Hard road for fleet management

Fleet management systems developed in New Zealand are among the most innovative in the world and the opportunities for vendors to export their technology are enormous. But, as Sarah Putt discovered, the toughest challenge the industry faces isn’t going global – it’s convincing the locals to get on board.A company’s vehicles are often its largest capital expenditure – and its staff its highest operating expense. So you’d think that fleet management systems designed to monitor an employee driving on the road in a business vehicle would be in high demand. But you’d be wrong. The take-up in the New Zealand market is around 10%. For a technology that’s been around since the 1970s that figure is not exactly a ringing endorsement.This despite an industry in which the vendors are very innovative – after all Navman began in New Zealand. Some of them are developing leading-edge technology; top-class systems that can’t be matched anywhere in the world. And that may be part of the problem. “We don’t want to be the international guinea pig and we don’t want to impose costs unnecessarily on the trucking industry. There are some hundred thousand trucks out there and at this stage there would be no more than 10,000 that had GPS on them,” says Tony Friedlander, CEO of the Road Transport Forum.Friedlander was referring to a vendor push to create an electronic system for measuring Road User Chargers – the bugbear of the transport industry (remember the truck protests that clogged the city streets a year ago?). But as head of the road users’ lobby group, he understands his constituency, and he could have been speaking about the systems being marketed across the industry.“What’s out there at the moment doesn’t meet the industry’s needs or the level of precision demanded by the tax collection authorities by any stretch of the imagination and it’s very expensive for what it is,” says Martin Hyde, General Manager of Rotorua Forest Haulage.Of course that’s the transport industry – trucks and trailers that are closely monitored and taxed through Road User Charges (according to a Waikato University study, RUC constitutes about 10% of a median road transport operator’s annual spend). But fleet management systems are not only designed for heavy users; they are increasingly being adapted for smaller vehicle fleets, as the vendors spoken to by TR attest.“We have been building our software and selling out solutions over the last three years. From then to now the client base has changed dramatically from mainly trucking fleets of any size, as they saw the value in GPS tracking and fleet management earlier than most,” says Aaron Muir from Argus Tracking.“Our biggest customer base now is in the service industry, being electricians, plumbers, air-conditioning, etc. and then sales fleets. Some of our clients have as few as one vehicle, so GPS tracking is no longer just for the BIG guy.”Muir’s observation is supported by his competitor, Navman Wireless.“The New Zealand market is currently only 10% penetrated with fleet management systems,” says Ian Daniel, Vice President of Asia Pacific and Latin America. “The transport market adopted the technology early, but in the last two years, the service market has seen an extensive uptake, as service businesses become aware of the technology and its benefits to their business. In four years Navman Wireless has seen a 600% growth in the number of unit connections.”In other words, fleet management is no longer the preserve of the truckies – it’s being pitched at all businesses and its being seen by many as a tool to drive productivity in these cash-strapped recessionary times.That’s certainly the view of Phil Allen, General Manager of GeoSmart, a subsidiary of the Automobile Association. It supplies the mapping technology for around 75% of fleet management systems in New Zealand.Allen says the biggest area for growth is in their route optimisation product, which he says will shave 15-25% off the number of kilometres a fleet of vehicles drives annually. Put simply, a client keys in the job locations they need to visit that day and it calculates the most efficient order and route to follow to complete the task list in the quickest time possible. GeoSmart has been trialling the technology with a service company that has 80 vehicles and which previously gave each driver a list of jobs that needed completing over a six-week period – the proviso being that they might be called to an emergency job at the other end of town on short notice. Allen says that by using the route optimiser they radically changed the workflow and now, instead of issuing job sheets every six weeks, they issue them every day.“They’ve ended up with more jobs in a day, at less cost, and also ended up getting less abuse on their vehicles.” Not everyone embraced the technology, however. A couple of drivers quit, but according to Allen the majority recognised that it gave them better job security to be more efficient.The route optimisation tool is being launched in the next couple of months, and unlike other GeoSmart technology that is sold via resellers, this is being marketed directly to the public. Allen says it will cost around $7 to $8 per vehicle a month, but there’s scope to negotiate on larger fleets. He says that previously it was only large companies that could afford route optimisation tools and they were paying around $150,000 a year.The company is also talking to its clients about creating a service that provides real-time reporting on traffic congestion, based on the information that’s supplied by their own fleet on the road. Allen says they want the clients to send them the information about vehicle speed that’s collected by their fleet management systems every five minutes. Based on this information (transmitted anonymously) GeoSmart will build up a continuous picture of traffic congestion around the country, which it will then relay back over the radio frequency.For example, if five vehicles from five different companies are travelling the same stretch of road at 20km an hour at 10am on a Monday morning, that would indicate there is a traffic congestion issue. If it’s just one truck it might mean that the driver is slowing down for an entirely different reason.