E-Log Mandate to Spur First-Time Adopters to Buy Lower-Cost Products, Vendors Say

This story appears in the March 31 print edition of Transport Topics.

Demand for basic, low-cost on-board truck technology will surge in the years ahead as first-time buyers look to comply with the federal government’s proposed electronic logging mandate, several suppliers said.

However, many providers of onboard systems also said they believe that new customers, after getting their feet wet with E-logs, eventually will add more applications designed to enhance fleet efficiency.

The Federal Motor Carrier Safety Administration’s proposal, issued earlier this month, would require truckers to implement electronic logging devices to record drivers’ hours of service.

That mandate is expected to more than double the market for onboard technology in the next few years, an industry analyst said.

“You can’t ignore the market created by these rules. Everyone’s going to be targeting it in some way with some kind of strategy,” said Clem Driscoll, founder and president of consulting and research firm C.J. Driscoll & Associates.

“I think we’re going to see more companies coming into this space with low-cost, basic solutions, trying to draw out the smaller carriers that have never had any kind of telematics system,” he added. “Now they’re going to need something and they’ll want to be compliant, but they don’t want to spend a lot of money.”

At the same time, providers of more advanced enterprise systems will try to attract first-time adopters with entry-level, compliance-focused products that they could upgrade later with additional capabilities such as driver-performance and fuel-efficiency monitoring, Driscoll said.

Omnitracs currently offers an upgradeable platform in that fashion with its MCP50 product and will continue to provide offerings using that approach, moving forward, said Dale Smith, a staff product manager at the company.

“Our goal is to serve all levels of the industry, from the smallest guy with one or two trucks to the very largest,” he said.

Brian McLaughlin, president of PeopleNet, said he sees the remaining market for onboard systems about evenly divided between those that will make only the minimum investment required for compliance and fleets that will purchase enterprise systems that offer advanced capabilities and integrations.

He said PeopleNet doesn’t currently have an interest in offering a simple e-logging product that can never be upgraded but does plan to have a “strong presence” in the platform play, which can start as an ELD only but retains the ability to add more applications over time. “That’s another key market for us in terms of our growth strategy.”

XRS Corp. CEO Jay Coughlan said his company would also consider offering a basic E-logging product that fleets could upgrade later with additional fleet management features.

“We might do it as a strategy to attract new users and then ultimately do a version of upselling from there,” he said. “They’re going to realize there’s so much more you can do.”

Rustin Keller, chief operating officer at J.J. Keller & Associates, said he sees most first-time ELD adopters choosing to implement “something practical and low-cost,” rather than a more complex fleet-management system.

He said the large for-hire fleets that are using telematics today to run an efficient operation “made those decisions many years ago, and hours-of-service was not the compelling reason for the purchase.”

“Pretty much all of that segment of the market has either implemented or already knows what their plan is,” Keller said. “The rest of the industry has been waiting for the rule.”

Keller said his company has positioned itself to provide a “low-cost, simple option” designed to help smaller fleets in particular comply with the requirements of the mandate when it becomes law.

In contrast, an executive at Telogis predicted that by the time the proposal becomes law, carriers will need to adopt fleet management applications beyond stand-alone E-logs anyway, not because of regulation but for competitive reasons.

“I think they’re going to have to adopt these technologies sooner rather than later,” said Kelly Frey, vice president of product marketing for Telogis. “There’s a much larger value proposition to knowing where your guys are, sequencing loads, optimizing routes and messaging your drivers.”

Rand McNally is targeting new adopters with its HD 100 device, which can be paired with smart phones, tablets and the company’s IntelliRoute TND 720 GPS device to electronically record hours of service.

The company also will be looking for other ways to address the growing ELD market, said Jim Rodi, Rand McNally’s senior vice president of mobile communications.

Eric Witty, vice president of product management for Cadec Global, said a portion of the trucking market will look to purchase low-cost products that offer only E-log compliance but also may go on to invest in more advanced systems.

“After adoption, we suspect this sector will slowly demand more functionality from their technology,” he said.

Witty said Cadec will retain its focus on providing high-capability systems to private fleets “but wouldn’t rule out new technologies and product offerings that better our business or open new markets in the future.”

Mari McGowan, director of product management at Vnomics Corp., said the proposed rule will force fleets to initiate a search for technology to comply with the requirements.

“Our belief is that, as they do, they’ll start to see how robust these systems can be and the benefits they bring,” she said.