Transportation risk management: Will telematics drive your fleet’s future?

Submitted by statecreative on Tue, 05/26/2015 - 00:12
truck driving into sunset - transportation risk management

If your business involves operating a fleet of vehicles, you know what a juggling act it is trying to coordinate vehicle financing and maintenance, drivers, fuel, health and safety issues, vehicle scheduling, and everything else that goes into fleet management. On top of that, you’re in a constant battle against rising costs, government regulations, and Duty of Care obligations.

Most fleet operators would love nothing more than to simplify the process – and keep costs down. But implementing a solution can be tough if you’re on a tight budget.

That’s why more and more fleet operators are turning to telematics as the solution.

What is telematics?

In general terms, telematics is the integration of telecommunications with information and communications technology, including GPS tracking. Practically speaking, it’s a system that allows fleet operators a way to monitor the location, movement, status, and behavior of every vehicle in their fleet.

That produces a lot of data, and that data can help fleet managers zero in on what’s happening with every vehicle, find out where the problem areas are, and plan effective strategies for improvements. That leads to increased productivity, improved driver safety, a streamlined maintenance process, better compliance with laws and regulations, and reduced unauthorized vehicle use.

When you put it all together, the benefits of telematics add up to one huge benefit: lower operational costs.

The Verizon Network Fleet blog cites research from Frost & Sullivan showing that companies that use telematics can lower their fuel costs by as much as 20 to 25 percent, reduce idle times by up to 20 to 30 percent, reduce total miles driven by up to 5 to 10 percent, and increase vehicle utilization by 15 to 20 percent.

Those are substantial cost savings and performance improvements. But there are even more ways telematics can lower your operating costs, including:

  • Optimizing routing and vehicle usage to reduce overtime and other inefficient use of labor
  • Reducing risky driver behavior, which in turn reduces accidents, traffic violations, and other costly incidents
  • Controlling repair costs and extending the life of vehicles by automatically tracking all service records, including maintenance performed, date of completion, etc.
  • Reducing wear and tear on tires

The bonus benefit

One benefit of telematics that often gets overlooked is the potential to lower fleet insurance premiums. But simply having a fleet tracking system in place to monitor vehicle and driver performance won’t lower your rates. The system has to be used as part of an overall fleet safety program that includes using GPS tracking data to help employees learn to drive more safely. The key is to be able to show your insurance carrier that you’re really using the tracking data to improve your fleet safety.

Do telematics really work?

According to Premier Beverage, a regional beverage distributor, the answer is a resounding “yes.” With over 100 vehicles, the company implemented a telematics solution that included coaching for managers and supervisors on how to interpret the data and make improvements. The results were impressive:

  • After one year, risky driving behavior was down 75 percent
  • They saved nearly 7 percent on fuel costs – almost $300 a year for every vehicle
  • Accidents were reduced by 31 percent, and accident-related costs plummeted a whopping 74 percent

Fleet management: a team sport

The best managed fleets are those that have everyone – not just management – onboard and taking responsibility for controlling costs. Telematics is a powerful tool that can give you a leaner, more efficient fleet – one that has a much better chance of staying on the road and keeping your bottom line intact.

Ready to learn more? Talk to the transportation insurance experts at Heffernan Insurance Brokers.