Magazine Article | March 26, 2009

Fleet Tracking Boosts The Bottom Line For Operators

Source: Field Technologies Magazine

Fleet tracking systems can reduce operating costs and improve vehicle performance.

Integrated Solutions, April 2009
Rising fuel costs and a slumping economy have put tremendous pressure on service, delivery, and long-haul fleet operators to reduce costs while squeezing every bit of productivity they can out of their existing trucks. With diesel fuel topping $4 a gallon or more in some markets, fleet managers are searching for ways to make their drivers more efficient, while at the same time complying with new regulatory requirements that limit hours of service and, in some states, vehicle idling.

A new generation of fleet tracking and management systems has made it possible for operators to better manage their drivers while reducing fuel consumption, improving safety and regulatory compliance, and optimizing vehicle and driver utilization. In the current economic environment, even marginal savings on fuel or maintenance costs can mean the difference between a profit or a loss for many fleet managers.

"A company can expect improved productivity, lower operational costs, improved safety, and simplified compliance," says Norm Ellis, vice president of transportation and logistics sales and services at Qualcomm Enterprise Services (QES). "If you get one more stop in per day or can get 2/10 of a mile per gallon more out of the truck, those improvements drive hard dollars right to the bottom line. That said, the key point is that the systems provide data and information that help companies manage their drivers and assets better."

Fleet tracking systems are available with a wide range of functionality, from basic GPS tracking to feature-rich in-cab communications systems. Before selecting a solution, carefully evaluate your goals for the system. Do you simply need to know where your trucks are so that you can dynamically reroute them during a shift? Do you want to monitor vehicle diagnostics and idle time remotely? Are you having trouble with drivers diverting from their routes or possibly using company trucks to run their personal errands? Regulatory requirements will also vary depending on the type of fleet.

"A service company will not require a Department of Transportation electronic driver log application, nor will they be required to report fuel taxes through the International Fuel Tax Agreement (IFTA)," says Andrew Paul, inside sales manager, North America, for WebTech Wireless. "Also, engine diagnostics will often not be required. A long-haul company will need all the reporting and mapping that the service company needs, plus the above-mentioned services."

Fleet tracking customers generally fall into three broad groups, says Brian McLaughlin, chief operating officer at PeopleNet. "The basic user just wants GPS tracking and two-way communications," he says. "On the second level up, customers are looking for performance management. They want to see information on gas mileage, idle time, speeding, and route measurements so that they can manage their operating costs. The third type is the safety buyer. They want to send over-speed alarms to the driver, they want to automate the hours-of-service process, and they want to see the fault codes coming off the engine. We've seen much more interest in safety-centered solutions over the past few years."

These more robust systems might provide such features as asset management optimization, arrival and departure monitoring, hours of service monitoring, critical event reporting, driver email or notification services, and vehicle performance monitoring.

Fleet tracking solutions shouldn't be selected in a bubble. Involve stakeholders from across the enterprise to ensure the maximum return on investment.

"The most successful implementations come from a cross-functional team representing all areas of the company — billing, accounting, driver safety, maintenance, operations, and customer service, for example," McLaughlin says. "Team members should know their area of responsibility and speak for it. This way, most issues are identified and known from the outset."
Driver involvement is especially important, because drivers may feel that the company wants to somehow monitor and control their behavior with the system.

"Many employees have a certain routine that they are accustomed to, and they feel that the GPS will threaten that routine," Paul says. "The fact is, those are the drivers who are costing the company loads of money in lost productivity and overtime."
"You start with a small subset of the drivers who are really the most opinionated," McLaughlin says. "Get them to buy into the solution, and make them part of the decision process during the system evaluation. Once you've done that, they become some of the strongest proponents for the system."

This fear of 'Big Brother' style monitoring has dissipated over the years because drivers, many of whom are independent contractors, realize that the technology can help them improve their productivity and make more money by reducing fuel consumption and increasing the number of stops they can make per day.

"Most of our fleet customers have gotten very creative and are using fleet tracking systems as a carrot instead of a stick," Ellis says. "Often, they put incentive programs in place that allow drivers to be compensated for behavior the fleet wants reinforced, such as increasing their fuel efficiency."

A fleet tracking system can provide a return on investment in as few as four to eight months. "Depending on your industry, there are different benefits," Paul says. "But overall, knowing the location of your employees and mobile assets adds a level of safety and allows dispatchers or owners to route the closest vehicle to a location, optimize loads and routes, minimize maintenance costs, and reduce fuel usage. Other benefits may include reduced overtime and reduced administrative cost through automation of fuel tax reporting or electronic driver logs."

There are other benefits as well. Better vehicle utilization can help a company avoid the cost of purchasing a new truck or hiring additional drivers. Improved compliance with state and federal transportation laws will leave a company in a better position to respond in case of an audit. There are also intangible benefits, such as improving a company's strategic and competitive position. Any ROI calculation should include these 'soft' benefits, as well as a full accounting of the implementation costs.

"Those benefits must be compared to the costs of information technology, hardware and software costs, and service plan costs," says McLaughlin. "Too many firms overlook nontraditional costs such as training and implementation costs, updates, maintenance, warranty, and the cost to replace existing equipment. These must be included to draw an accurate picture."

Fleet tracking systems can provide valuable data about how your drivers and trucks are performing in the field, but just having that information won't make a dent in your operational costs or customer service performance. "The system can identify idling percentages, speeding, etc., but the company has to counsel and train drivers in order to make an impact," Ellis says.

"Too many companies think that when they implement technology, magically things will improve," McLaughlin adds. "Technology provides a lot of information, but it doesn't take it to the next step, which is to improve the business. That's management's role."

The challenges facing fleet managers are increasingly complex. A thoughtfully deployed fleet tracking system that lowers operational costs without negatively affecting customer service can help carriers and service companies survive and thrive, even in today's difficult economic environment.