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What Is Telematics and How Does It Work? (+16 Reasons You Need It) Rastrac Team | Feb 12, 2021 9:54:00 AM

“How do I use a telematics system for my fleet?” We get this one a lot! While many in the industry have heard of telematics – after all, the market is projected to reach more than $62 billion by 2025, up nearly 16% from 2020 – not all are familiar with how telematics work.

Telematics technology is of course related to GPS tracking, and it is an ideal way for fleet companies to monitor their vehicles, equipment, and employees (it may be more important now more than ever in our post-COVID era). But before we delve into the top 16 benefits of telematics for fleet management, let’s take a step back and look at the origin of telematics, how it works, and how it’s installed.

What is Telematics?

Telematics is a combination of two words: telecommunications and informatics. It is often defined as “the blending of computers and wireless telecommunications technologies, with the goal of efficiently conveying information over vast networks to improve a variety of services.”

The word telematics was first coined in a United States Government Technology report in 1978, during the Cold War. This was when global positioning systems (GPS) were being developed mostly for military and intelligence applications due to concerns over national security and nuclear threat. It wouldn’t take long, however, before major research programs began experimenting with vehicle telematics to improve road safety and reduce environmental impact.

Today, telematics’ meaning is largely connected to its use in tracking vehicles and assets when having up-to-date information on their location is needed for daily business functions. One example of telematics as it applies to modern fleet management is GPS tracking.


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How Do Telematics Systems Work?

Telematics systems work by connecting a device, such as a GPS tracker or other data logging tool, to an asset. Then, the tool collects key performance data about the asset. Once collected, the device will send the information to a data center where it can be collated, interpreted, and analyzed.

So, what does a telematics system in a car or truck do? In the case of fleet telematics, the telematics system will store information in a database that can be accessed by your fleet management system. Whether this database is a remote cloud server or a server/computer on your network may vary from one telematics solution to the next.

Once the data has been uploaded, the fleet manager can access it via the telematics system’s software—the specific operation of which may vary depending on the telematics solution used.

How is a Telematics Device Installed?

Telematics devices can be installed in different ways depending on their type. For example, a location-tracking GPS device might be installed in a vehicle’s onboard diagnostics (OBD) port (which makes the device easy to install and provides power whenever the vehicle is active).

Other GPS devices might be installed elsewhere in the vehicle to make them harder to find and tamper with—though they may need to be spliced into the vehicle’s power supply unless they have an independent power supply, such as a battery or a solar charger.

Some devices, such as temperature monitoring systems for refrigerated (i.e. reefer) trucks might need to be mounted in the cold compartment of the vehicle (or have sensors connected to the cold storage area).

Whenever installation requires splicing the telematics device into the vehicle’s power supply, this is usually done as part of a professional installation. Meanwhile, OBD port-mounted devices can usually be installed in a matter of seconds even by a non-professional.

16 Benefits of Telematics Systems

Telematics GPS tracking devices can be used in a variety of ways and offer a number of benefits. Here are the top 16 ways telematics can help your company.

1. Improve Fleet Efficiency

Whether your business is a B2B or a B2C, the efficiency of your vehicle fleet can have a direct impact on your company’s overall customer service experience. Think of it this way: if your fleet vehicles are delayed by traffic jams, breakdowns, or less than optimal route planning, are your customers more likely to be satisfied or dissatisfied?

Vehicle telematics helps you provide awesome customer service by keeping your vehicle fleet moving on schedule. For example, GPS tracking solutions allow you to remotely track the position of your fleet vehicles so that, if one gets stuck in traffic, you can quickly give that vehicle a detour to follow to minimize the delay.

2. Set Geofencing Boundaries

A geofence is like an invisible fence. When a GPS device crosses the “fence,” a response is triggered. In fleet management, geofencing technology creates virtual boundaries around specific geographic locations such as warehouses, distribution centers, and delivery destinations. If a fleet vehicle leaves these boundaries, fleet managers are notified. A vehicle leaving geofenced boundaries can signify an employee tending to personal matters on company time or vehicle theft.

3. Track Driver Behaviors to Improve Safety

Are drivers accelerating and decelerating too fast? Taking turns too recklessly? With a vehicle telematics system, it’s possible to track driver behaviors in real-time so unsafe behaviors can be identified and discouraged while good drivers are rewarded. This can help to reduce risks so drivers, vehicle assets, and products arrive safely and on time.

4. Increase Driver Accountability

Help guide your employees and ensure that they’re following rules like the Federal Motor Carrier Safety Administration’s (FMCSA’s) Hours of Service (HOS) rules—and prove it to regulators! With fleet telematics, you can track when drivers and equipment operators start or stop work. Then, you can organize that data into reports for regulatory organizations if you’re ever audited.