“If there are several cars on one road at one time all doing the same speed, we know that’s the speed on that road. The concept is simple but the opportunity is large.” Allen says GeoSmart exports its systems to the Middle East and Asia and that there are plenty of opportunities offshore for the fleet management systems developed here in New Zealand.It’s certainly the overseas opportunity that’s caught the attention of former Navman COO Steven Newman and economist Brian Michie. Together with Paul Bishop they are the directors of Eroad, a company that’s invented an electronic hubodometer. That’s the equipment which measures the number of kilometres a truck drives in order to calculate the RUC the transport operator is liable for.The RUC system was introduced in New Zealand in 1978. It was a world leader at the time, but it has remained a paper-based system ever since. Eroad director Brian Michie says its eHUBO is designed to bring the system into the 21st century – it’s the “world’s first secure electronic hubodomenter, and web-based payment and services gateway”, and – according to the company’s literature - it’s an “opportunity to reform and future-proof the $1 billion RUC regime, with private sector motivated to bear all risks and costs.”The eHUBO sits on the top of a driver’s dashboard and records the kilometres it travels, sending the information via a 3G cellular network to the company’s base and to the New Zealand Transport Authority. It means the RUC licence is continually updated, and when the vehicle travels on a private road and is eligible for a RUC refund, it is automatically calculated.A field trial of the eHUBO has involved 104 vehicles travelling 1.6 million km and it’s currently being certified by NZTA. Eroad is spearheading a RUC reform, claiming that electronic systems like theirs “will generate a payback of $1-2 billion through improved industry productivity, reduced RUC evasion and lower administration and enforcement costs.”The company was formed in 2000 and it is starting to gain attention overseas – in particular Sweden, where it has been invited to provide a demonstration to the World ITS Congress in Stockholm in September.Michie says the eHUBO is a platform on which other applications could be run – such as a VoIP system that could replace the traditional two-way radio as the truckie’s primary communication toolOther vendors that TR contacted agree that RUC represents a great opportunity for fleet management systems. “In New Zealand particularly, electronic road user charges [eRUC] monitoring and tax rebates are the big thing in fleet management at the moment,” says Andrew Radcliffe from Blackhawk Tracking.“The ability to monitor vehicle compliance, eg: WOF, COF, Service, RUC is also a favourite feature for customers with our inbuilt alerting mechanisms to alert when these ‘compliance issues’ need to get done. This is also keeping their vehicles more efficient by frequent servicing and dramatically cutting down on infringement notices for RUC, Rego, etc,” says Aaron Muir from Argos Tracking.GeoSmart’s Phil Allen sees real advantages for transport companies that adopt an RUC system because “the company is not exposed to its employees keeping manual logs (and) jumping on and off to read the meter”.But the issue for Eroad and others who want to sell their fleet management systems to the industry is that the users – or at least the Road Transport Forum that represents 80% of commercial road transport operators – don’t appear to want them.CEO Tony Friedlander says they aren’t ruling out electronic hubodometers in the future – just not right now. And for every international case study that Eroad’s Brian Michie can site, Friedlander has one to counter it.“Those countries (Switzerland, Holland, and Germany) where we’ve looked a closely the cost associated with introducing the eRUC system are about three times higher than the annual costs associated with the current RUC system in New Zealand. They’re trying to sell a system and none of the international evidence backs up what they’re saying.”Friedlander says the only transport operators that would welcome eRUC are those with GPS systems anyway – and that is still just 10%. “I think you’ll find that view with the majority of the industry. You’ll get some that are happy to have GPS systems but that’s because they’ve got them on board anyway. The RUC system is complex and needs simplifying – whether distance charge or switch to a fuel charge is an issue that government is currently considering. “We get concerned when we see some technology suppliers trying to get governments to try to impose costs on our industry.”It appears that the fleet management industry has a hard road ahead to sell its technology solutions to its major users.