Note: The below methodology outlines ABI Research's forecast methodology for commercial telematics, which forms the basis and building blocks for ABI Research's IoT Market Tracker – Worldwide (MD-IOTMWW-111) forecasts for fleets.
ABI Research collects aftermarket telematics data twice a year from various regional and global vendors in the fleet management ecosystem, including fleet managers, Telematics Service Providers (TSPs), software solutions vendors, hardware solutions Original Equipment Manufacturers (OEMs), technology solutions vendors, and other value-added service providers. The data tracked accurately form a market base year. The research conducted allows ABI Research to gain access to regional markets, products, technology drivers, inhibitors, and trends.
ABI Research gains further secondary information from various news sources, including corporate financial reports and marketing collateral, media articles, industry periodicals, trade group reports, government and private databases, industry directories, and other public resources. Secondary data enable ABI Research to create and track market conditions and growth rates to gauge market size and trends.
ABI Research also takes a look at each country's connectivity deployments and connections when it comes to telematics solutions and aggregates them.
Revenue is based on subscription and hardware unit average weighted pricing that differs by country, vertical, and vehicle type.
Tables present market data for each of the main vertical applications for commercial telematics into trucking, trailers, and non-trucking solutions. Non-trucking verticals (i.e., services, including utilities, private transportation, construction, government, emergency services, public transportation, and local delivery) and geography provide additional granularity.
The forecasts focus on total system revenue, which are defined as accumulated (or the installed base of) system subscription revenue, plus annual hardware shipment revenue. System subscription revenue was calculated as accumulated and activated systems, minus those systems that had been deactivated by the end of the given year, multiplied by an average subscription fee for every region.
Commercial Telematics Forecasting Methodology
ABI Research employed the methodology described below.
The starting point was the creation of an overall shipment base year, which was then broken down into trucking, trailer (in some forecasts), and non-trucking telematics shipments. Then, the data are cross-referenced with information gathered from leading vendors.
Whenever possible, ABI Research leveraged existing and proven sources of information from our library. For example, ABI Research has extensive information on smart mobility and smart cities.
ABI Research made assumptions on the rate of growth and on changing levels of penetration. Telematics adoption and major technology and government initiatives were then factored into medium-term forecasts.
Based on existing market knowledge and future trends identified, an assumed replacement/churn rate was applied for each vertical onto the forecast data. The results of this model were then cross-referenced with the data gathered from vendors, as well as additional industry and secondary information sources.
Average Selling Prices (ASPs) were gathered from leading vendor data. All data gathered allowed an average price to be determined and forecast. With information gathered and forecast for both ASPs and shipments, overall generated revenue was determined.
Fleet Management: Deals with the administration aspect of fleet operations. It entails things like financial transactions, vehicle updates, compliance, billing, maintenance scheduling, staff availability, etc. So it is an overlap of Information Technology (IT) and operations.
Commercial Telematics: Strictly pertains to fleet ops. It is more about data sharing to ensure streamlined day-to-day ops than storage. It entails functions like engine diagnostics, odometer readings sharing, vehicle status monitoring, driver behavior monitoring, route planning and optimization, fuel monitoring, tracking downtime, etc.
Trucking Fleets: Truck Load (TL) fleets provide transportation distribution services to shippers of large quantities of goods, quantities that will fill or almost fill the truck or trailer, and for full shipments destined for the same physical location because the truck is loaded at one end and does not stop to take on more goods or unload until it has reached its ultimate destination.
