Telematics: The Future Of Organized Logistics

The transport logistics sector in India has seen a huge wave of disruptive investments over the course of the last year. Road transportation contributes a massive $150 billion dollar to the Indian GDP annually but is also one of the most disorganized sectors in the Indian economy. Several players are trying to organize the sector through technology – some are doing it to capture new market opportunities while others are struggling to find enough differentiation to even survive.

Fleet telematics promises to play a key role in this effort for organization of the sector. India currently has an estimated VTS (Vehicle Tracking Systems) adoption of less than 1% as compared to near 100% adoption in developed economies. However, there are several solid reasons for fleet owners to adopt VTS and fleet telematics to improve profitability and operational efficiency.

At its basic level, VTS systems are able to track four essential data points: speed, time, location, and direction. More complex systems are also able to remotely provide such data as engine behavior, mileage, safety measures, tyre conditions, etc. Telematics is the key tool to solve large complex transportation problems like route planning, demand forecasting, achieving predictable delivery times, driver education, monitoring vehicular performance and establishing performance-based rewards. This helps not only fleet owners but also their customers in getting reliable information about their in-transit cargo movement – that is currently heavily dependent on the word of the driver behind the wheel – and planning future consignments.

A quick survey of transportation companies in the country will reveal that the number one complaint of most companies is the severe shortage of drivers. While there are several reasons for this but a big part of it is that there is a strong disincentive for honest people from joining the driving profession. For example, because of the lack of a transparent and fair performance measurement system, every driver in a fleet of vehicles is paid the same salary. A dishonest driver is able to make some money on the side whereas an honest driver loses out since he’s paid the same as everybody else. This creates a vicious loop that prevents honest, hardworking, self-respecting people from becoming a driver – the entire driver community is labeled as dishonest, treated with mistrust and not given respect they deserve for their hard work.

Telematics has the potential to change this entire landscape. With telematics, it is possible to measure driver behavior in deeper and much more meaningful ways. Even at the most basic level you are able to measure and monitor data like “hours driver per day”, “distance traveled per day”, “average speed”, “maximum speed”, “number of idle days in a month”, “harsh braking”, and “night and unsafe driving”. You can thus reward drivers who work harder – somebody who drives 10 hours a day versus 5 hours a day can finally be given differentiated compensation – thereby creating a strong incentive to actually perform better. Such monitoring and measuring also helps you track and improve fleet performance over time by making the right interventions. Most importantly, it also makes it easier to run large fleets at different locations with a centralized tracking and monitoring team.

It is estimated that cost of logistics in India is approximately 5% higher in India as compared to developed economies. This means that there is a huge value gap to be captured considering the size of the industry. Smart investors have already realized this and are frantically backing professionals who can bridge the gap between technology and transportation. We have already seen the disruption happen in the taxi segment via companies like Uber and Ola and the competitive pressure is already being felt in long haul transportation who are now looking at fleettelematics to offer them a competitive edge over their peers. With giants like Tata Motors now entering the telematics space, we are likely to see an exponential growth in adoption of the telematics technology in the near future and with it a marked improvement in fleet utilization.