March 2017

It’s Axiomatic, the Future of Fleet Efficiency is Increasingly Telematic

Technology’s role in promoting and improving driver and truck operational safety is not really open for much debate anymore. From hours of service compliance, to monitoring vehicles performance and condition, the data (potentially) streaming from the cab of a modern over-the-road commercial vehicle is allowing fleet owners to manage their operations more cost effectively. The volume and accuracy of data are increasing steadily thus allowing managers to pursue ever more effective risk management programs. Those unwilling to adopt these techniques are finding themselves falling further behind in every meaningful metric. Most importantly; gross operational profit-margin.

With the advent of Compliance Safety Accountability (CSA,) there has been even more motivation for fleet managers and truckers to be proactive in managing risk. Among other things, trucking insurance companies are using these scores to assess risk and calculate premiums. Speed monitoring for example can provide proof of compliance which in turn can help improve CSA scores.

Fortunately proven, reliable safety/information technologies are making it easier and more cost efficient to assess and measure risk when vehicles are out operating, providing accurate data. Telematics as they are known, include such gear as electronic logging devices (ELDs), engine speed and efficiency monitoring as well as in-cab video, driver biometrics, load and environmental monitoring. These rapidly maturing technologies, paired with the internet, cloud, etc., are more affordable and easier to integrate into operations.

It’s clear telematics data can deliver better operational transparency to fleet managers. Armed with the information the technology, executives now have the means to achieve best-practice levels of safety and security to drivers and the motoring public. An entire industry has grown up to bring the benefits of telematics and advanced fleet safety security technologies to the trucking industry.

The industry is spending heavily in safety according to the ATA, who recently released data revealing the U.S. trucking industry is spending $9.5 billion a year on issues related to safety. Here’s how the ATA breaks it down:

On-board technology (25 %): Collision avoidance and mitigation systems, blind spot warning systems, stability control, video event recorders, electronic logging devices and other safety technologies.

Driver training (36 %): Safety training, staff wages and consultants, safety retraining and coaching and hazardous materials training.

Safety-related compensation (13 %): Awards and bonuses based on improved safety performance.

Regulatory compliance (26%): Motor vehicle and driver record checks, drug and alcohol testing, voluntary safety audits, safety staff wages and benefits as well as safety consultants.

At roughly $2.3 billion, the investment in safety technologies is significant and likely to be sustained as it provides the basis to manage fleet risk and driver/public safety. ATA’s findings point to four primary areas of focus that in general, focus on well-known tactics to mitigate root-cause risks identified in most fleet risk analysis profiles.

The FMCSA’s “Study of the Impact of a Telematics System on Safe and Fuel-efficient Driving in Trucks,” and its findings help us to understand why the industry is spending billions on safety technology investment—namely because it is proving to be worth it. According to the study’s results, “A telematics system was successfully demonstrated to be effective in improving motor carrier efficiency. In this field study, the research team demonstrated that telematics can be used successfully to monitor driver performance and improve safe and fuel-efficient driving behavior. Telematics also can provide in-cab feedback to alert the driver to unsafe driving events. When combined with driver intervention in the form of coaching and incentives, the results were safer driving and improved fuel economy.”

While couched somewhat in the stilted jargon of academics and bureaucrats, the bottom line is federal researchers find safety technologies have a very positive impact and can help drive the costs curves associated with managing risk, loss and liability down. Yes there’s been a ton of spending, but the uptake of safety technologies has not been the linear progression some might think. Implementing these technologies can be fraught with faulty implementations and unforeseen integration issues. Even under the best circumstances implementing any business related information technology remains an expensive challenge for a fleet enterprise. While it is increasingly clear to fleet managers that the investment in safety is an imperative they cannot ignore, what has not been so clear is how to get the returns promised by the investment.

Trucking insurance underwriters recognize safety technologies role and effectiveness and adjust actuarial tables accordingly, but in general are not in the business of assuring effective technology implementation; traditionally that’s the role of trusted experienced integrator if one is lucky, or your partner’s son “who’s a real wiz at that” if one is not. Regardless, implementing safety technologies and controlling insurance premium costs have not been directly correlated, that is, until now.

Recognizing the inherent linkage between loss control techniques and tech, as well as the importance of taking an integrated approach to implementing safety and fleet management technology, ProSight Specialty Insurance of Morristown, New Jersey has created a platform designed to do just that5. Called Secure Fleet, ProSight’s innovative risk management solution utilizes multiple modalities to drive down costs by: finding quality drivers and retaining the best, controlling compliance costs and minimizing the business interruptions and brand damage caused by unsafe driving.

The Secure Fleet is a business intelligence platform. For example the Driver Rewards program designed to reward and retain drivers through a point system integrated to the platform’s Video Safety Program as well the e-Logging Fleet Management tool and a comprehensive Drug-Free Operations screening program. Each element of the platform contributes to overall safe, effective, cost efficient and sustainable fleet operations. According to ProSight, Driver Rewards can generate a 14% reduction in turnover. It’s Video Safety Program, which uses an event-based video recorder with an integrated coaching system, can decrease loss cost as much as 50 % and operating costs as much as 4 %. ProSight’s e-logging system is highly automated, FMCSA compliant and can drive an overall increase in top line revenue by 1 %. Lastly their drug screening program is powered by Foley which fields a 10-panel test to capture newer and potentially more harmful drugs.

The innovative linkage between insurance and technology is a departure from traditional underwriting approach. This forward-looking integrated approach may well be leading early adopters into a more profitable future than their competitors.