The Less Than Truckload (LTL) terminology comes from the fact that a typical shipment does not fill the entire truck. Rather, LTL truck companies pick up many smaller shipments throughout a metropolitan area and transport them to a consolidation center where the shipments are sorted, combined with other shipments bound for similar destinations, and loaded onto a truck for final delivery. LTL companies employ dock workers, local pick-up and delivery drivers, and over-the-road drivers. Companies that consider the physical delivery of products to be a critical part of their customer satisfaction process often choose to run their own captive distribution services. These private fleets differ significantly from commercial or for-hire fleets. The drivers are usually salaried and experience extremely low turnover relative to for-hire fleets. The drivers are often expected to play a customer service role in interactions with customers. Drivers often run the same routes to facilitate relationship building with their accounts. Because private fleets are viewed as cost centers by their organizations, rather than profit centers, private fleets are more likely to invest in new electronics, particularly if they believe it will improve customer satisfaction through better on-time delivery or more responsive distribution. However, investment in wireless communications among private fleets tends to lag behind other types of onboard electronics, primarily because of the stable and repeatable nature of vehicle routes and customer transactions.
Long-Haul Trucking Fleets: The long-haul trucking market segment has historically been an early-adopter market for most Fleet Management System (FMS) solutions. Long-haul truckers operate across national regions, travel for extended periods of time, typically have high-value cargo, and generally do not have predetermined routes. Long-haul trucking fleets can vary in size from mid to large and can consist of more than 100 vehicles. Fleet managers are keenly aware of the benefits of FMS solutions and are open to the early adoption of those with new features, capabilities, and functionalities. For example, many current long-haul trucks are equipped with factory-installed black boxes that feature remote diagnostics, driver safety applications, or aftermarket retrofitted mobile devices, such as Personal Navigation Devices (PNDs) and mobile computers. Initially, the widely adopted value proposition for long-haul vehicle fleets was tracking and security systems, due to the randomness of their service routes, range of their cargo deliveries, and the typically high value of the cargo. However, long-haul trucking fleet managers are increasingly shifting their demand to driver management applications that enable workforce productivity and drive incremental revenue.
Short-Haul and LTL Trucking Fleets: Short-haul trucking fleets generally operate within a local region, may not have a predetermined route or cargo, and generally have lower-value cargo than that of long-haul vehicles. The fleets typically consist of a smaller number of up to 100 vehicles. Short-haul fleet managers are also equally aware of and embrace the value propositions of FMS solutions. They demand similar features, capabilities, and functionality as long-haul fleet managers. LTL vehicle fleets also operate within local regions and adopt similar FMS solutions as short-haul trucking fleet managers. However, LTL truck drivers generally have a predetermined route and usually consolidate and transport cargo from a number of destinations or from a central facility.
Local Delivery Fleets: Local service fleets include a variety of local retail and logistics companies that pick up and deliver goods and cargo or provide services within a residential or municipal area. Local service companies generally operate small fleets consisting of fewer than 10 vehicles and have FMS solutions retrofitted aftermarket in the vehicles. Certain types of local service fleets were also early adopters of FMS solutions. Service fleet managers demand FMS solutions that can increase service delivery times, while decreasing costs related to the operation of fleet vehicles. The parcel delivery market is dominated by two very large players, UPS and FedEx, followed by a second tier of much smaller fleets. The remainder of the North American market is made up of very small specialty delivery companies operating in localized markets. Package delivery companies, such as UPS and FedEx, were among the first to adopt fleetwide FMS solutions, including those with integrated mobile devices, such as handheld computers. UPS and FedEx have spent large sums on customized solutions tailored to their operating processes and business objectives. These systems employ third-party subsystems and software modules that are integrated with customized proprietary software. Many second-tier parcel delivery fleets have implemented less ambitious and less costly systems in their attempt to keep pace with the industry leaders. These onboard systems use terrestrial wireless networks as their primary Wide Area Network (WAN) system. A few fleets operating in larger geographic areas in the western United States have also integrated or plan to add satellite service to handle out-of-coverage situations. The very small parcel delivery fleets are delaying any significant investment in wireless technology for financial reasons. Those that have moved forward have opted for interactive devices. Courier services are highly specific in terms of pick-up and delivery destination information. The need for wireless communications in this market segment consists of real-time next-assignment dispatch, Estimated Time of Arrival (ETA) notification to the customer, and pick-up location/direction information.
