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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation

New markets for fleet telematics, part I

Jan Stojaspal analyzes the key trends propelling the uptake of fleet telematics in urban buses, motor coaches, taxis, emergency vehicles, rental fleets and light commercial vehicles

Cost savings, driver safety and passenger convenience are shaping up as the main driving forces behind adoption of fleet telematics across a wide range of previously neglected market segments—urban buses, motor coaches, taxis, emergency vehicles, rental fleets and light commercial vehicles.

Urban buses

Urban buses are often lumped together with motor coaches, but they are a distinct market segment with many unique requirements, particularly an ever growing reliance on complex intelligent transport systems (ITS) fleet operators use to optimize vehicle deployment in real time, manage fuel consumption and ensure passenger comfort through driver monitoring and timely passenger information.

Demand for ITS is increasing around the world as a growing number of cities are embracing public transportation to fight traffic jams, improve air quality and better serve swelling populations. Commitment to carbon footprint reductions is already part of tendering requirements in many countries, according to Jaap Groot, European sales director for MiX Telematics. Public subsidies are increasingly tied to whether ITS operators can add value to riders through real-time passenger information systemsthat employ a combination of electronic signs at bus stops and smartphone apps with route planning and real-time updates.

Brazil is a particularly hot market at the moment as its cities prepare for visitors to the FIFA World Cup in 2014 and the Summer Olympic Games in 2016, says Christiano Blume, LAM host manager, strategy and portfolio management, Volvo Group Telematics.But demand is growing in other populous nations, such as China and India, too. (For more on telematics in Brazil and other emerging markets, see Industry insight: Telematics and emerging markets.)

And it is also growing in Europe. The United States, for its part, is nearing saturation levels due to heavy public spending by the U.S. Department of Transportation and the Department of Homeland Security aimed at securing public transit following 9/11. “The potential of emerging countries is very high; [their] demands for mass transportation are huge,” Blume says.“Brazil, for example, is the biggest market in the world for Scania buses and probably also for Volvo buses.” (For more on Volvo and fleets, see Volvo, apps and fleet telematics.)

Although this is a space where many OEMs offer their own solutions, low volumes of vehicles—in all of Germany, only about 50,000 urban buses are in service—and cutthroat competition favors ITS specialists like IVU Traffic Technologies. 

The ITS imperative

This Berlin-based company of some 350 software engineers and €40 million in annual revenues specializes in planning, enhancing and controlling the deployment of vehicle fleets and staff. During more than 35 years in business, IVU has made a name for itself for building reliable, robust ITS systems around private radio networks. Think Tetra, a digital mobile radio technology that is in wide use by government agencies and emergency services the world over. 

But while private radio networks are an excellent solution when it comes to instant call set-up and ease of handling group calls, they are expensive to build and maintain. According to Claus Dohmen, IVU’s product manager public transport, it costs between €5 million and €15 million to set up a private radio network for a city the size of Düsseldorf or Cologne, and additional money to pay for onboard equipment and maintenance. So IVU recently launched a new line of products that are built around open cellular and Internet technologies and are much cheaper to operate.

With IVU’s new ‘Voice over IP over GPRS technology, there is no up-front investment into network build-up or steep maintenance fees. There is only the cost of onboard units (roughly €500 per device) and a regular monthly fee for data connectivity and service. (Clever software engineering got call set-up times under one second and also enabled group calls that are on par with private radio networks.) “The idea is to have not so much investment in infrastructure, but rather pay operational expenses that even in many years of operation will not add up to the investment volume of a private radio system,” Dohmen says. 

Passenger information systems

The drive to reduce costs of ITS further extends to passenger information systems, where public transit operators are starting to embrace smartphone apps and Web portals as a way of complementing, and sometimes even replacing, the €10,000+ electric signs they install at bus stops to announce arrival times and other information. (For more on smartphones, see Q&A: Smartphones as the gateway to fleet telematics.)

A big discussion in the industry is also over whether to open this schedule and real-time passenger information to third-party aggregators like Google or independent app developers so that they can offer it through their own services, Dohmen adds. Some, like Transport for London, are happy to do so. To make the information publicly available to third parties, Transport for London, an IVU client, successfully launched a service built on IVU’s unified real-time API (URA) and scalable server architecture called IVU.realtime.cloud. But other public transit companies are balking for fear that a poor use of the information might tarnish their reputation.

According to Blume, an ability to handle multiple brands and even multiple modes of transport, such as urban buses together with trams and light rail, is another important requirement for ITS solutions today.

In 2008, Volvo won a tender to equip 1,400 urban buses in the central Brazilian city of Goiânia with its ITS4mobility technological platform. It won the contract despite the fact that none of the buses in the city’s fleet were made by Volvo.

ITS4mobility gives bus operator’s control of bus operations through real-time monitoring and constant contact with the drivers via text messaging while also providing passengers with real-time information on the buses, at bus stops and even in shopping malls.

Motor coaches

Unlike solutions for urban bus transportation, which emphasize complex systems management and optimization, motor coach telematics is built to suit vehicles that travel long distances on highways and make few stops.As a result, primary attention is paid to vehicle tracking, driver and passenger safety, and, of course, fuel consumption.

