Fleet Management: still a long way from a mature market
At Machina Research we recently updated our outlook on the fleet management sector. Although it is often considered as one of the more mature M2M sectors, it is growing rapidly and, more importantly, evolving in many different ways.
At the end of 2013 there were approximately 11 million Fleet Management connected devices worldwide. By 2023 we expect that to grow to 60 million, plus another 10 million vehicles connected via a factory-fit connection. In revenue terms, it will grow from USD2.9 billion to USD11.7 billion over the same period.
Today Fleet Management is mainly about narrowband data. There has been some talk about adding real-time video to applications, for security, safety, and even for monitoring driver behaviour where privacy regulations permit, but for the most part it is just that – talk. There have been some interesting deployments of video cameras in telematics, but these almost all use locally stored footage, recorded over when storage is full and only retrieved if required to support or defend a claim. Where devices and connectivity are being upgraded to support 3G and 4G, the main driver has been maintaining compatibility with future network plans rather than the requirements of the application
The use cases for fleet management are well established and mature – job management and scheduling, vehicle tracking and route optimisation, vehicle monitoring and preventative maintenance, driver hours tracking, and driving behaviour monitoring, which often includes fuel consumption reduction and accident reduction. The business cases for these use cases also seem to be well established. Suppliers, and to a slightly lesser extent happy adopters of telematics technology, point to savings in fuel consumption ranging from 10% to 25%, and reductions in insurance claims costs as high as 70%. There are similar claims about increases in labour productivity, ranging from a 10% improvement up to 50%, and savings on maintenance costs too.
Driver-related applications in particular are often about meeting regulatory requirements linked to safety considerations. Although the details of the specific regulations, which are usually country-specific, are in the process of changing, the basic requirement to track the time individual drivers spend at the wheel and the length of their rest breaks, stays the same.
Despite the maturity of the technology and the use cases, the fleet management sector is in something of a ferment at the moment. Among the traditional specialists there has been a flurry of mergers and acquisitions. Since 2011 Trimble has acquired PeopleNet, Punch Telematix and Tata’s telematics Indian division, GEOTrac in Canada, TMW, and ALK. Masternaut merged with Cybit in 2011, one of its key competitors in the UK market, and was itself acquired by FleetCor, a fleet payments provider, in June 2014. Telogis acquired Navtrak in July 2012 to increase its presence in the small to medium business market. In February 2014, Lysanda bought stolen vehicle recovery specialist TRACKER with the intention of combining to create a new Tantalum Corporation including both B2B and B2C products. TomTom bought the telematics operations DAMS Tracking from parent company Diffusion Artistique et Musicale SAS (DAMS) in April 2014, and Fleetmatics bought the Italian company KKT which owns the routing optimization and scheduling software Routist in June 2014.
Everywhere one looks in Fleet Management the sector is in flux. Growth is still rapid, M&A is rampant, regulation is introducing new dynamics and service propositions are evolving rapidly. While it may be one of the longest established M2M sectors, it is hard to describe it as ‘mature’.
Written by: Jeremy Green, principal analyst