Utility and Service Fleets: Utility service fleets generally consist of vehicles that provide local telecommunications (telephone and cable), water, gas, and electricity services. Telecommunications fleet managers focus on customer service as a critical area of competitive advantage, particularly related to customer site installations, repairs, and upgrades. The efficient completion of these truck rolls, while reducing operational costs, drives competitiveness and profitability. Water, gas, and electricity companies also adopt FMS solutions to efficiently complete upgrades and emergency repairs at residential or remote sites, while optimizing the operational use of their vehicles.
Municipal and Government Fleets: Municipal service fleets consist of local and federal government vehicles typically operated in local regions by municipal employees for business purposes. The municipal service fleet managers generally value vehicle and driver management applications as they are bound by stringent government regulations and tight operational budgets. Cellular connectivity is in higher demand than satellite connectivity because most municipal fleets are operated within metropolitan or suburban environments with pervasive cellular coverage. Wi-Fi connectivity is also growing in demand, as many municipal environments have been enabled with public outdoor Wi-Fi coverage. Government fleets are characterized by their diversity both in terms of the type of vehicles and the applications.
Emergency Services Fleets: Emergency service fleets consist of ambulances, paramedic vans, police cars, fire trucks, and other vehicles that are used by private and public operators to address public or residential emergencies. Navigation and routing applications are of vital importance due to the urgent nature of the emergencies. Satellite or other Private Mobile Radio (PMR) connectivity, such as Terrestrial Trunked Radio (TETRA) connectivity FMS solutions, is in higher demand than cellular connectivity, given the potential of the emergency being outside of cellular coverage, although many FMS solutions have dual-mode connectivity for redundancy purposes. Remote diagnostics and maintenance applications are considered to be of great importance due to the vehicles operating at high speeds and in frequently harsh driving conditions.
Public Transportation Fleets: Public transportation service fleets generally consist of public school buses and passenger buses. The primary concern of school bus fleet managers is that of driver (and passenger) safety. Therefore, driver management applications are in great demand in this market, as well as improved customer service and value applications that enable real-time scheduling information and dynamic route management. The reduction of operation costs or improved efficiency of the vehicles is less important, given that the routes are generally shorter and predetermined. Public passenger bus fleet managers focus more on the reduction of costs than school bus fleet managers because city or county bus routes tend to be longer than school bus routes. Also, the driving environments can vary depending on the time and traffic conditions.
Private Transportation Fleets: Private transportation service fleets consist of rental cars and trucks, taxis, limousines, shuttle vans, and other transportation-for-hire vehicles. Real-time status and location are of high value to private transportation service fleet managers, as well as two-way communications, navigation, and routing capabilities. Driver monitoring, improvement, and safety are also in demand, given the varied experience of the professional drivers (or rental customers) and the unpredictability of the driving environments. Therefore, driver management applications have been increasingly adopted in this market segment.
Trailer Tracking: Asset management includes knowing the location of assets and how much they are used, which is the main reason companies in the developed world obtain a trailer tracking system, as it allows automating supply chains and optimizing the use of existing resources. Security remains the principal driver for new trailer tracking installations in less mature markets. The availability of additional tracking options, such as load content and temperature monitoring, is expected to lead to continued growth worldwide. The use of a Tire Pressure Monitoring System (TPMS) results in significant fuel savings by avoiding the excess rolling resistance of underinflated tires by running on correctly inflated tires. It also prevents blown tires.
Construction and Industrial Equipment Fleets: Industrial equipment fleets consist of heavy construction, mining, oil & gas, and other industrial off-road vehicles, such as trailer tractors and highway snowplows. Industrial equipment fleet managers value FMS solutions that focus on vehicle location and asset security, such as geofencing and asset tracking applications. A number of industrial equipment vehicles are also operated in harsh environments and under extreme performance conditions, requiring remote diagnostic applications. Satellite connectivity is generally adopted more than cellular connectivity, given the remote environments. Some trailer tracking applications may also make sense for vertical markets, such as construction equipment, for which the service model is infrequent, rather than continuous and the fundamental requirement is location tracking, rather than driver monitoring.