5. Prevent Vehicle Theft

In 2019, more than 720,000 vehicles were stolen, and fleet vehicles and commercial trucks are not immune to the threat. These automobiles are valued as a whole, for their parts, or for their cargo. The good news is that theft is going down, and much of it is attributed to vehicle apps and computerized safety options including telematics. GPS tracking devices can curtail vehicle and equipment theft—and improve the odds of recovering your assets intact if they are stolen!

6. Track Trailers and Assets

GPS tracking for fleets isn’t just for the primary vehicles. Telematics can also be used for trailers that are being used to transport goods. These are often magnets for thieves, who know there is likely to be pricey equipment or material inside that they can resell (the FBI reports that more than $25 billion in cargo is stolen each year). A GPS tracking unit can help you recover trailers and assets, as well as monitor their usage.

7. Prevent Fuel Waste

Fleets, especially large vehicle fleets with commercial-class vehicles, consume a lot of fuel. However, not all fuel consumption is productive. According to the Department of Energy, heavy-duty trucks consume about 0.8 gallons of fuel per hour when idling. That may not sound like much, but we’ve done the math, and it can really add up.

Typically, a long-haul truck idles about 1,800 hours per year, which is about 1,440 gallons of gas wasted. While gas prices were down in 2020 due to the pandemic, let’s say diesel gas costs $3 a gallon. That one truck will have wasted $4,320 in gas—on top of extra maintenance costs for 1,800 hours of vehicle wear and tear.

With fleet telematics data from a GPS device, wasteful idling behaviors can be identified so they can be corrected early on.

8. Protect Temperature-Sensitive Product/Cargo

Temperature tracking systems can relay critical data to a fleet manager in real time—providing alerts if the refrigeration in a truck suddenly fails. Armed with this notification, fleet managers can alert drivers right away to take measures to protect the product—or dispatch another truck with a working refrigeration unit to replace the failed unit. By taking action quickly, cold storage products can be protected from spoilage.

9. Improve Customer Satisfaction

Today’s consumers expect to have up-to-the-minute information on their products’ journeys. With a fleet telematics solution, it’s possible to provide near-instant updates on where their products are at as long as they’re in a tracked truck or container. This helps keep customers in the know about when to expect deliveries, helping to increase transparency and customer satisfaction.

Sometimes, delays are unavoidable, and many of your customers will understand this. When a vehicle is delayed, navigation from telematics will allow you to reach out to your customer and let them know of the delay and how long it will probably take for your vehicle to arrive. This can be helpful for controlling customer expectations, as well as allowing your customer an opportunity to reschedule if the new arrival time isn’t convenient to their needs. This helps prevent customer dissatisfaction caused by delays (and the negative reviews that can come with it).

10. Keep Drivers On Schedule

Are drivers sticking to their assigned routes and travel times? Fleet telematics help make the answer to this all-important question clear. With records of where drivers currently are, and where their vehicles have been at all times of the day—providing fleet managers with the information they need to verify whether drivers are adhering to proper routes and schedules.

You might be surprised at how often a delivery or service vehicle might arrive at the wrong destination. In a best-case scenario, the driver may only be temporarily lost as they search for the correct address.

In a worst-case scenario, the driver and crew might start offloading cargo or trying to fulfill a work order at the wrong location. Not only does this waste money and time, but your customer is also left waiting for service.

Using vehicle telematics, you can track where your service vehicles are when they check-in for the start of a work order or delivery, allowing you to make sure that they’re at the right address.

Additionally, if a dispute does arise later, you can use the GPS tracking data from the vehicle to check if the vehicle was at the worksite at the appointed time. This helps to quickly resolve disputes one way or the other so you can focus on moving your business forward.

11. Improve Driver Productivity

Productivity has a tendency to spike when GPS tracking is implemented. Why? Employees will often drive and work more efficiently when they know their vehicle is being monitored; they know that their fleet manager can see if they’re idling too long in one location, taking longer than usual to complete a job, or going off route.

12. Resolve Service Disputes

With accurate GPS data from a telematics system, fleet managers can easily resolve disputes about service/delivery times. For example, say a customer calls to complain that their service was late—with GPS data, fleet managers can easily see if the driver was actually late, and where they were in the time leading up to arriving at the customer’s location. This helps establish the reasons for tardiness (or prove that services arrived on time) so they can be addressed.

