Frost: Australian Trucking Industry Spurs Demand for Commercial Vehicle Telematics

October 6, 2006 // Published as a news service by IHS

The intensely competitive Australian trucking industry is becoming a lucrative segment for the commercial vehicle telematics systems market.

According to Frost & Sullivan, major participants in the trucking industry will lead the way in the application of telematics, while the smaller market participants anticipate adopting telematics in a phased manner.

Analysts said the demand for telematics should increase, as manufacturing and retail sectors implement just-in-time (JIT) practices, which require real-time information on cargo delivery status. The use of telematics will also help trucking firms distinguish themselves from other market participants.

New analysis from Frost & Sullivan found that the Australia commercial vehicle telematics market earned revenues of $24.0M in 2005, with estimates to reach $60.7M in 2012.

"Trucking companies are also concerned about rising fuel prices and they expect the implementation of telematics in vehicles to help minimize this cost," said Frost & Sullivan research associate Satish Kumar Sampath. "Besides the demand from the industry, the decreasing costs of telematics systems and favorable government regulations are likely to keep the market buoyant."

Despite market optimism, analysts said Australian telematics service providers (TSPs) need to realize they are involved in an emerging market and conduct campaigns to increase product knowledge among consumers.

"In comparison to other developed markets, such as the North American and European telematics market, the Australian market is in its infancy stage," said Sampath. "Product knowledge and consumer awareness is very low. The benefits associated with telematics are low even among the fleet operators and the trucking industry that constitute a major portion of the end-users."

Systems manufacturers and TSPs should create awareness and promote the utility of their systems to increase both unit shipment and revenues, analysts said.

While conventional telematics systems already provide fleet managers with real-time information about the vehicle's location, analysts said new products enable the monitoring of various engine parameters. This enables fleet managers to take preventive measures before serious damage can occur to the vehicle.

With the diversified range of commercial vehicle applications, analysts said market participants have to provide customized telematics solutions for each end-user segment. For example, cargo monitoring is crucial for commercial vehicles transporting biohazardous materials, whereas vehicle parameter monitoring is essential in the mining industry due to the use of high-cost commercial vehicles.

Apart from the basic function of vehicle tracking, service providers have started offering greater value-added features such as driver safety, vehicle condition monitoring and cargo monitoring to meet varied requirements. Offering multifunctional systems enhances the value of the product, thus leading to increased sales and higher revenue.

Analysts said the commercial vehicle telematics market obtains revenues from TSPs, original equipment manufacturers (OEMs), hardware manufacturers, content and airtime providers, software developers and wireless device suppliers. However, TSPs contribute the bulk of the revenues.

"The telematics services segment is expected to be a constant source of revenue, with immense scope for further growth by offering superior content," said Sampath. "This potential is especially visible in the wireless communication sector and call center operations."

Source: Frost & Sullivan.