Although Mexico presents its own, diverse challenges, the future of logistics, insurance and fleet management is necessarily related to telematics. Estimations point at 88 percent of new cars to feature integrated telematics by 2025.
Vehicle telematics uses GPS technology to triangulate the position of vehicles and digital cellular networks to transmit a range of data from the vehicle to other software and hardware systems. The transmitted data covers everything from location and vehicle diagnostics to driving style.
Telematics solutions are becoming crucial for smart fleet management in any kind of company. “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,” said during Mexico Automotive Summit 2021 ECHO Fernando Ardura, Chief Business Officer, Traffilog.
While implementing telematics is cost-effective, it is important to do it correctly. The four main pillars for correct integration are data analytics, data mastering, software and good transportation practices, according to Marco Lizarde, Business Unit DHL Consultant. Also, to get the best results, it is key to set clear goals regarding what you want to measure and why. “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 MBN Kent Bjertrup, CEO-Mexico, ALD Automotive.
Telematics and Logistics
Logistics and delivery businesses are all about precise time estimations and correct cost calculations. A survey made in the EU showed that one of the biggest frustrations customers have when dealing with a company is the estimated time of arrival (ETA). Only a 6 percent of the total respondents said that they expect precise arrival times, according to WebFleet Solutions, a telematics-specialized company owned by Bridgestone.
Investment in telematics offers companies the opportunity to provide more accurate data related to specific operation fields and make more precise estimations when providing customers with ETAs, while keeping better track of their fleets. Companies which have already transitioned to integrated telematics reported a 10 percent drop in unfulfilled deliveries due to customers not being available and “an overall increase in customer satisfaction.”
Every country presents different challenges and Mexico could be one of the most complex countries to implement connected mobility. Diverse indexes have tagged Mexico City as the most congested city in the world, which could be very costly for logistics companies. “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 to MBN Lizarde, who highlighted the importance of having integrated systems able to communicate with each other.
Telematics in the Insurance Business
The entire insurance business has depended historically on the experience and risk management of companies. However, telematics could take risk management to a different level for both clients and companies, as better drivers could lead to lower insurance premiums. “Increasing the well-being of trucks and payloads through telematics and betting on road safety training can help transportation companies to more effectively negotiate the prices of policies with insurance companies,” said to MBN Manuel de la Torre, General Manager, WebFleet Solutions.
On the other hand, telematics is becoming a massive trend in the insurance sector, according to Ardura, who added that policy costs need a correct balance: “If they are too expensive, clients will go to another company. If they are too cheap, accident rates will skyrocket and it will no longer be a profitable business.” Telematics applied to the insurance business helps to understand the client’s driving habits, consider a broad range of information from the user, so fair rates can be established. Technology will also be helpful when it comes to newer trends, such as car subscriptions replacing the traditional vehicle ownership culture in Mexico. Through telematics, OEMs and third-party players offering subscription programs will be able to track and charge users under different plans, such as a per-kilometer rate.
Mexico’s Specific Challenges
According to SSPC, 80 percent of vehicle accidents are caused by driver’s mistakes. Telematics help preventing major accidents, reducing minor accidents and correcting dangerous driving patterns, and could help reducing deaths and costly incidents across Mexico.
Still, besides technology, traffic, roads and other problems the country currently faces, another challenge for telematics to grow massively in Mexico is the short-term vision that several business owners, carriers and fleet management leaders often have regarding telematics and the implementation of complex tech 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 during the Automotive Summit 2021 ECHO Rafael Lajud, General Director, Invarat.