The 2008 outlook for information technology in trucking is fairly simple — fleets will be collecting more data than ever before. It will be higher quality data creating a wide range of tools that are more powerful, yet easier to use. And management reliance on this data will no longer be confined to a limited number of fleet types or sizes. Rather, it will be widespread as new technology drives up IT utility, while at the same time driving down prices for systems more easily customized for specific fleet requirements.
Trucking has long used data-based management tools, but now it appears that the industry is about to reap the rewards of several emerging technologies evolving into mainstream products and applications, all at the same time.
“For the first time, the availability of low-cost GPS-enabled handsets and in-vehicle devices, affordable data communications, and access to a wide range of horizontally focused and specialized third-party applications will make the management of workers possible for all companies regardless of their size, IT capabilities or vertical focus,” according to a new fleet survey by the research organization C.J. Driscoll & Assocs.
Released in October, C.J. Driscoll's survey focuses on the first two components in this new IT formula, or what it calls “mobile resource management (MRM) systems and services.” The survey sample encompassed all types of fleets, including long-haul and regional for-hire carriers, as well as private, vocational, utility and government fleets, but was “stratified” to make sure smaller fleets didn't outweigh larger ones in the sample, according to the firm.
Compared to an earlier survey conducted in 2003, “there's been a significant increase in interest for almost all types of applications for managing assets in the field,” says Clem Driscoll, the founder and managing partner of C.J. Driscoll & Assocs. “There's an increased awareness of IT's benefits in general (among fleet managers), but more specifically we found high interest in wireless systems that go beyond talking to a driver on a cell phone.”
How high? Eighty percent of the surveyed fleets say they already use cell phones for wireless communications and 41% push-to-talk services. Satellite data communications, pager, Blackberry and smartphone percentages were all in the single digits. And only 3% reported using no wireless services at all.
Despite the high penetration already achieved by wireless services, “roughly 50% of the surveyed fleets said they will acquire a new MRM system in the next 12 to 18 months,” says Driscoll. And most of those — 46% — will be GPS-based services and solutions
Driscoll estimates that current U.S. fleet use of GPS tracking, or location-based systems (LBS), is only about 15% overall, with truckload carriers leading the way with 35% to 40% penetration. However, a number of converging factors will drive the sharp growth in adoption expected in the next year or so.
The first is that fleets of all types are beginning to recognize that wireless data is emerging as a key to profitability. “Very few fleet operators don't know of competitors and others with similar operations successfully using these solutions already,” says Driscoll. “Awareness, interest and acceptance of LBS services is particularly high.”
Both hardware and communication costs are also dropping to points that support reasonable returns on investment for all types of fleets, not just irregular route truckload carriers. In particular, Driscoll expects to see growth in the use of ruggedized handheld systems that incorporate GPS receivers and cellular data modems. The availability of cell phones with GPS capability will also bring down LBS costs and accelerate their adoption by fleets.
In some fleet operations, especially among common carriers, customers are driving the move to LBS, expecting tracking and real-time scheduling information as part of their service.
Finally, equipment manufacturers, wireless service providers and software developers all recognize the growth opportunity presented by fleets, leading to new products and applications for a much wider variety of fleet operations.
INSTALLED OR PORTABLE
Among specific types of fleets expected to acquire LBS in the next year or so, the surveyed truckload carriers, municipal operations and private fleets indicated a preference for tracking devices installed in the vehicle. Service, construction and regional or local common carriers showed a greater preference for handheld or cell phone devices. Those indicating a preference for installed systems also strongly valued integration with back-office systems such as routing, dispatch or accounting.
Whether installed or portable, 65% of the fleets favored a real-time GPS system, that is, a system using wireless communications to deliver tracking data as it's captured. Only 14% preferred systems that store the tracking data onboard the device and avoid monthly service fees.
Fleets with more than 100 vehicles showed the greatest interest in adding GPS tracking systems in the next 18 months (52%), with most of those larger fleets indicating a preference for vehicle-installed systems, according to the survey results. Perhaps reflecting the already high adoption rate among truckload carriers, only 43% of fleets operating Class 6-8 trucks said they planned to add GPS system in the coming 18 months, while approximately half of the fleets running Class 1-5 vehicles said they planned to buy such systems in the same timeframe.
While tracking seems to be the LBS of most interest to fleets, remote vehicle diagnostics and driver performance monitoring also grew in importance compared to the 2003 survey. High fuel costs and the need to minimize liability seem to be driving that trend, according to the survey.
“Demand should be strong if diagnostics and driver performance information can be delivered in ways that enable fleet operators to effectively integrate the data into their operations,” the survey found.
Real-time traffic information also saw increased fleet interest from the 2003 survey. “Traffic data integrated into routing or dispatch systems can provide a big benefit, but it's not for every fleet,” says Driscoll. “The quality of the data available today still has a way to go, but eventually real-time traffic data is going to be an important ingredient in dispatch and routing applications,” he says.
