Beyond the ELD Mandate:

Transcription

1 i Beyond the ELD Mandate: The Third Wave in Transportation Efficiency INDUSTRY WHITE PAPER INTELLIGENT FLEET MANAGEMENT SOLUTIONS fleetup.com

2 ii TABLE OF CONTENTS EXECUTIVE SUMMARY 1 STATE OF THE MARKET 1 PERENNIAL CHALLENGES FACING 1 FLEET MANAGERS FLEET MANAGEMENT REQUIRES 3 ACTIONABLE DATA THE FIRST WAVE OF FLEET TECHNOLOGY: ACTIVITY DOCUMENTATION THE SECOND WAVE: DRIVER 5 SAFETY AND ACCOUNTABILITY THE THIRD WAVE: FLEET 6 OPERATIONS PROFITABILITY FLEETUP LEADS THE THIRD WAVE 7 CONCLUSION 9 ABOUT FLEETUP 10

3 1 EXECUTIVE SUMMARY COST OF FUEL CAN CONSTITUTE UP TO 60 PERCENT OF THEIR OPERATING BUDGET This whitepaper will examine the current state of the fleet industry as it pertains to fleet management technologies, as well as how the 2017 ELD Mandate will create the opportunity for additional efficiencies by leading Electronic Logging Device (ELD) and Fleet Management System (FMS) technology solution providers. Additionally, this paper will evaluate the ever-evolving challenges facing fleet managers and how technology solutions are addressing those needs or falling short. Finally, this paper will illustrate the evolution of fleet management solutions in a three-wave chronology that is mapped against technology innovation, government regulation, and the benefits carriers and third-party logistics (3PLs) organizations can reap from machine learning and Intelligent Fleet Management solutions. STATE OF THE MARKET NINE PERCENT OF OPERATIONAL COSTS ARE DUE TO DOWNTIME, COSTING FLEET COMPANIES $ A DAY, PER TRUCK Managing fleets has never been more complex than it is today. In addition to perennial concerns fuel use and waste, operating costs, vehicle maintenance and repair, government regulations, driver productivity, theft, and safety fleet managers must constantly keep an eye on the future for developments in technology, government oversight, and operational efficiencies. The challenge is formidable. Fleet managers are expected to investigate, evaluate, and implement advanced fleet management systems, gather and utilize data, leverage machine learning and automation technologies, improve logistics transparency for customers, identify eco-friendly ways to green their fleets, and be ready for new vehicle technologies like electric and driverless trucks. And as technology innovation is accelerating, change in the fleet industry is happening faster than ever before. PERENNIAL CHALLENGES FACING FLEET MANAGERS It can be challenging for fleet managers to formulate a strategic plan for the future when they are consumed with the same issues that have plagued their business for years. 1. Fuel Waste: For many fleets, the cost of fuel can constitute up to 60 percent of their operating budget. It is not uncommon for fuel costs to make or break the profitability of a commercial fleet operator. Dozens of factors contribute to fuel waste, but the most glaring are: FLEET MANAGERS ARE EXPECTED TO MAINTAIN NO LESS THAN SIX MONTHS OF DRIVER LOGS IN CASE OF A GOVERNMENT AUDIT Poor driver habits: Too many drivers engage in poor habits like unnecessary idling and aggressive driving. Changing driver behavior is a long process requiring persistent education and one-to-one coaching. Poor maintenance practices: Maintenance personnel must be trained to remain vigilant about optimizing equipment like tires, air filters, etc. Maintaining fleets today is an increasingly technical challenge. Lack of available fuel-efficient vehicles: Operators have been slow to invest in different sized vehicles and hybrid/electric vehicles due to the cost. As a result, fleets don t always have the right sized vehicle for smaller deliveries. Using large trucks for small deliveries is hard on margins.

