if a truck is in a high theft area and how long it remained in that area.

But the single most important thing for fleet operators to remember is that improving their risk profile depends far less on the possession of telematics devices and far more on how the data from these devices is used to change driver behavior. Is the data actively monitored? Are individual drivers coached if their driving is not acceptable? Are drivers who refuse to change bad driving behavior fired? These are the things that matter.

Jim also stresses that using telematics data for insurance purposes is still in its infancy. “We’ve only scratched the surface regarding how telematics information can be used to predict behavior.”

Guest Commentary: Transportation Compliance Doesn’t Cost, It Pays

Guest Commentary | By Chris Jones • 03/01/2012

Traditional thinking is that government transportation compliance programs, such as hours of service (HOS) regulations, cost companies money. If the focus of your compliance efforts is solely to meet the regulation, then I concur. But, that approach is a lost opportunity to reduce operational costs through better driver and vehicle performance. Instead of just meeting the regulations, fleet operators need to look beyond to the benefits of telematics and advanced tracking systems to change driver behavior, improve productivity, better understand vehicle performance and, for a large number of goods shipped, ensure that they arrive at their destination without damage. With the technology available today, the price difference between solutions that cost money to be compliant and solutions that help you make money through improved performance are only dollars per month.

Complying with government mandates such as HOS means that your drivers are not working the kind of hours that make them a hazard to the other drivers on the road. What HOS doesn’t tell you is, when your drivers were driving, were they as productive as possible? Did they excessively abuse your vehicles or the products they are carrying? This is where the money is to more than offset the cost of compliance.

Any fleet manager would say that they have good drivers and bad drivers, and that the good drivers are the most productive. Any competent fleet manager would also say that they have put together training programs and best practices to raise the level of their poorer performers. These same fleet managers would say that this approach does improve driver performance, but seldom reaches its full potential and is tough to sustain across their organization.

Why? Because it is nearly impossible to measure driver performance over the road without remote tracking and vehicle monitoring capabilities. Drivers know this and, while most are well intended, they do what they believe is best to get the job done.

A simple example is leaving the vehicle running while they are stopped for a pick-up or delivery or filling out paper work. It doesn’t take a lot of idling to run up large and unnecessary fuel cost, especially in these high fuel cost times. Regulations, such as the engine idling rule in New York City that aggressively fine fleet operators if they are caught idling over 3 minutes, further drive idling costs. Add to that the costs of reduced customer service associated with miles and operating hours of drivers driving off route or making unplanned stops.

Driver behavior also impacts vehicle maintenance costs. Excessive tire, brake and engine wear are related to speeding, hard cornering and braking, engine over-revving, etc. – and all are a function of driver performance.

For a number of sensitive products, driver behavior impacts the quality of those products. Take a product such as ice cream – it is easy to understand how leaving the door open too long at each stop results in thawing and freezing that ruins the product. What is harder to understand and track is how harsh driving can lead to failure rates in large screen televisions to abnormally climb. For “high dollar density” goods, such as televisions, a trailer of product represents millions of dollars in potential damage claims.

There has been considerable change within the technology markets associated with fleet management within the last several years. In the past, telematics solutions were cumbersome and extremely expensive to purchase and operate. Class-focused compliance solutions emerged that were much lower cost, but offered limited or no capabilities for tracing driver and vehicle performance and making corrective actions. Now, there are cost-effective solutions that combine the ability to connect to the vehicle’s bus and provide compliance reporting. In addition, there is integration with route planning and execution to help ensure that even if drivers are exhibiting good driving behavior, they are actually running the routes that are lowest cost and meet their pick-up and delivery windows.

Fleet managers must recognize the inflection point that is in front of them. Transportation compliance programs, such as hours of service, driver logs and vehicle inspection, have been the great awakening for telematics and tracking technology. Unfortunately, many fleet managers are failing to capitalize on the opportunity to improve their productivity by implementing solutions that only meet their compliance requirements. These are the solutions that “cost.” The advanced planning, mobile and telematics solutions available now meet the compliance requirements but also provide the driver and vehicle performance management capabilities that help change driver productivity, performance and safety. These are the solutions that “pay.”

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.

Route Planning Based on Real World Data (Part 2)

Mobile Technologies | By Steve Banker • 01/24/2011

A few weeks ago, I wrote a posting about how fleet routing applications could be improved by using “real-world” traffic data, particularly data on the true average speed per hour of vehicles traveling on specific road sections at different times of the day and week. GPS navigation device vendors like TomTom have this data, which routing solutions can now use to create better routes.