Other LBS services such as weather alerts, data messaging, stolen vehicle tracking, and trailer tracking also elicited strong interest in the survey, but that interest was more restricted to type of fleet operation than overall.
Ken Manning, the president of the Transportation Costing Group, sees the same growing interest in using mobile information systems to capture business data out on the road.
“Even LTL fleets that never considered onboard wireless devices are moving to handhelds, cell phones and onboard computers to collect data that can help them understand their businesses better and improve customer service,” says Manning. Changes to hours-of-service and the anticipated requirement for electronic onboard recorders (EOBRs) as well as the growth of lower-cost land-based wireless communications are also pushing a wider range of fleet types and sizes to remote data collection, Manning points out.
Accelerating data collection with real-time wireless communications can bring operational savings through more effective dispatch and monitoring. However, the key benefit of better data captured out in the field is greater specificity, says Manning. Collecting more data, especially data about individual vehicle activities, can greatly improve the usefulness of analytical tools that help drive down costs and drive up profitability.
For example, capturing arrival and departure times for each delivery or pickup gives “better definition” to cost analysis than simply calculating general cost-per-shipment numbers, Manning says. “Knowing the exact activities that a shipment consumed lets you determine the profitability of that shipment,” he says. “That's valuable information when you want to evaluate the profitability of customers, lanes, areas and so on.”
With more finely detailed data, “fleets can use business intelligence software to really mine the information and manage their companies,” says Manning.
Despite the increase in data volume and detail, newer systems are reducing complexity and cost, which will allow mid-sized and even smaller fleets to take advantage of business intelligence tools. “The user interfaces are becoming more transparent and the new freight management systems more flexible,” says Manning. “That means a fleet can draw various levels of information from that database. It's going to be used by marketing, dispatch, accounting. If it's user friendly enough, then even top management will use it, not just the marketing and operations people.”
The availability of hosted applications is also making this type of business intelligence tool accessible to small fleets. “Database software in particular requires specialized IT expertise,” Manning says. “With a hosted system, the smaller fleet doesn't need that expertise to maintain the database.”
Given the growing emphasis on high-volume data IT tools, Manning also expects the new year to see a significant number of carriers “investing in replacing less robust or technologically outmoded fleet management systems, especially home-grown systems.” The new enterprise management suites offer “flexibility and ease of installation, use PC-based technology, and prices are coming down relative to functionality, all of which makes them attractive now,” he says.
GROUNDWORK FOR RECOVERY
Echoing Manning's observation, Tom McLeod, president and CEO of McLeod Software, sees the same fleet interest in IT investment. While freight was flat in 2007, for-hire fleets showed a healthy appetite last year for replacing older in-house management systems, according to McLeod. “Larger carriers on legacy platforms are forecasting systems changes over the next few years, and we see continuation of that good business climate in 2008,” he says.
“When business is great, most fleets aren't that worried about being more efficient,” McLeod says. “But when business is soft, they do whatever they can to be more efficient and save money today, while also laying the groundwork to seize the opportunity when the recovery comes around.”
In particular, many carriers are using the slowdown to move into new areas such as brokerage or container businesses. “They need more IT capability to do that, so they're investing in systems with modular growth structures,” McLeod says.
No matter what's driving the move to new generations of management systems, McLeod sees three common requirements emerging in the next few years as fleets reassess IT needs.
“The first is better management of details,” he says. As fleets master their new, more powerful systems, they're confronted with “a flood of information required by modern systems and want to simplify handling that flood.”
For example, just automating load assignments for drivers isn't enough now. “They want the pickup and delivery information automated as well, without any driver input,” says McLeod. “They want to use that detailed information to take them to the next level.”
The second requirement will be tighter, smoother integration. “There are a remarkable number of companies that still have standalone systems and clunky interaction between those various systems in maintenance, dispatch, billing and so on,” McLeod says.
“Better integration means more efficiency,” he says. “Instead of using document imaging as an electronic filing cabinet, integration turns it into a full-blown work flow system. That's efficiency.”
The third IT requirement coming from fleets is better information sharing, both internally and with customers. “Carriers have information locked up in their systems that shippers want to get to,” according to McLeod. “At the same time, fleets want to unlock that information in real-time to put it in front of their decision maker while there's time to do something about it. We're going to see some tremendous progress in the electronic flow of information.”
But perhaps the biggest IT change coming down the pike is fleet ability to use all this data being generated by new mobile and office systems.
“The limiting factor on implementation of technology is how fast an organization and the individuals within it can use that technology to change the way they make decisions,” says McLeod. “We've been in a big catch-up phase, but organizations are now beginning to figure out how to get more out of all this new data and the systems for handling it.”