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News Article

Telematics Are Crucial for Smart Fleet Management

By Antonio Gozain | Wed, 09/22/2021 - 17:53

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Telematics is no longer a luxury in fleet management but a key resource for companies to smartly manage their assets with positive cost-benefit solutions to maximize profits and reduce risks effectively. While implementing telematics in Mexico would be a win-win proposition for all players involved, there are diverse challenges in the way, agreed industry experts.

“Telematics is about connected cars, which will collect data to monitor everything related to the vehicle from its location to the drivers’ behavior. They even give the possibility to monitor the condition of the vehicle. We can collect all this data and offer it so customers can take safe, well-informed decisions,” said Kent Bjertrup, CEO-Mexico of ALD Automotive.

Telematics systems are installed in vehicles and send data to track the location and performance of the vehicle and the behavior of the driver. Information can be sent digitally to the company’s servers or through mobile applications. These systems are more complex than a GPS, which only provides a limited set of data such as the real-time position of vehicles.

“Telematics is a reality. The technology is already here; it is just about implementing it correctly. It is profitable to use it; the real cost would be not to do it. If you are going to use telematics, you need to have a complete implementation program rather than only buying the systems. A GPS is no longer enough to know everything about your fleet,” said Fernando Ardura, Chief Business Officer of Traffilog.

Companies need to know that their light or heavy vehicle fleets are safe and profitable, according to Ardura. Telematics provides this knowledge. With the precise data it collects, fleet management companies can maximize fuel usage, one of their most important expenses. Knowing the behavior of drivers allows companies to improve their habits and become more efficient. “A correct use of advanced telematics allows you to do preventive maintenance rather than corrective maintenance to vehicles. Smart maintenance often means a longer useful life of the units,” said Ardura.

The auto transport business contributed with 3.4 percent of Mexico’s GDP in 2019, attending the demands of 111 sectors of the Mexican economy and mobilizing over 550 million tons of merchandise, according to the National Chamber of Cargo Transport (CANACAR).

“Telematics is already a reality in most of trucks in Mexico. But in countries such as the US it is no longer an alternative, but an obligation. In cargo transportation, telematics help prevent accidents. It detects system failures, routes, traffic and drivers’ behavior in real time. Telematics became crucial to offer a better service to customers while reducing costs and becoming more efficient. It should not be seen as an expense, but as an investment,” said Mauricio Medina, CEO of TIP México.

Telematics do not only help when vehicles are on the road but also while the fleet is parked in the company or in shipping terminals, where vehicles could also suffer damages, said Rafael Lajud, General Director of Invarat. The integration of the whole services offered by telematics is key for the companies to make better decisions, added Lajud.

Digitalization is drastically changing the logistics industry. Fleet management software helps companies managing large databases of information, with records such as vehicles purchased or leased, maintenance schedules, service histories, operating expenses and financial data. These systems reduce administrative processes and can set alerts and send emails.

The opportunities that technology offers come with challenges for companies and telematics is not the exception. “Mexico presents a lot of challenges, with a very complex road network, security issues and many suppliers. The key to achieve perfect shipping is standardization, to lower costs and achieve consolidation, with a clear legal framework to get a real win-win deal for every player involved. Standardization will boost investment,” said Marco Lizarde, Business Unit DHL Consultant. The four main pillars for a correct integration are data analytics, data master, software and good transportations practices, said Lizarde. “It is all about investment. You need to know where data is going to be stored. Software systems are key and they have to intercommunicate with other systems. We need to integrate our systems.”

Several business owners, carriers and fleet management leaders often have a short-term vision regarding telematics and the implementation of complex technology systems. “We have to be more constructive when explaining the benefits of these systems. We should not offer our products as small, separated services but as a complete and integral solution for fleet management companies that will help them reduce costs and maximize profits,” said Lajud.

A correct use of telematics also needs to set clear goals and meet them. “Data is extremely complicated, one needs to understand it, organize it and then work with it, linking it to the objectives already defined. We can program data and make it look beautiful but it is all about implementation, investing time and changing the behavior of drivers,” said Bjiertrup.

Telematics is becoming massive across the world in the insurance sector. Insurance policies costs need a correct balance; “if they are too expensive, clients will go to another company and if they are too cheap, accident rates will skyrocket and it will no longer be a profitable business,” said Ardura. This technology applied to the insurance business analyses the habits of the client, combining a broad range of information from the user’s age to their driving habits, allowing both the company and client to reach fair rates.

While investing in telematics systems could be costly for companies, not doing it could be worse. “You have to measure to improve,” said Medina. Once achieving standardization of the systems and enough investments, the entire industry could be benefited from the information that telematics provides.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst