HOW TELEMATICS AND THE IoT ARE TRANSFORMING COMMERCIAL TRANSPORTATION
Digital transformation is driving the commercial vehicle transportation industry with mobile and wireless devices empowered by telematics and the Internet of Things (IoT) technologies. In fact, as of December 18, 2017, the Federal Motor Carrier Safety Administration mandated that commercial vehicle carriers and their drivers use an electronic logging device (ELD) to record a driver’s Record of Duty Status (RODS). This means the approximately 3 million commercial U.S. trucks in long-haul service must use an IoT device connected to the vehicle’s engine and wireless smartphones and tablets to collect and report data, rather than manually maintaining a log book of their RODS (i.e., mileage, driving and idling time, driving behavior, etc.). This ruling addresses the industry’s issues with the inaccuracy and inefficiency associated with manual record keeping, including each driver spending an average of 110 hours a year completing paper logbooks and the overall industry spending at least 51 million hours annually reviewing and storing records.
This ruling could potentially save millions of hours in wasted time and possibly billions of dollars in increased efficiency and productivity. However, not all sectors in the industry are able to fully realize its benefits and, as a result, have pushed back on the ELD ruling. For example, the agricultural trucking owners were granted an exemption from ELD for their businesses. A huge roadblock for “aggie” truckers was the lack of mobile access in remote rural areas for the smartphones, tablets, and other IoT and wireless devices required to meet ELD standards. As with anything that has to do with digital technology, interconnection anytime, anywhere for any device is vital to its success.
Industry disruptors: Telematics and IoT
Interconnected telematics systems have contributed tremendously to the optimization of the commercial vehicle transportation industry. They have increased driving efficiency via real-time communications and by leveraging GPS and other navigation applications to direct drivers toward open roads and away from any obstructions that could cause delays. They have also helped reduce vehicle idle times and maintenance costs, increased driver safety and job satisfaction, and enhanced vehicle performance and security.
In addition, the IoT and other vehicular technologies and applications have been transforming transportation companies by enabling more in-depth and accurate tracking and delivery systems, not just for their vehicles on the road, but also for their cargo. For example, package shipping companies such as FedEx and UPS can now track the temperature, location and other vital signs of a package – including when it’s opened and whether it was tampered with along the way. That is in addition to determining the fastest, most cost-effective delivery route, right down to where to park vehicles nearest to the package’s destination.
Together, telematics and IoT technologies are changing the entire landscape of the commercial transportation industry, as well as every industry that is reliant on its vehicles to do business. New digital supply chains and ecosystems are coming together to create a global digital vehicle transportation business, and greater interconnection is making it possible.
Interconnected transportation digital supply chains and ecosystems
Telematics and IoT technologies, along with mobile and wireless, have enabled thriving interconnected digital supply chains and third-party ecosystems to further add value to today’s commercial vehicle transportation industry. They are doing this by leveraging the distributed nature of mobile and wireless, along with the scalability of the cloud, to integrate telematics and IoT technologies with business process and back office applications (e.g., logistics, inventory control, accounting).
The following are examples of industries that are leveraging these interconnected digital supply chains and ecosystems:
>> Insurance: Similar to the commercial vehicle transportation industry’s drivers’ RODS, insurance companies are interested in good behavior from all the drivers they insure. By monitoring driving habits (e.g., speed, collisions, mileage, etc.) and partnering with third-parties to transmit, process and analyze driver information, insurance firms can set rates and provide discounts for customers based on their driving behavior records.
>> Home and Commercial Services: Any company delivering a home or commercial service (e.g., repair, maintenance, remediation, etc.) needs to track the vehicles for those services, as well as the tools and products that are required to deliver them. Take pest control for example: Today’s exterminator vans are programmed and connected to monitor a vehicle’s mileage and gas consumption, the time the driver is driving versus idling and the amount of chemicals being used per service call. This is in addition to leveraging third-party solutions for performing inventory control and billing all in real time.
>> Retail and Fleet Leasing and Sales: For those companies that lease or sell a single vehicle to an individual consumer or a fleet of vehicles to businesses, the combination of third-party mobile and wireless communications, telematics and IoT solutions enable vehicle manufacturers, resellers and leasing companies to automatically track cars and trucks on the road, make vehicle replacement decisions, and monitor and address maintenance issues before they even occur. For example, to help with vehicle replacement decisions, telematics captures the mileage history of a vehicle, enabling the leasing or sales company to determine the average aggregate point where they can show their customers the diminishing returns of every vehicle type and make. And, by working with third-party providers to develop vehicle tracking and maintenance programs, retail and commercial vehicle firms can collect and analyze data on the probability of different major repairs at different mileage bands, which they can use to advise their customers on a vehicle’s life cycle. Vehicle telematics are also evolving to alert these companies of a potential issue before it happens, and they can alert the car manufacturer and jointly make a decision to repair or cycle the vehicle.
>> Mobility as a Service (MaaS): Digitally enabled car-sharing and ride-hailing is poised to soon exceed the profitability of traditional car sales. According to Accenture research in its report, “Mobility as a Service,” by 2030, revenues from mobility services are projected to soar to almost $1.47 trillion—with profits reaching nearly $270 billion, versus car sales’ profitability of $150 billion. To compete and win in the MaaS market, Accenture sees automotive original equipment manufacturers (OEMs), transportation service providers and vehicular technology innovators creating new business models: “Partnering with digitally-savvy suppliers, start-ups or even large digital corporates will often be the best way to build capabilities in highly specialized areas such as artificial intelligence or IT security.”
Take for example Grab, a Singapore-based technology company that offers ride-hailing and logistics services. They collaborated with Equinix partner iguazio in our Singapore Equinix International Business Exchange™ (IBX®) data center to leverage direct and secure, low-latency connectivity to the AWS Cloud and iguazio’s Unified Data Platform, while leveraging the IoT and data analytics to report in real-time on customer churn, unique bookings and driver availability. They even developed a heat-map program to identify where high volumes of passengers were located relative to drivers. This enabled them to increase their driver efficiency and maximize profits in numerous aspects of their ride-hailing business.
It takes a distributed, vendor-neutral interconnection platform to enable all these digital interactions and transactions between commercial vehicle transportation firms and their suppliers and partners. This platform must connect digital business physically and virtually around the world, enabling companies to reach everywhere, interconnect everyone and integrate everything to build future commercial automotive business models and their respective supporting infrastructures and services.
You can learn more about how Equinix is providing more than 9,500 companies globally that single interconnected business platform by reading the Platform Equinix™ Vision.
You also may be interested in reading our infopaper on how the transportation industry is leveraging an interconnection-first strategy to achieve greater automation and self-service.
By Luke Harrison - Principal Global Solutions Architect - Equinix