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The Real Economics of Fleet Telematics

The Real Economics of Fleet Telematics

Are companies getting their share of the benefits from the adoption of fleet telematics?

Author: FleetLogik/Friday, October 20, 2017/Categories: Featured, Resources

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The benefits of telematics adoption by commercial fleets are well-documented and has evolved well beyond the early days of dots on a map.  Not surprisingly an estimated 40% of North American fleets are now utilizing some form of intelligent fleet management. The technology empowers fleet-based organizations to reduce fuel consumption, decrease hours in the workday, do more with each vehicle and become more eco-friendly, among a myriad other benefits. But when you look collectively at the total economic impact of things like millions of service vehicles idling their engines and driving less, and businesses having far better visibility and control over their operations, the impact is truly remarkable.

Fleet telematics has directly influenced substantial productivity gains while reducing fleet costs for businesses large and small, representing $50B or more in economic gains.  The additional positive environmental impact is often overlooked, with at least 6M tons of CO eliminated as fleets now consume fewer gallons of fuel.   

Reduced operating expenses 

Savings comes from a number of sources but generally it is about improved productivity of both vehicles and personnel. 

On average, across all industries data shows a 20% decrease in payroll hours was derived from having an optimized fleet. In many cases, this makes the difference between a standard versus overtime workday, meaning not only less hourly pay overall, but also the reduction or elimination of overtime payouts as well.

The potential dollar impact is substantial. On average across all industries, using wage averages by industry according to the Bureau of Labor Statistics, annual payroll cost savings were $14,962 per vehicle. That means that a business operating just 5 trucks could save $74,810 per year through optimization. A larger fleet of 150 trucks could save a staggering $2.2 million using intelligent fleet management technology.

Fleet Utilization

On average utilization increased 15% from a combination of improved dispatch, reduced vehicle downtime and improved productivity.  That equates to roughly 1 in 7 vehicles being either eliminated or reassigned to growing the business.

Idle Reduction and Fuel Efficiency

“Idle” is a term used to define when a vehicle’s engine is running but the vehicle is parked or not moving. Some portions of idle time are more difficult to control that others such as the time spent at a traffic light – but even then with more efficient routing idle times can be decreased.  UPS avoids left turns in their route planning, in part to avoid unnecessary idle time. 

There is a large portion of idle time the driver has complete choice.  Though it may not be top of mind, idling is one of the largest contributors to wasted fuel and with telematics managers can work with drivers to minimize unnecessary idling.  On average fleets achieved a 12% decrease in idling minutes (per vehicle per day) after implementing commercial vehicle telematics technology. That figure considers idling minutes at inception to post implementation measurement.  

Plumbing, Heating & HVAC companies experienced the most drastic decrease in idling minutes with a 27% drop – a decrease from 37 idling minutes on average per vehicle per day, to 27 idling minutes per vehicle per day. In a typical 20-day work month, this equates to 200 minutes of idling time saved and a significant savings in fuel.

Other Benefits

There are many other benefits companies are achieving with the advancement of telematics.  Managers now have with the ability to monitor key driver behaviors associated with risky or unsafe driving such as speed, harsh braking, acceleration and cornering.  Simply knowing where and the status of every asset in real time and with pin-point accuracy is a basic but essential element of managing a fleet.  Vehicle maintenance is far more efficient with service schedules automatically updated and vehicle health monitored with advanced diagnostics.   Companies have seen a reduced paperwork as result of telematics – from mileage updates, fuel reporting and job time keeping, systems are tracking and storing the minute details in an easy to access format.  Last but not least is the customer confidence and competitive edge telematics has provided companies embracing the technology.  More customers in many industries are expecting if nor demanding service providers to have the abilities telematics provides. 

Interactive Benefit Calculator

FleetLogik has created a web based interactive benefit calculator that companies can use to estimate their own savings and return on investment using inputs that are unique to their own operation.  Feel free to explore on your own or call FleetLogik for more information on how we can help you achieve more with your fleet.    

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Number of views (1296)/Comments (1)

1 comments on article "The Real Economics of Fleet Telematics"

Tom S

10/21/2017 7:53 AM

Good article. gives us something to compare our results. We are doing ok0 but could be better. Didnt mention the geofence benifits.

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