Tim Pigden, Managing Director at UK-based routing software vendor Optrak, responded to my posting and mentioned other possibilities. His point is that if you analyze how vehicles operating in a multi-stop environment actually spend their time, you will often find that there is greater variability associated with vehicle load and unload times than with road speeds. “And while most people have a reasonable idea of road speeds and can [make] a reasonable approximation, even if not as accurate as the example you give, they can be way off in their estimates of loading or unloading times.”

Again, GPS-enabled devices could provide this type of data. TomTom Work, for example, can track four events: when a truck arrives at a customer location; when unloading has started; when unloading has ended; and when the truck departs. The middle two events–when unloading starts and ends–depend on the driver clicking the right icon on their device. Thus, those two events could be subject to driver exaggeration. However, if telematic sensor data is available–e.g., a sensor on the backdoor of the truck that indicates when the door is opened and closed–those events could be tracked more accurately.

The point of having data on those events is to model the unloading process. The routing software will work better if its model includes customer orders, order lines, products, and product packing hierarchies (pallets, roll cages, etc.). This would allow the routing application to understand that at this customer site the driver is unloading three roll cages, at this other site the driver is just taking the top two layers off a pallet located in the first bay, and so forth.

This kind of solution will be more difficult to implement in certain industries. For example, in a Direct Store Delivery scenario, a driver often needs to get checked in by a store manager and they may have to wait to get their attention. This wait time can vary significantly. In contrast, fuel delivered to gas stations is often unsupervised and the driver does his work late at night when the station is closed.

Optrak has not yet implemented such a solution. The company is anxious to work with a customer where this degree of granularity would generate ROI, which probably means a customer with a large fleet and greater variability around the types of trucks, quantity of goods delivered, and the types of conveyances it uses.

Analysts can’t help but think of the future and imagine what is coming around the corner. But there are plenty of low hanging fruit opportunities available right now. If a company has a fleet of more than 20 trucks, existing routing and mobile resource management (MRM) solutions will provide a very good payback. These next generation products may prove most useful to companies with large fleets.

Guest Commentary: Addressing the Challenges of Bringing Together Private Fleet and For-Hire Transportation for Improved Operational Results

Guest Commentary | By Ken Wood • 01/13/2011

Traditionally, most private fleet operating businesses have viewed the private fleet as a separately managed entity that was typically focused on outbound distribution. In some cases, the fleet would have static backhauls for inbound goods. For-hire carriers were typically managed by a different team. We are seeing an increasing trend in customer interest in solutions that integrate the planning and execution functions of both private fleet and for-hire carrier operations.

Integrating the planning and execution of private fleet and for-hire raises some interesting challenges. While the objective is usually to provide the lowest cost of delivery, the requirements for pricing, planning, and executing private fleet and for-hire assets, however, usually involve a very different information and business process. Unifying the data and business processes for effective control without becoming overwhelmed by complexity can be a significant issue. Before examining how to address these challenges, it is important to first look at the various considerations companies must take into account.

Assets vs. Agreements
To effectively manage private fleet operations, managers must consider such elements as asset utilization, driver and vehicle availability, driver skills, driver performance management and pay considerations. They must also take into account compliance issues, such as hours of service, vehicle inspections and fuel tax reporting. These are all significant factors in the planning and execution process. Having access to the detailed information and procedures for managing the people and assets required to operate the fleet is the basis for the successful optimization and execution of fleet-based deliveries.

For purchased transportation, the asset management considerations are typically not a significant concern, with the possible exception of specialty transport. The primary basis for optimizing and executing for-hire transport activities is ensuring that suppliers on the transport lanes meet contract conditions. These include pricing agreements, coverage areas, equipment types (but not necessarily quantities) and in some cases, volume agreements. Having a set of reliable carriers on a lane ensures availability when volumes spike or in cases where a carrier is short of equipment and has to turn down a tendered load.

Planning and Execution
While the general basis of modeling private fleet and for-hire carriers may boil down to assets versus agreements, things get much more interesting when looking at the planning and execution requirements. Planning for fleet operations requires a strong handle on the details that drive resource utilization, stop assignments, and route scheduling. To accurately create multi-stop routes within and across days, it is essential to accurately calculate pre-trip, during-trip, and post-trip stop service times, detailed mapping, restrictions, driver skills, precise pickup and delivery time windows, and dozens of other factors.

