ABI Research: Logistics, Not Consumers, Best Early Market for Premium Traffic Information

September 25, 2006 // Published as a news service by IHS

Recent analysis from ABI Research found that the commercial sector, especially logistics operators and delivery fleets, will offer the best early market opportunity for the coming wave of advanced real-time traffic information services.

It has been widely assumed that the early market for real-time traffic services and advanced road speed information will be navigation systems deployed in the consumer segment.

Most existing navigation offerings use Radio Data System (RDS)-Traffic Message Channel (TMC) as their backhaul, and are very inexpensive to customers.

But, according to analysts, more advanced services, including real-time road speed and traffic flow data, require connections with considerably greater bandwidth.

"Advanced real-time traffic information services must handle complex two-way data transfers, requiring much more bandwidth in both directions. It remains to be seen whether consumers will be willing to pay for that," said ABI Research principal analyst Dan Benjamin.

In the commercial sector, where time is money, analysts said the prospects seem more certain. "If the content providers such as Navteq, Tele Atlas, Inrix, LandSonar and Traffic.com can deliver highly accurate road speed and traffic flow information, they will find a huge market in the commercial world," Benjamin said.

If logistics companies such as Federal Express, United Parcel Service and even local delivery services and taxi fleets can cut a few minutes off each trip, if they can do more intelligent route and schedule planning and if they can reduce their fuel costs, they stand to save a great deal of money.

Accurate real-time traffic flow and road speed information allow dispatchers to avoid costly delays as they develop. Even shaving off 10 minutes of driving per vehicle per day will deliver substantial financial returns, analysts said.

"Granted, there are integration issues to be resolved, and the traffic data providers are going to have to deliver on their promise of high-quality information," said Benjamin. "But given that the logistics companies already have (and are paying for) advanced telematics systems, they should be ready to pay a premium for traffic information that will enable them to use their resources to the fullest."

Source: ABI Research.