MiX Telematics’ safety solutions for motor coaches, for example, integrate Mobileye’s accident avoidance technology, which monitors the driver’s driving style for signs of fatigue and sounds an alarm the moment the driver starts nodding off. Another safety device that MiX Telematics offers is Alcolock’s tester, which disables ignition if alcohol is detected on the driver’s breath before or at random intervals during a trip.

According to Rémi Demerlé, global partnerships director at Telenor Connexion, there is also growing interest in 4G Wi-Fi routers to provide onboard connectivity for motor coach passengers. And there are early signs that connected infotainment may also be a good fit.

Lower fuel consumption

Solutions that help lower fuel consumption are in demand by both urban bus fleets and operators of motor coaches, though bigger savings can be achieved in the urban bus segment, particularly through reductions in idling.

Last November, Groot of MiX Telematics spent a day with an Irish customer to help him analyze the operations of his 650-bus fleet. It turned out the client was losing £100,000 a month in excessive idling alone, idling that lasted more than five minutes.

According to Groot, good driving habits can reduce fuel consumption by as much as 10 percent, but the training to instill them needs to be backed up by some kind of instant feedback. “If you have a thousand buses, you normally have around 3,000 drivers,” Groot says. “It’s not going work through just simple reports where the manager has to talk to the driver every week or every month.” (For more on feedback, see Managing driver behavior with fleet telematics and The role of feedback systems in fleet telematics.)

MiX Telematics’ simplest solution is called RIBAS, a small display that gives the driver instant visual and audible feedback in five areas: R for over-revving, I for excessive idling, B for harsh braking, A for harsh acceleration and S for speeding. Green lights mean everything is fine; amber is a warning that the driver is doing something wrong and needs to correct it; red is a serious violation that is stored in a database.

Despite the obvious cost savings, fleet operators need to tread carefully when putting these systems into operation. MiX Telematics, for one, makes sure that HR departments and unions are onboard before a rollout begins in order to ensure acceptance and transparency.

If the system comes across as punitive, “We are on the wrong track,” Groot says. “It has to be seen as a competition, doing the right thing.” He adds, “The goal is not to have no orange or no red. The goal is to reduce [their occurrences]. So rather than having penalties, companies give rewards to those drivers that have the best score.”

Taxis

Taxi fleets, with their widely dispersed assets and reliance on central dispatching, are a natural fit for telematics. Most are already using it. Traditionally, taxi fleets, much like urban bus fleets, have relied on dedicated two-way radio frequencies and running the software on their own servers.

But a growing number of fleets, particularly smaller ones, are opting for Web-based solutions that communicate over cellular networks, says Clem Driscoll, author of U.S. Mobile Resource Management Systems Market Study 2012-2013 Edition.

Many of these Web-based solutions still interface with custom-built onboard computers, but smartphones and tablets are gaining, says Lauchie Scougall, business development manager at Sigtec Europe, a global provider of intelligent transport systems. “‘Bring your own hardware’ has really taken off in recent years,” he says. “So the driver can use an application on a smartphone to receive jobs, while customers can also use a smartphone application to make a booking.”

Not so fast, says Smartphone Apps Committee, a task force formed by 15 US municipal governments in response to a spate of smartphone apps that connect passengers directly with drivers or operate on a peer-to-peer basis. Of these apps, Uber, an on-demand car service that lets anyone with a GPS-enabled smartphone summon a professional town car or limo driver, has drawn the most ire.  

The Uber service is currently available in more than a dozen US cities as well as London, Paris, Amsterdam, Toronto, Vancouver and Sydney. But it is often not welcome. San Francisco and Chicago cab companies are suing Uber for trademark violations and consumer fraud. In October, New York managed to shut down Uber’s foray into yellow cabs. And in November, the California Public Utilities Commission fined the San Francisco-based start-up $20,000 for alleged “public safety violations.” Meanwhile, the Smartphone Apps Committee has drafted guidelines for new laws to be passed that would put Uber and other such services under strict regulatory scrutiny and very likely drive them out of business.

With rear-seat infotainment becoming more common in passenger vehicles, several major US cities, including New York and Chicago, are starting to require that taxi cabs are equipped with passenger information systems, which include a back-seat display that gives them a map with current location, plays TV clips with information about the city and even accepts a credit card swipe, though no one is yet asking for connected infotainment, Scougall says.

Next week: New markets for fleet telematics, part II

Jan Stojaspal is a regular contributor to TU.

For more on fleets, see Industry insight: Fleet telematics.

For the latest on fleets, visit Telematics for Fleet Management Europe 2013 on March 19-20 in Amsterdam.

For all the latest telematics trends, check out V2X for Auto Safety and Mobility Europe 2013 on February 20-21 in Frankfurt, Telematics India and South Asia 2013 on April 17-18 in India, Telematics Russia 2013 in September in Moscow, Telematics Detroit 2013 on June 5-6 and Content & Apps for Automotive Europe 2013 on June 18-19.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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Insurance Telematics USA 2014

03/09/2014 - 04/09/2014, Radisson Aqua Blu, Chicago

Pricing Becomes a Commodity: Insurers Enhance the Consumer UBI Proposition by Integrating Complimentary Services for Product Differentiation