4 2 Automatic rerouting is not available: Many fleet management systems don t provide automated re-routing of drivers around construction, heavy traffic, poor road conditions, and inclement weather. Dispatchers and fleet managers do not have the capacity to provide this service for each truck. TOO OFTEN, FLEET MANAGERS MUST DEAL WITH INACCURATE AND ILLEGIBLE LOGS THAT ARE NOT ABLE TO BE VERIFIED 2. Vehicle Maintenance & Repair: Purchasing, maintaining, and repairing vehicles is the second largest expense of fleet operations. Fleet operators must identify new ways to improve vehicle maintenance with equipment like air filters, mirrors, and tires and processes, like optimizing drivetrains and tire pressure. Unfortunately, fleet managers face pressure to operate vehicles well past their most economical age and then must manage growing repair costs. According to the American Transportation Research Institute, nine percent of operational costs are due to downtime, costing fleet companies $ a day, per truck. Without actionable data from the engine informing the maintenance team, knowing the right time to repair a vehicle can seem to be part science, part intuition, and part luck. When it comes too late, the costs for repair, loss of cargo, and damage to customer goodwill can be exorbitantly expensive. 3. Reducing Other Operational Costs: Fleet managers are expected to do more with less every year. In addition to reducing costs for fuel and vehicles maintenance and repair, fleet managers must find ways to reduce insurance premiums, overtime pay, and recruitment and hiring costs. They must also right-size their vehicles to maximize the productivity of the fleet. DRIVERS ARE BOTH THE KEY TO FLEET SUCCESS AS WELL AS ITS LARGEST LIABILITY 4. Government Regulations & Compliance: Fleet is one of the most highlyregulated industries in the world. In the United States, fleet managers are expected to maintain no less than six months of driver logs in case of a government audit. The process of gathering, recording, and filing has been mostly manual for years. And too often, fleet managers must deal with inaccurate and illegible logs that are not able to be verified. It is a timeconsuming effort that has not been effective in eliminating excess driving hours necessary to keep drivers and the public safe. 5. Driver Productivity: Drivers are both the key to fleet success as well as its largest liability. Hiring, training, and retaining conscientious drivers is an ongoing effort. Drivers are generally resistant to change, and their professional habits and behaviors can have a major impact on fuel costs, vehicle damage, and safety. Fleet managers must constantly educate, convince, and incentivize drivers to improve behaviors that affect reporting operating costs, and customer service. 6. Theft: Stealing of vehicles, keys, cargo, fuel, and parts cost the fleet industry millions every year. Fleet operators must be constantly vigilant to prevent and recover stolen items. Unfortunately, the threats are from both within and outside the organization. Theft and damage occurs not only on the road but also in a fleet s own parking lot. GPS and alarm systems only stop a small percentage of crime. Lastly, and perhaps most troubling, is theft of equipment, fuel, and information by drivers and other staff. Fleet managers face an ongoing battle as thieves become more sophisticated in their efforts to acquire high value assets.