A similar level of detailed control is also needed for dynamic dispatch and tracking. Near real-time updates on truck position, route and stop status (en route, arrived, departed, etc.) initiated by either the driver and/or geo-fence penetration, must feed back into the scheduling engine. The scheduling engine must then understand these events and be able to intelligently update the route’s current schedule status. It must also predict the future stop schedule and provide warnings based on the downstream impacts of route schedule changes. Decision support provided by the scheduling engine must also be aware of the current status of the route in order to properly advise on how to insert new jobs into a route’s existing stop plan.

For purchased or for-hire transport, multi-stop routing is only one of the planning options. Shipment consolidation, pooling, continuous moves and mode selection based on disparate carrier pricing agreements must be considered. The planning activities are typically subject to a delivery day to be followed up with a specific appointment time. The shipper planning the route for the for-hire carrier is not concerned with the truck’s point of origin or destination after their load is completed, or managing the driver’s hours. In other words, the shipper only needs to provide feasible plans that adhere to the contract, since the rest of the details are the burden of the carrier.

Executing loads with for-hire carriers entails message-based load tendering in a variety of forms, including network-based communications, web portals, fax machines, emails and phone calls. Adding the option of a private fleet into the mix of for-hire carrier pricing, modes, and equipment options provides an entirely new dimension to the analysis of which option to use when and where.

Successfully Combining Private Fleet and For-Hire
The details of how to plan and execute across private fleet and for-hire operations is complex and requires the combined capabilities of both a fully-featured route planning and dispatch solution and a transportation management system. These traditionally distinct systems must also be combined in a way that provides excellent usability, flexible business processes, and the ability to address the ebbs and flows between order management systems, carriers and fleets.

When uniting private fleet and for-hire planning and execution, customers should consider route planning and dispatch solutions that share the same technology platform as their transportation management solutions. This approach enables these solutions to be deployed together and accessed via a single sign-on and an integrated navigation plan. These solutions must support workflows that allow freight to be analyzed against both private fleet and for-hire functions at the same time. Business rules also should be incorporated that allow operators to override standard cost metrics to define how and when a private fleet option must be used. The platform should also support the movement of freight back and forth across the private fleet and for-hire options as daily plans evolve.

Without this advanced level of integration, it is very difficult to take totally disparate routing and transport solutions and arrive at a cohesive and useable solution. By combining private fleet and for-hire planning and execution in this manner, customers are able to achieve improved operational results.

Ken Wood is Senior Vice President, Product Strategy, Transportation and Mobile Resource Management at Descartes Systems Group. Ken is responsible for defining all product strategy for the Descartes transportation management and mobile resource management suite of solutions. Ken brings to Descartes over 14 years of experience in supply chain management software including transportation management, routing and scheduling, and supply chain planning and redesign. During his career, Ken has worked with leading supply chain software providers such as CAPS Logistics, i2, and Centricity in consulting and product management roles.

Route Planning Based on Real-World Data

Private Fleet | By Steve Banker • 11/29/2010

A few weeks ago, a press release from PostcodeAnywhere caught my attention. The company introduced a new routing solution for private fleets that uses real-world data from tens of thousands of customers driving with TomTom devices in the UK. This is the first routing solution that I am aware of that uses “real-world” average speed data.

Standard routing solutions input data—such as the number of trucks in a fleet, truck characteristics (e.g., truck height, weight capacity, cube-out capacity), and customer delivery points—into complex optimization algorithms to determine the “best” route plan for the fleet in terms of minimizing the miles traveled or the time it will take to complete the deliveries. Existing routing solutions are excellent at minimizing distance, but they are less effective at minimizing delivery time because they don’t contain “real-world” data—i.e., they lack data on the true average speed per hour traveled on particular sections of road, at different times of the day and week.

Some routing solutions allow users to modify route times. For example, if you know that delivering to a particular location, via a particular route, at a particular time of day will take longer than usual (such as rush hour on Tuesday mornings), you can modify the time parameters in the system. But this is a manual and time-consuming process. In contrast, PostcodeAnywhere’s software-as-a-service routing solution bases its fleet plans on road statistics, which include average speeds across five minute intervals, on any day of the week. The data on average speed on a section of road by time of day is updated quarterly.

I spoke to the company’s managing director (MD) and the lead developer of this product and learned that this solution is extremely affordable. The MD mentioned a payback period of months. I believe it based on the company’s pricing, which is a bit difficult to explain. The managing director also mentioned that there is good TomTom data available for North America. PostcodeAnywhere is looking for reseller partners in North America.

So, what is next in route planning? The PostcodeAnywhere average speed data is updated quarterly. Ideally, we will see this data updated more often. Further, this data is not just available from TomTom and other GPS device providers, but also from phone companies that are increasingly selling GPS-enabled cell phones. Therefore, I don’t expect PostcodeAnywhere to be the sole provider of this type of solution for very long.

