Back to articles

Telematics Technology and the Future of Transportation & Delivery

7th November 2018

Telematics technology has made cars, trucks, planes, and boats smarter today than they’ve ever been. Most vehicles built today know where they are, how fast they’re going, and critical information about the state of the engine, steering, and other key functions. Often, all of this information gets shared wirelessly to the cloud, where various parties can access and use vehicle data in real time.

What is Telematics?

Broadly, the technology that monitors and shares useful information about the status, behaviour and movement of vehicles and other objects is known as telematics. It’s a specialised branch of the internet of things (IoT) that focuses on the various challenges of long-distance transmission.

An everyday example is the GPS in your car, it’s communicating with satellites that are 12,500 miles away from your car. Nevertheless, advances in telematics allow your car to communicate effortlessly with GPS many times per second. Giving you accurate updates of your location and other useful information such as traffic and journey time on a mobile app such as Waze or Google Maps.

GPS is only one, albeit an important, application of telematics. Sensors, black boxes, and transmitters in vehicles around the world can collect and collate all kinds of data about speed, distance, and performance in various types of vehicles and objects. In a recent report, McKinsey found that car data collected and transmitted via telematics would be worth $750 trillion by 2030.

In this article, we’ll dig into the history of telematics, learn about some of its present uses, and explore its future potential in revolutionising transportation and delivery.

History of telematics infographic
History of telematics infographic

A Brief History of Telematics

Telematics has a long history that spans decades of innovation. In the 1960s, some of telematics’ earliest applications involved US nuclear submarines observing changes in the Doppler effect of polar satellites. Triangulating very simple signals from these early satellites allowed submarines to calculate their exact position in the ocean in minutes. Also in the 1960s, ARPANET arose as an early predecessor of the modern internet.

Over the decades, computer science and telecommunications came to be increasingly intertwined. Remarking on this symbiotic relationship in a report to the French government, Simon Nora and Alain Minc coined the term télématique, a mashup of the French words for telecommunications and computer science.

After the US government released access to GPS to the public in the early 1990s, telematics commercial applications exploded. In particular, telematics began to focus on and refer to vehicle tracking and monitoring. In the early days, fleet owners would install black boxes into vehicles to record driving data. After a few days or weeks of driving, they would plug the black boxes into a computer and download the data. Nowadays, black boxes are much smarter and can connect wirelessly via cellular or Bluetooth to feed data in real time.

Telematics hardware also became more sophisticated while also getting smaller. Today, you can plug in a telematics box with positioning, accelerometers, cameras, and other integrations into your 12V cigarette lighter in your car. Even more handily, mobile phones can act as a telematics box, capturing and send a lot of useful telematics data from inside your car. These devices can transmit back via cellular, satellite, or other wireless connections, allowing for real-time data from dozens of devices installed in a single vehicle.

Cloud technology and storage has also made that real-time data highly available anywhere in the world. As more and different types of data become available, telematics is becoming increasingly sophisticated, with data science, advanced analytics, and machine learning working together to predict maintenance, safety, and efficiency. Innovations in these related fields in the past decade have enabled previously impossible applications of telematics. Major companies are using this data to drive insights and alerts for clients and consumers.

Use Cases

McKinsey’s research on telematics indicates that only 10-15% of vehicles currently have telematics devices installed in Europe and North America. As that percentage grows, however, more benefits and use cases become possible. At 20%, McKinsey predicts significant benefits for road safety and anti-theft measures as more cars become able to alert their owners and local authorities to problems.

At 50%, municipalities will be able to use anonymised data from in-vehicle telematics to optimise traffic, including changing street patterns and stoplight timing. In your car, you’ll get real-time route optimisation based on metadata from all the cars travelling in your city.

At 80% of vehicles with telematics devices in them, things begin to get very interesting with the advent of smart cities initiatives. Telematics will play a key role in enabling autonomous driving. Eventually, car ownership may become a thing of the past. Mobility as a service, with a monthly subscription to take you anywhere in the most efficient way possible, could become the norm – complete with telematics-controlled scooters, bikes, cars, buses, trains, subways, and other forms of transit.

Already, telematics is playing a major role in transportation, even at less than 15% market penetration.

Black Box Insurance

According to ABI Research, the UK and Italy are leading the way in the application of telematics information toward custom insurance. Companies like Direct Line Group and The Floow are using black box telematics technology to cut premiums by tracking how a customer drives.

This type of telematics insurance, sometimes called black box car insurance can allow them to create tailored rates and even pay as you drive plans to score and charge drivers. They can also perform breakdown and accident analysis so when a problem occurs, the data can tell the mechanic or the police exactly what happened.

Telematics car insurance would reward those that drive carefully with lower car insurance rates while pushing vehicle insurance premiums up for drivers that drive more recklessly. This helps first-time drivers who are often given the highest premiums, making driving more affordable for careful drivers.


Real-Time Mapping

Google Maps and Waze already use a combination of anonymised telematics data and user reports to map traffic in real time. Cities can use telematics data as well to optimise transportation. A solution like SUNA Digital Traffic Service from Intelematics helps cities implement various optimisations, communicate with drivers, and prioritise repairs based on live data. It’s currently deployed across all capital cities in Australia and New Zealand and now boasts the largest traffic database in the world.


Fleet Telematics – Maintenance, Safety, & Efficiency

Pepsico has installed fleet telematics systems in its vehicles worldwide. As a result, Pepsi can lower fuel expenditure, optimise vehicle usage and distance travelled, mitigate vehicle accidents and wear, and reduce insurance costs. Another example is telematics use on construction sites to monitor location and predict breakdowns. Fleet management systems and hardware come in all kinds of configurations. Companies like Scorpion Auto and Geotab are some of the leaders in new hardware and applications.


Information for Customers

Increasingly, companies are using telematics not just for optimisation. They’re also providing real-time data to end customers and vendors. Even one of the oldest companies in the world, Royal Mail, is innovating, using telematics to give customers live information about how far away their package is. As more companies integrate telematics data directly into the services they provide, customers will get more useful and accurate information about deliveries and arrival times.


Future Applications

As you can see, telematics is already having a major impact on transportation, but with advancements in IoT, connectivity, and sensor hardware the future potential is even bigger. 5G connections will make it possible to send larger amounts of data at a higher speed. Better cameras and LIDAR sensors will make autonomous driving cheaper and safer.

As adoption grows, smart cities will be able to move people and control traffic with greater speed and efficiency. This is especially important when it comes to solving the first and last mile of transit for the majority of the public, finding efficient, affordable means to get people to and from major mass transit lines. This is where autonomous vehicles, bikes, and scooters could be most useful.

Along the way, we’re sure to encounter new applications of telematics and IoT that we haven’t even imagined yet. Maybe walking robots or drones will deliver packages to our front door using telematics to judge position and placement. Perhaps driverless boats or pilotless planes will become the norm for shipping and long-distance travel. With telematics, the opportunities to improve speed, efficiency, and safety of transportation are endless.


We work closely with multiple clients utilising telematics technology. If you would like to find out more about our expertise in recruiting data professionals or have expertise in this area and would like to get exposure with our clients. Please do not hesitate to get in contact with me at [email protected].


I have also written about:

Share Article

Get our latest articles and insight straight to your inbox

Hiring data professionals?

We engage exceptional humans for companies looking to unlock the potential of their data

Upload your CV
One of our consultants will contact you
to find out more about you