5 3 7. Safety: According to the Federal Motor Carrier Safety Administration (FMSCA), more than 80,000 large trucks were involved in injury crashes, and nearly 4,000 large trucks and buses were involved in fatal accidents in Driver error remains the number one cause of truck accidents (88 percent according to the Federal Motor Carrier Safety Administration). Issues with driver fatigue and drug and alcohol abuse persist across the industry. Fleet managers are continuously educating drivers on Hours Of Service (HOS) regulations, rest periods, medical fitness, eating habits, drug use, and more. MORE THAN 80,000 LARGE TRUCKS WERE INVOLVED IN INJURY CRASHES, AND NEARLY 4,000 LARGE TRUCKS AND BUSES WERE INVOLVED IN FATAL ACCIDENTS IN DRIVER ERROR REMAINS THE NUMBER ONE CAUSE OF TRUCK ACCIDENTS (88 PERCENT ACCORDING TO THE FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION FLEET MANAGEMENT REQUIRES ACTIONABLE DATA Technology that provides deep, informed insight into the day-to-day operations of a fleet is the key for growing operations, improving margins, and driving profits. Data must be actionable, and the technology used must be easy to use and cost effective to deploy and administer. Implementing and Expanding Fleet Management Systems: Most fleet managers have implemented basic systems by now, but they are also constantly bombarded with information about fleet management systems, compliance, and safety. Those who did not start their career as technologists are finding these systems complex to evaluate, implement, and manage. Moreover, the reporting processes remain mostly manual because current fleet management systems overwhelm fleet managers with data and do not provide useful insights. Fleet managers must wade through thousands of lines of data in order to, for example, identify the source of fuel waste by the driver. Managing Fleet Data: Fleet managers are under increasing pressure to gather, track, and utilize more and more data in a ceaseless effort to constantly improve fleet operations. And because there are virtually thousands of data points that can be collected and analyzed, sorting the wheat from the chaff is a full-time job. By analyzing the data, fleet managers can determine the best solutions to improve driver behavior and aggressive driving, reduce fuel waste, and minimize vehicle downtime, but building an effective process for extracting the information can be daunting. CURRENT FLEET MANAGEMENT SYSTEMS OVERWHELM FLEET MANAGERS WITH DATA AND DO NOT PROVIDE USEFUL INSIGHTS Growing Expectations from Customers: With the advent of technology, the planet is connected in ways never seen before. Thanks in part to enhanced computing capabilities and the availability and accessibility of information, fleet customers (to include end customers and 3PLs) have come to expect complete visibility into cargo management. To remain competitive, fleet managers must arm themselves with the technology that enables transparency across the supply chain pickups, deliveries, delays, and real-time views into routes and driving progress. This not only requires investment in modern technologies but integration with customers logistics systems as well.

6 4 THERE ARE 11 FATAL TRUCK ACCIDENTS EVERY DAY Greening Fleets: Some of the most aggressive changes in government regulation involve greening the fleet industry. As organizations in all industries pay close attention to ozone depletion and global warming, the urgency for reduction of greenhouse gases generated by large trucks has grown. Recent EPA regulations require car manufacturers to build engines that are more fuel-efficient in turn increasing the costs of equipment and vehicles, and requiring the addition of new filters and electronic logging devices. These new and rapidly changing equipment mandates also requires the hiring and training of a technically-proficient mechanical staff who have the training and experience to work on fuel-efficient and hybrid engines. While these changes will pay dividends by reducing fuel costs in the future, they are costly for fleet operations today. Preparing for New Vehicle Technologies: The fleet industry is both excited and apprehensive about the forthcoming advancements in technology. As hybrid and electric vehicles become more commonplace and less expensive, EPA regulations will likely render them a necessity. While the advantages of self-driving vehicles are well-documented, it is critical that fleet managers stay abreast of all emerging technologies driverless vehicles, in particular, as they could have a disruptive impact on fleet operational costs, safety, and productivity. Intelligent technology and actionable data are the future of fleet management, and they must address the needs of the market to include not only the fleet manager and the drivers, but also the carriers, freight brokers, and the government agencies that monitor and manage the transportation industry. With this goal in mind and after the advent of GPS tracking, technology companies began developing solutions to improve fleet accountability as the government was demanding. THE FIRST WAVE OF FLEET TECHNOLOGY: ACTIVITY DOCUMENTATION Technology innovations in fleet management can be organized into three identifiable waves, beginning more than 30 years ago, with the First Wave arriving for large fleets beginning in the mid-1980s. This First Wave of fleet technology allowed for documentation of fleet operations. Leaving the legacy of logbooks and paper records behind, the First Wave in fleet management technology gave fleet managers greater visibility into their operations by leveraging GPS tracking and Automatic Onboard Recording Devices (AOBRDs). These devices were installed into commercial vehicles to capture critical data and activities driver s duty status, engine use, road speed, miles driven and would date/timestamp each activity as it took place. Until AOBRDs came into existence, many of these items could be tracked by a driver using a manual log, but AOBRD automated some of the necessary reporting and provided fleet managers with verification of activities. This First Wave of technology for the transportation industry was expensive, bulky, difficult to install, and technologically incomplete. As a result, adoption was low. It also didn t improve the ways that drivers and operators share information or address critical information needs for safe and effective fleet management including:

7 5 DRIVER FATIGUE AND VEHICLE MAINTENANCE REMAINED THE MOST FREQUENT CAUSES OF ACCIDENTS Hours of Service (HOS) alerts and advisories Variations in duty status (on duty but not driving, yard movement, personal conveyance, etc.) The status of engine power, vehicle motion, or engine-on/engine-off Time and sequence of duty status changes on a graph grid Time zone adjustments and clock time drift Data integrity check functions Government regulations compliance Although adoption of AOBRDs was limited, the potential of this technology for simplifying fleet management and improving safety was obvious. Dozens of companies began building better versions of the AOBRD, but technology capabilities didn t change significantly until the early 21st century. THE FMCSA ISSUED A MANDATE REQUIRING ALL COMMERCIAL VEHICLE WEIGHING OVER 10,001LBS, ARE DESIGNED TO TRANSPORT NINE OR MORE PASSENGERS OR ARE TRANSPORTING HAZARDOUS WASTE (WITH PLACARDS) MUST START USING AN ELD TO RECORD HOURS OF SERVICE (HOS) BY DECEMBER 2017 THE SECOND WAVE: DRIVER SAFETY AND ACCOUNTABILITY The Second Wave of fleet technology is upon us with a clear focus on improved driver safety and accountability. According to the Federal Motor Carrier Safety Administration (FMCSA), in the domestic United States alone, there are 11 fatal truck accidents every day. 98 percent of the fatalities are in the passenger vehicles, and more than 100,000 people are injured. Regardless of increasing U.S. transportation regulations beginning in the 1980s and decreased number of fatal passenger car accidents, the number of truck-related accidents, fatalities, and injuries have increased. Driver fatigue and vehicle maintenance remained the most frequent causes of accidents. Concerned with these trends, the U.S. government began researching new ways to ensure that interstate drivers didn t work excess hours, and that large trucks were better maintained, and their safety ensured. In 2014, the ELD Mandate was issued. In December of 2015, the FMCSA issued a mandate requiring all commercial vehicle weighing over 10,001lbs, are designed to transport nine or more passengers or are transporting hazardous waste (with placards) must start using an ELD to record Hours of Service (HOS) by December (Exceptions: pre vehicles, driveaway/towaway operations, drivers maintaining RODS for less than eight days in a rolling 30-day period, or drivers who use the 100 air-mile and/ or 150 air-mile short haul exceptions.) ELD s automatically record driving time, engine data, miles driven, duration of engine use, and much more. This Second Wave of fleet management technology requires that fleet managers phase out AOBRDs in 2017, and completely eliminate them from fleet operations no later than December ELDs are to take their place, allowing for enhanced