There are also solution providers like Descartes Systems Group (an ARC client) that offer real-time route planning. If a truck gets stuck in traffic, a user can rerun the whole fleet plan for the day taking into account what is happening on the ground. Even better, however, will be the day when these solutions use real-time congestion data to re-plan routes and prevent trucks from getting stuck in traffic in the first place.

Tips for Improving Fleet Utilization and Reducing Operating Costs

Logistics Technologies | By Steve Banker • 07/17/2009

Looking for some good ideas on how to improve your private fleet’s utilization or how to save money on fuel? In 2004, the Environmental Protection Agency launched SmartWay, a program (and brand) that identifies products and services that reduce transportation-related carbon dioxide emissions. As part of this program, they annually announce the SmartWay Excellence Award Recipients. Reducing CO2 emissions and reducing gas consumption often go hand in hand. The document announcing the 2008 SmartWay Excellence Award Recipients provides some good ideas that companies can use to improve their fleet’s utilization and save money on fuel.

Any improvement program should focus on people, process and technology, and that is the way I have grouped the ideas.

People:

Roehl Transport combined targets for drivers – maximum idling levels that drivers are asked not to exceed and miles per gallon targets – with weekly idle-time evaluations to tell drivers how they are performing.
Equipment upgrades designed to make cabs more comfortable and reduce idling are often not enough. Stan Koch and Sons Trucking coupled those improvements with a bonus program for drivers to reduce idle time. These actions have helped the company lower its “idling activity from 60 percent in 2005 to just 15 percent in 2007.” Covenant Transport went the opposite way; it charges drivers an hourly fee for idling in excess of a set maximum.
Other incentive programs were also used – including a bonus paid for every mile per gallon improvement above a threshold set by the company or recognizing top drivers monthly with special prizes.
Several carriers trained its drivers to use progressive shifting. Progressive shifting is accomplished by changing gears upward as early as possible when accelerating. After each shift is completed, the engine and transmission should be operating at or near the lowest RPM speeds recommended by the truck manufacturer. Others talked about providing ongoing training and education programs on fuel efficient driving practices and fuel conservation strategies.
Sharp Electronics came up with the idea of adding driver comfort lounges at their facilities. If you don’t want drivers idling, it is a good idea to provide them with a comfortable place to hang out while their trucks are unloaded.

Process:

Improved packaging initiatives can reap great savings. For example, HP “redesigned the packaging for its notebooks to reduce the size and weight of each box” which “reduced package weight by 8 percent” and increased “the number of boxes per pallet by 25 percent.” “Kimberly-Clark reduced the package size of personal care products by 12 percent, significantly increasing the amount of product that can be shipped in each truckload. This strategy alone allowed Kimberly-Clark to utilize 96 percent of its trailer space, eliminating 2,100 truckloads in 2007.”
Kohls “improved its backhaul program by 29 percent, resulting in nearly 19,000 backhaul trips executed on return from stores and eliminating 3.6 million miles of empty truck hauls. These once-empty trailers now carry merchandise from Kohl’s vendors back to the distribution centers.”
Equipment maintenance programs are critical to both better mileage and fleet utilization.

Technology:

Several companies govern their fleet speed, most often at 65 mph.
All of Dillon Transport’s 250 trailers “utilize automatic tire inflation to ensure proper air pressure.”
Several award winners bought new trucks with more aerodynamic profiles, mirrors, and air shields, or they added low cost trailer skirting and cab roof and side fairings to existing trucks.
The use of bunk heaters, auxiliary power units (APUs), or auxiliary cooling systems to make the cab more comfortable and reduce idling was common. Others installed automatic engine shut-off controls to minimize idle time while parked.
Watkins Shepard found that super single tires reduced fuel consumption by as much as a full mile per gallon per truck. Others mentioned purchasing low-rolling resistance tires. Low-rolling resistance tires are designed to improve fuel efficiency by minimizing the energy wasted as heat as the tire rolls down the road.
“Lowe’s increased the overall cube utilization of its trailers, allowing the company to ship the same product using 4,866 fewer trailers.” While the article did not say how they accomplished this, one way is through the use of load building software.
If you want understand the effectiveness of your training or incentive progams to save fuel, you need to track it. Electronic speed management, weekly miles per gallon and idling can all be tracked using telematics.
With the right fleet maintenance software analytics it is possible to specify “engine and drive-train combinations that maximize fuel mileage.”
Route planning software and programs can reduce the number of empty miles traveled.

As these examples illustrate, being eco-green can save you green (money)!

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