Corporate Themes

Telematics and IoT: The Powerful Catalysts Reshaping the Logistics Industry

 
May 7, 2018


It’s hardly surprising that the world’s biggest logistics industry supports the world’s largest economy. The trucking industry is the U.S. economy’s lifeline, with trucks handling over 70% of the freight tonnage movement across the country. According to the American Trucking Associations, trucking was the dominant mode of freight – moving 10.73 billion tons of freight in 2017. To help put this in perspective: the freight industry in the U.S. annually requires over 3.6 million heavy-duty Class 8 trucks and over 3.5 million truck drivers. Given the scale at which the industry is growing, existing fleet management methods that are incapable of effectively handling truck failures, accidents, driver injuries, and late deliveries, are no longer sustainable.

Besides keeping their fleet on the go, ensuring fleet safety and optimizing operational costs have become the primary concerns of logistics players. Telematics solutions along with IoT technologies can play an important role in achieving these objectives through fuel management, route optimization, real-time tracking, and vehicle MRO management.

Three key use cases of telematics and IoT in logistics

Together, telematics and IoT solutions can help logistics players gain greater control over their business through:

  • Superior fuel management: –Annually, the cost of fuel accounts for 38% of the total shipment cost in the U.S freight industry and over 38 billion gallons of diesel fuel are consumed. Telemetric analysis can give fleet managers better insights on managing their fleet on a daily basis and become more cost efficient. Traditionally, the industry has attempted to optimize fuel consumption by taking the shortest routes. Telemetric analysis takes it a step further by tracking and pin-pointing- sudden accelerations, harsh braking, rash cornering, and driving beyond speed limits– the other key factors contributing to high fuel consumption.
  • Proactive vehicle maintenance and driver safety: Wages, driver benefits, vehicle repairs, maintenance, and insurance account for 47% of the total operational costs of the freight industry. Despite this, many freight companies have failed to focus on the health of the vehicle or the safety of drivers. This is now changing – freight operators are realizing that trucks and their drivers are their primary assets, whose wellbeing should be a top priority. Telemetric analysis can be utilized to promote safer driving by studying driver behavior through IoT sensors installed in vehicles that generate timely alerts for over speeding, hard braking, acceleration or other anomalies. The real time data thus obtained can be combined with historic trip analysis to provide customized training to drivers, and also to reward them with incentives to promote safer and efficient driving. Data obtained from telemetric analysis can also be used to ensure proactive vehicle repair and maintenance, reducing unplanned downtime and inefficiencies.
  • Optimized time management–Fulfilling customers’ same-day delivery expectations is now a must-do for all businesses. Faced with such enormous pressure, real time location information is of vital importance when it comes to fleet management. Telemetric analysis can be used to optimize route planning, track unscheduled diversions and delivery status of goods. Customers can also be provided live updates on their goods’ shipment status, resulting in superior engagement and service.

Ushering an era of smarter and interconnected logistics

Leveraging telematics solutions in logistics has the potential to re-shape business models to keep pace with changing consumer and market demands. Its impact on managing inbound and outbound logistics data, and ensuring interconnectivity with backend processes such as accounting and inventory control, can help businesses realize the massive value of connected logistics. At a time when operational cost and efficiency are key growth drivers, telematics and IoT can prove to be the catalysts, the logistics industry needs to future-proof operations.

It’s hardly surprising that the world’s biggest logistics industry supports the world’s largest economy. The trucking industry is the U.S. economy’s lifeline, with trucks handling over 70% of the freight tonnage movement across the country. According to the American Trucking Associations, trucking was the dominant mode of freight – moving 10.73 billion tons of freight in 2017. To help put this in perspective: the freight industry in the U.S. annually requires over 3.6 million heavy-duty Class 8 trucks and over 3.5 million truck drivers. Given the scale at which the industry is growing, existing fleet management methods that are incapable of effectively handling truck failures, accidents, driver injuries, and late deliveries, are no longer sustainable.

Besides keeping their fleet on the go, ensuring fleet safety and optimizing operational costs have become the primary concerns of logistics players. Telematics solutions along with IoT technologies can play an important role in achieving these objectives through fuel management, route optimization, real-time tracking, and vehicle MRO management.

Three key use cases of telematics and IoT in logistics

Together, telematics and IoT solutions can help logistics players gain greater control over their business through:

  • Superior fuel management: –Annually, the cost of fuel accounts for 38% of the total shipment cost in the U.S freight industry and over 38 billion gallons of diesel fuel are consumed. Telemetric analysis can give fleet managers better insights on managing their fleet on a daily basis and become more cost efficient. Traditionally, the industry has attempted to optimize fuel consumption by taking the shortest routes. Telemetric analysis takes it a step further by tracking and pin-pointing- sudden accelerations, harsh braking, rash cornering, and driving beyond speed limits– the other key factors contributing to high fuel consumption.
  • Proactive vehicle maintenance and driver safety: Wages, driver benefits, vehicle repairs, maintenance, and insurance account for 47% of the total operational costs of the freight industry. Despite this, many freight companies have failed to focus on the health of the vehicle or the safety of drivers. This is now changing – freight operators are realizing that trucks and their drivers are their primary assets, whose wellbeing should be a top priority. Telemetric analysis can be utilized to promote safer driving by studying driver behavior through IoT sensors installed in vehicles that generate timely alerts for over speeding, hard braking, acceleration or other anomalies. The real time data thus obtained can be combined with historic trip analysis to provide customized training to drivers, and also to reward them with incentives to promote safer and efficient driving. Data obtained from telemetric analysis can also be used to ensure proactive vehicle repair and maintenance, reducing unplanned downtime and inefficiencies.
  • Optimized time management–Fulfilling customers’ same-day delivery expectations is now a must-do for all businesses. Faced with such enormous pressure, real time location information is of vital importance when it comes to fleet management. Telemetric analysis can be used to optimize route planning, track unscheduled diversions and delivery status of goods. Customers can also be provided live updates on their goods’ shipment status, resulting in superior engagement and service.

Ushering an era of smarter and interconnected logistics

Leveraging telematics solutions in logistics has the potential to re-shape business models to keep pace with changing consumer and market demands. Its impact on managing inbound and outbound logistics data, and ensuring interconnectivity with backend processes such as accounting and inventory control, can help businesses realize the massive value of connected logistics. At a time when operational cost and efficiency are key growth drivers, telematics and IoT can prove to be the catalysts, the logistics industry needs to future-proof operations.

Saloni Kakkar works as Data Scientist with the Analytics and Insights R&D team in Tata Consultancy Services’ (TCS) Business Operations unit. She holds an M.Sc. degree in Statistics from Panjab University, Chandigarh, India. She is an expert in building various statistical and mathematical models across clusters.