8 6 visibility, carrier monitoring, and governmental oversight. Today s ELDs not only offer more/better functionality, but they are also less expensive, easier to install, and offer many benefits over prior technologies, including reduction of driver paperwork, greater log accuracy, increased ability for dispatchers to plan for better loads, and cost savings from fewer safety violations and lost time on inspections. THE THIRD WAVE OF FLEET MANAGEMENT TECHNOLOGIES WILL FINALLY REALIZE THE POTENTIAL OF CONNECTED FLEETS Improvements available on ELDs that were not available on AOBRDs include: Electronic compliance with government regulations Passing data to a system where safety and fleet managers can see e-logs in near real-time Driver alerts that help them remain HOS compliant Easier, more accurate HOS record-keeping Automated Driver Vehicle Inspection Reports (DVIR) Driver behavior reporting on speeding, idling, and hard braking to reduce fuel waste Mapping and live traffic to avoid construction and high-traffic areas. ELDs will assist fleet managers by enabling insight into several areas and will keep carriers, drivers, and third-party logistics providers (3PLs) compliant with government regulations. However, ELDs will not fully meet the critical business needs of fleet managers. While the first generation of ELDs will improve the fleet manager s ability to gather government-mandated data and stay compliant with FMCSA regulation, these devices on their own will not empower fleet managers with business-critical, actionable data that will improve fleet operations, increase productivity, enhance driver and vehicle safety, and provide business insights that drive a measurable, repeatable boost to the carrier and/or 3PL s bottom line. THE THIRD WAVE: FLEET OPERATIONS PROFITABILITY The Third Wave of fleet industry technology will improve profitability. In 2017, Automotive Fleet Magazine polled fleet managers and found their top concerns were data management, reducing operating costs (like fuel), and reorganizing fleet management. The Third Wave of fleet management technologies will finally realize the potential of connected fleets. GPS tracking, AOBRDs, and ELDs established the foundation for intelligent fleet management. The data now available will make Intelligent Fleet Management a reality for transportation organizations of all sizes. True Third Wave fleet management systems will leverage the big data collected by fleets in order to conduct enterprise resource planning (ERP). This effort will result in better organized fleets and cost savings.

9 7 Data Management: The key to the success of the Third Wave is gathering and simplifying the analysis of data, allowing better resource planning on the part of fleet managers real-time reports that will illustrate how they can maximize usage of equipment, staff, and resources across the organization. Intelligent fleet management systems provide intuitive user interfaces and deep learning software that understands the unique business challenges of the fleet industry. The very best systems will generate actionable data, easily understood across the organization. And a degree in data science is not required! FLEETUP CUSTOMERS CAN SAVE AS MUCH AS 30 PERCENT USING FLEETUP S PATENTED FUEL WASTE ANALYSIS TOOL Reorganizing Fleet Management: Using a centralized system with data in the cloud, everyone in the organization, from drivers to senior management, will contribute to and draw from the same information, thereby enabling true cross-organization coordination. The shared system and understanding can significantly lessen the complexity for organizations. Under the current system [of fleet management], multiple departments get involved depending on ownership of the vehicle, including the legal department, fixed assets, treasury, tax, and regional offices. Centralized fleet management should also allow field workers focused on serving customers rather than tracking down titles, conducting transfers and licensing vehicles. Automotive Fleet.com, 5 Fleet Manager Challenges in 2017 and Beyond - December 2016 Cost Savings: For the first time, fleet managements systems, working with intelligent ELDs gathering actionable data, can automate reporting, and help save money and time with this formerly manual process. Third Wave fleet technologies will also create a single point of control and management of fleet assets, making it possible for fleet managers to identify more opportunities for cost savings with fuel, maintenance. FLEETUP LEADS THE THIRD WAVE As the Second Wave concludes, fleet operators and brokers are feeling the crunch between government compliance, customer demands, and fleet profitability. The ELD mandate and increasing complexity of fleet management will necessitate that trucking operators invest in new and better fleet management systems to include ELDs for every vehicle. Understandably, transportation companies view this as a painful expense due in part to today s fleet management systems not delivering on the promise of making operations more efficient. And therefore, have not reduced operating costs or improved profitability. FleetUp is leading the Third Wave of fleet technology with solutions that promise to dramatically improve the profitability of fleet operations. While transportation companies will need several years to recoup their investment in ELDs and a fleet management system, FleetUp subscribers will leverage tools like our proprietary Fuel Waste Analysis and HOS Route Management Tool, and cut that time in half. Not only will these technologies reduce operating costs, but they will also enable the delivery of more freight in less time using the same equipment and staff. FleetUp has built the next generation of fleet management technology: FleetUp Command FMS. Using the data gathered, FleetUp is leveraging machine learning to automate many of the functions that other fleet management systems leave to fleet managers, maintenance personnel, drivers, and even executives.

