The Car and Truck Fleet and Leasing Management Magazine

The Use of Telematics to Increase Fleet Safety

November 2006, by Mike Antich and Chad Simon

The use of telematics – the combination of global positioning systems (GPS) and remote diagnostics – in fleet continues to grow, providing fleet managers the ability to monitor vehicles and enhance driver productivity, thus saving money by controlling unnecessary idling and miles driven, fuel purchases, accidents, and other fleet functions. Telematics systems allow fleet managers to obtain real-time, downloadable status reports on driver behavior, including vehicle speed, location, and route compliance; monitor vehicle diagnostic components; and set customized alert parameters, among other features.

Monitoring Driver Behavior

Many fleet managers are experiencing positive results through the use of telematics, including slower vehicle speeds and decreased mileage, which also decrease a driver’s chance of getting into an accident, according to David Coleman, vice president, telematics strategy for PHH Arval. The total cost of accidents is estimated at $160,000 per million vehicle miles traveled (MVMT). Risk exposure can be calculated at 16 cents per mile, meaning fleets are covered for 16 cents of risk exposure for every mile a vehicle is on the road when physical damage and all other associated expenses are factored (see figure on facing page). Conversely, fleets save 16 cents for every mile not driven, according to Coleman.

If fleet managers can eliminate unnecessary mileage, they eliminate risk exposure. “For instance, with service fleets, managers can track and eliminate odd-hour and unauthorized usage and excessive speeding through implementing a telematics program,” said Coleman. “For every study we have done, data shows monitored drivers are less likely to be involved in an accident. We know they drive slower because policies are enforced and drivers are aware of the device’s presence in the vehicle.”

Addressing Negligent Entrustment

“The reality is that fleets have a responsibility to address the issue of negligent entrustment, and we have been working with our clients to help them identify what constitutes negligent entrustment and look at a total solution,” said Pam Walinski, director, vehicle accident services for PHH Arval. “The majority of clients in our accident management program also subscribe to our MVR services. An MVR check should be run as soon as a driver is involved in an accident, when traditionally, MVRs may have only been run annually. Clients are becoming more aggressive as to how frequently they obtain MVR data and using the record in conjunction with actual driving data captured through PHH Onboard.”

Once a telematics device is installed in a vehicle, the organization can act promptly to resolve any issues with an employee’s driving activities, regardless of whether the driver is a senior executive or star salesperson. “This is the new battleground for helping companies control risk exposure and negligent entrustment,” says Coleman. “We no longer need to wait to receive a bad motor vehicle record, identifying who has been caught exhibiting bad behavior.”

“Looking at a population of historical driver data to identify contributing elements that result in an accident, we can identify people whose current behavior will likely result in an accident, and most importantly, correct that behavior ahead of time,” says Coleman. “The goal is to identify the right training for individuals based on their behaviors, actions, and risk signature.”

Increased Fuel Expense

In the past five years, the average company’s annual fuel expense has risen from $5 million to $40 million. Therefore, to counteract this added expense, an organization must increase sales by $20 million, according to Coleman.

“Telematics are helping fleets reduce fuel expenses by eliminating unauthorized use, reducing idle time, decreasing miles driven through better routing, and lowering speeds. But the big ‘wow’ in terms of reducing costs is when you can avoid the cost of accidents. We’re moving from reactive to proactive. And that’s good news for driver health, safety, and productivity.”

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