13. Improve Maintenance Schedules

Every vehicle needs periodic maintenance. Items such as brake lines, wheels/axles, the steering column, and countless other components of a vehicle experience wear and tear daily that, if left alone for too long, can cause a breakdown or increase the risk of an accident on the road. 

Many fleet telematics solutions can help relay crucial diagnostic code information to the fleet manager—identifying potential problems so they can be serviced sooner rather than later. This can prevent accidents and expensive repairs by applying small fixes that cost less (while skipping potential roadside service or towing fees). Think of it this way, it’s far cheaper to put more air in a tire than to have the tire explode on the road because it wasn’t properly inflated.

14. Optimize Equipment Life Cycles

Buying and selling fleet assets at the right time is crucial for maximizing fleet ROI while minimizing fleet costs. Telematics can help fleet managers better optimize equipment life cycles by tracking how old each piece of equipment is and identifying the best time to replace it to ensure a high resale value. 

Additionally, being able to demonstrate that a vehicle or other asset was well-maintained can be crucial for negotiating high resale prices—telematics devices can help you optimize and document your maintenance efforts.

15. Reduce Insurance Premiums

Many insurance companies recognize the benefits of GPS fleet tracking solutions by offering significant discounts on insurance. Some may even pay you to implement GPS fleet tracking because they understand the value of telematics for monitoring driver safety, preventing theft, and improving vehicle upkeep. In return, they may just ask that you maintain driver-centric reporting to prove that you are using the technology. So, be sure to ask your insurance provider about discounts (if they don’t offer one, you may want to shop around for one that does).

16. Automate Payroll Management

Using telematics data, fleet managers can automate payroll to pay employees based on their time “on the clock.” GPS tracking can identify when a vehicle starts and shut down for the day, providing an accurate record of how long an employee worked. 

As you can see, telematics can have a huge impact on your bottom line. The benefits of GPS tracking through telematics can save you thousands or even hundreds of thousands of dollars on fleet and asset management every year. 

Which Industries Are Using Telematics?

Telematics is being used across many industries, and its usage continues to expand into new ones, such as boat and jet ski rentals! Here’s a look at the industries making the most of telematics today and how it’s helping them.

  • Government. Improving snow and ice management, trash collection, street cleaning, and more.
  • Heavy Equipment. Keeping heavy equipment fleets well-maintained and preventing theft.
  • Public Safety. Monitoring the location of emergency vehicles in order to improve response rates and officer safety.
  • Truck Fleets. Monitoring fleets to ensure shipments are delivered to their destination safely and on time.
  • Construction. Reporting on performance diagnostics, fuel usage, and maintenance scheduling. 
  • Oil & Gas. Monitoring oil and gas extraction and transportation activities to increase efficiency and worker safety. 
  • Refrigeration. Monitoring the temperature of cold- or heat-sensitive products to ensure safety and reduce spoilage.
  • Mobile Service Providers. Monitoring vehicles and employees working for internet, electric, and other service providers as they move from one property to another.
  • Recreational Vehicles. Tracking RVs to reduce theft and damage on the road.
  • Executive Fleets. Improving preventative maintenance of luxury vehicles to reduce breakdowns, unscheduled repairs, and parts replacement.
  • Lawn Care & Landscaping. Monitoring employee and equipment performance for better productivity and customer service.
  • Generators. Monitoring the condition of generators, such as fuel level, battery voltage level, and coolant temperature.

Related Content: Five Ways To Customize Your Driver Performance Report

Telematics in a Post-COVID World

COVID-19 had a massive impact on companies in all industries, and many suppliers suddenly found themselves without many of their best customers. Now, much of the country is back in business as vaccinations for COVID-19 begin rolling out. As consumers rush to return to normal, a period of increased demand may hit certain economic sectors. 

For example, the Economic Times predicted that “sectors like transportation, storage, warehousing would come back quickly once the lockdown is lifted.” Meanwhile, those businesses “which are affected due to human behaviour will take the longest time to recover,” according to the article.

Companies handling supply chains in the recovering economy will have a massive opportunity ahead of them—if they can stand out from the competition and win the business of new (and recovering) companies seeing increased demand as they open (or reopen). 

One way that companies can stand out and improve their operational efficiency is to use fleet telematics. If you’re interested in reaping the benefits of fleet telematics, Rastrac can help!

Getting Started With Rastrac Telematics 

Are you ready to get started on improving your operational efficiency so you can stand out in a recovering economy? Get started with fleet telematics by reaching out to the Rastrac team today! Rastrac is a leader in the field of fleet telematics and has helped many companies and government organizations realize new operational efficiencies that save time and money while improving productivity.


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