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5 Reasons Telematics Systems are Essential Cost Savers for Vehicle Fleets of Any Size

Vehicle tracking, or telematics systems, are quickly moving from an industry best practice to a competitive requirement for all types of commercial fleet operations.  While telematics were originally used almost exclusively by large trucking fleets to track shipments and provide ETAs for waiting clients, today nearly every type of fleet, including passenger, local delivery, service providers, construction companies and private carriers, are using a system to reduce costs and streamline operations.

The technology involved with vehicle data tracking was once viewed through a single dimension, as a means of addressing safety-related issues.  Today the same data is leveraged to optimize a variety of business variables including fuel consumption, maintenance costs, driver productivity and customer service.  For an implemented telematics system to be successful, multiple stakeholders must be able to access the data.

According to Steven Bojan, Vice President, Fleet Risk Services at HUB International Limited, "The same tool used to identify unsafe drivers can also be used to reduce cargo damage and more. The data provides customer service representatives with a bevy of information that can be utilized by clients." All of these applications can have real impact on budgets and cost control efforts.

The relationship between driver safety and a streamlined, responsive customer service experience is just one economic motivation to opt for telematics. Here are five reasons why selecting and rolling out the right system is essential for the cost-containing needs of your business:


Pushing drivers and vehicles to their limits usually results in decreased efficiency, which many fleet operators overlook as a huge element of financial waste. When a driver leaves work in the same or better condition as he or she arrived, product and service standards are maintained, reducing the impact of losses and claims. Safety and operations need to work hand-in-hand in order to be truly successful. Selecting the right telematics system will promote this relationship.

Improving fleet fuel economy  

For many fleets, fuel expenses rival the cost of drivers.  Drivers that speed or use excessive RPGs weigh down the vehicle's miles per gallon (MPG).  Furthermore, the unnecessary burning of fuel due to idling is an economic and environmental concern.  Some states are actually passing regulations that limit permissible idle time. Repeatedly violating those regulations can lead to costly fines.

Enhancing customer service  

It is important to know where and how your vehicles are operating. Clients are counting on your driver to deliver or appear on time so that they can conduct business.  A vehicle running late or involved in a crash results in service failures.  In service industries, you are only as good as your last successful effort.

We've already hinted at this, but today's customers demand better, faster communication between all business segments. A well chosen and implemented telematics system will proactively alert dispatch to problems with vehicles or drivers that can be anticipated or avoided. This saves time and money with the simultaneous benefit of reputation management. A sound delivery record translates into business opportunity growth.

More insurance carriers are now requiring telematics systems 

Insurance carriers are beginning to demand the use of a telematics system in order to provide coverage for fleets of any size. Systems equipped with video feeds can help exonerate a fleet operator from a crash for which they are not responsible.  As Bojan says, "A picture is worth more than a thousand words." In turn, this means lower premiums and less wasted time and money during the claims dispute process.

An answer to the skyrocketing costs of auto liability claims  

As mentioned above, a growing number of insurance carriers are now requiring telematics systems from the businesses they insure. But keep in mind, this demand protects your business as well as the carrier covering your risks.

Many telematics providers offer a "bread crumbing" feature, a component that tracks where drivers have traveled over a 24-72 hour period. This can be very important in the event a crash occurs, but your driver says he wasn't there. Was he or she out of route? Knowing with certainty can save valuable claims and litigation costs.

It's clear that commercial fleets of all sizes will have to select and implement a telematics system sooner or later, whether required by law or driven by the costs and consumer demands associated with running a successful business. When choosing the tools and providers that are right for your company, make sure operations and safety are partners in both selection and implementation.  According to Bojan, "Up to 70 percent of users will experience failures if telematics solutions are not implemented with multiple stakeholder buy-in."

For more information and best practices, listen to our webinar recording: Improving Fleet Performance with Telematics.

Talk to your HUB International Risk Services professional about selecting the right system for your company.

For more information regarding transportation and fleet insurance, please visit HUB Transportation.