10 8 Machine learning, according to one of its developers Arthur Samuel, gives computers the ability to learn without being explicitly programmed (Arthur Samuel, Wikipedia). Machine learning is a subfield of artificial intelligence in which computers use algorithms to study data and make predictions based on its findings. Using machine learning, FleetUp Command FMS will review a trucking company s data in order to find patterns of, for example, fuel waste, to generate cost-savings. This analysis will save fleet managers hundreds of hours analyzing individual truck and driver behavior and routes. FleetUp Command Pro delivers superior value from the data carriers, and 3PLs collect using the FleetUp ELD. With FleetUp, transportation organizations can: Significantly improve route management and reduce delays, vehicle wear, and HOS violations Dramatically decrease fuel waste Identify necessary interventions for improving safety, driver behavior, and maintenance Prepare concise reports for fleet managers and executives FleetUp solutions create a well-oiled engine that fluidly facilitates compliance for carriers, inspections for drivers, independent contractors, owner/operators, and monitoring of trucks and freight for carriers. The FleetUp Broker Platform offers unprecedented end-to-end visibility into fleets and freight in the cloud between brokers and carriers enabling better customer service, and improved margins for all.

11 9 FleetUp Command FMS combined with the FleetUp intelligent ELD is the most well-rounded solution available today automatically managing both drivers and vehicles, providing real-time optimized route management, fuel consumption analysis, geofencing, and ELD/HOS compliance. It also provides end-to-end visibility in the cloud for every member in the value chain from drivers to brokers with asset tracking, load delivery notifications, emaintenance, and proactive safety checks. Drivers are always connected to the system, and fleet managers, dispatchers, and carriers have complete visibility via a standard Android or ios device. There is even a multi-language voiceover that provides drivers the proper alerts in their native language ensuring HOS compliance. A complete solution will help fleets run and communicate better, but the most important benefit is driving profits through cost savings. The FleetUp Command FMS and ELD will help companies save money a lot of money: FleetUp customers can save as much as 30 percent using FleetUp s patented fuel waste analysis tool. Machine learning HOS Route Management will save time and fuel by assigning the right drivers for the right loads and is based on a real-time analysis of drivers available Hours Of Service. Additionally, HOS Route Management helps drivers avoid traffic, bad roads, higher grades, and inclement weather. The FleetUp ELD is installed as a hidden installation, and also allows the OBD II port to remain open. This allows the FleetUp ELD to remain active and virtually impervious to tampering/shut off, allows maintenance to access the OBD II port for diagnostics, and also enables GPS to remain operational in the case of theft all of which results in reduced violation fines. E-maintenance recognition technology identifies equipment problems before they can take a vehicle out of service. CONCLUSION Over the past thirty years, the trucking industry has been transformed by technology. Drivers, dispatchers, brokers, and customers can now share information automatically and improve visibility across the supply chain. Fleet managers have access to the data they need to not only lower operating costs, but also improve the efficiency of their entire fleet. The potential for improving profitability is real and measurable, and as technology continues to evolve, so will the needs of fleet managers, drivers, and the organizations that monitor for compliance and safety.

12 10 ABOUT FLEETUP FleetUp applies Silicon Valley technologies to fleet management with a patent-pending solution that enables companies to maximize profitability, improve driver safety, and comply with current and upcoming regulations more effectively. FleetUp s intelligent fleet management solutions are intuitive, secure and designed for the needs of fleet companies and their drivers. FleetUp is the first ELD approved by the FMCSA. FleetUp mobile and web-based fleet management solutions are used by NorCal PacLease Kenworth, Samsung SDS America, NGL Transportation and others. The company is based in Silicon Valley, CA with offices in Los Angeles, CA; Santiago, Chile; Shenzhen, China; and Seoul, South Korea. Learn more at fleetup.com or follow us on LinkedIn, Facebook or Twitter. fleetup.com US201706