PeopleNet’s Data Highway
The long-haul trucking industry, once the province of latter-day cowboys galloping cross-country nonstop to deliver goods, has been overhauled. Rising fuel, insurance and equipment costs, combined with federal regulations and steadily eroding freight rates, have forced out most independent truckers and produced a nationwide shortage of up to 40,000 drivers (see “Data but Not Drivers”).
Today, the vast majority of over-the-road drivers work directly for trucking companies, 95 percent of which operate fewer than five trucks. “It’s a very competitive industry,” affirms Sean McNally, spokesperson for American Trucking Associations (ATA), the largest national trade association for the trucking industry.
Trucking outfits seeking to trim costs and improve paper-thin margins are turning to companies like Minnetonka-based PeopleNet, the second-largest telematics and fleet mobility provider in the U.S., with more than $200 million in annual revenue, 2,500 customers and 300,000 vehicles served. PeopleNet focuses on two areas of benefits for fleets: safety through increased regulatory compliance and safer driving behaviors; and efficiency through automating paper processes and managing labor, fuel and regulatory costs.
In the last year or so, PeopleNet shifted its focus from core telematics—essentially a computer on a truck that’s delivering location-based information and messaging—to a complete mobile suite. PeopleNet has pioneered (and trademarked) the phrase “The Internet of Transportation Things” to describe the ways that its new mobile gateway technology brings together, connects and integrates many devices, processes and systems via an Android platform.
Data but Not Drivers
According to Bob Costello, chief economist for American Trucking Associations (ATA), the country is short 35,000 to 40,000 long-haul over-the-road truck drivers. “As the economy gets better, the driver shortage becomes more of an issue,” says ATA spokesperson Sean McNally. “One, because there’s more freight to move, which needs more drivers. But also our driver pool has more career options; we find that many drivers transition to the construction industry.”
Forty-year trucking veteran Dave MacMillan, quoting research by the late Mike Parkhurst, a former over-the-road trucker and longtime editor of Overdrive magazine, says that 80 percent of cross-country trucking traffic in the 1960s was performed by owner-operators, a figure that has dropped below 10 percent today. MacMillan himself recently parked his truck and trailer, “effectively retired” from long-haul trucking and went to work for a local shipping company. Why? Follow the money . . . or the lack of it.
He notes that since the 1980s, freight rates have been cut in half, fuel prices have quadrupled, insurance has more than doubled, licensing has tripled, truck maintenance has doubled, equipment costs have almost doubled and the cost of eating on the road has tripled. “If you’re going to be away from home, you want to make a salary that makes that worthwhile,” MacMillan says. “It used to be that way, and it’s not anymore.”
The economics of driving as an employee of a trucking company aren’t much better. “Driving a truck today is subsistence living,” MacMillan says. “You clear $800 a week but spend $200 of that eating on the road, and that doesn’t include 20 hours a week sitting and waiting for your truck to be loaded and unloaded. So you’re working 70 to 90 hours for $600 a week. That’s why you can’t get anybody interested in driving a truck anymore.”
The facts bear MacMillan out. According to ATA’s Costello, long-haul driver turnover was 95 percent last year. He estimates that the industry needs on average 100,000 new drivers each year over the next decade. Although Costello warns that “the shortage will get worse before it gets better,” he notes that driver pay increased 8 to 15 percent over the previous year and a similar uptick is expected this year.
While the ATA applauds stricter hours-of-service (HOS) regulations that effectively limit drivers to 11 hours a day on the road, Costello acknowledges that the regulatory-dominant “safety first” environment reduces driver productivity. Consequently, carriers need to add more trucks and drivers to haul the same amount of freight, which further exacerbates the driver shortage.
Another factor contributing to the shortage is the cost of obtaining a commercial driver’s license, which can take up to eight weeks of training and cost thousands of dollars. ATA is exploring a licensing model that would make it possible for drivers under 21 to participate in interstate commerce. “Forty-nine states allow drivers as young as 18 to drive intrastate,” McNally says. “It’s crossing state lines where it becomes a federal issue. We’d like to figure out ways to get these younger drivers behind the wheel of a large truck.”
McNally adds that ATA is also looking into ways to make it easier for returning veterans to convert their military experience to experience behind the wheel. “There are men and women returning from overseas who spent a lot of time operating heavier equipment,” he says. “If you can drive a truck in Kandahar, you can drive a truck in Los Angeles.”
Harnessing this machine-to-machine (M2M) data allows fleets to store, manage and analyze vehicle-centric data (e.g., temperature, fuel consumption, tire pressure) and driver-centric data (e.g., hours of service, messaging, driving behavior) simply and efficiently. When businesses know how their drivers and trucks are performing, they are better positioned to correct driver behavior, maximize gas mileage, choose optimal routes, avoid challenging weather conditions and take advantage of other ways to improve efficiency and safety. For instance, drivers can be empowered with location-based data that let them know why, when and where to stop for gas, food and other necessities, and provide them with incentives to do so through special discounts and promotional offerings. “Given the tremendous shortage of truck drivers in the U.S., making every driver more efficient becomes that much more important,” notes PeopleNet president Brian McLaughlin, a 14-year veteran of the company.
A pending federal mandate promises to increase PeopleNet’s customer base in the next year or two. Legislation mandating the use of electronic logging devices (think high-tech time cards for truckers) will likely boost the number of on-board devices in commercial motor vehicles to perhaps five million, an estimate that sounds right to the ATA’s McNally. Currently, truck drivers, who are limited to driving 11 hours a day, can manually manage their hours through a log book, but those days are coming to an end. “We’ve already seen a lot of new demand and new competitors,” McLaughlin says. “It’s pushed us to up our game.”
Dave MacMillan, a 40-year trucking veteran who contributes to Smart-Trucking.com, a trucker advocacy website run by his wife, Catherine, has used PeopleNet’s on-board system. “I have no problem monitoring everything I do because I’m not ever doing anything I shouldn’t be doing,” he says. “As for electronic logs, they will be a fact of life. I’m a supporter because it regulates the hours that you can drive, which should be the case.”
The mobile gateway sees all
PeopleNet’s mobile gateway—which incorporates 4G communications, a Wi-Fi hotspot and a web server so customers can write their own applications—is all about connectivity options. However, the Internet of transportation things is still in its infancy. McLaughlin expects fleet command centers to be able to track driver health and performance through heart-rate monitors, wearable devices and retinal monitors. McLaughlin not only envisions creating wireless bubbles around trucks so that they’re able to sense and communicate truck-to-truck and truck-to-infrastructure (passing information electronically between a computer on the truck and some form of government or commercial system), he says PeopleNet’s corporate parent Trimble Navigation Ltd. is already developing them. “From a technology perspective,” he says, “what’s possible is bound only by our imagination.”
While PeopleNet’s turnkey technology is designed to improve vehicle efficiency, the company’s first priority is fleet safety, which not only saves lives, but also lowers insurance costs. While McLaughlin asserts that “trucks that use our technology are indisputably safer than those that are not,” he is just as concerned about the people in passenger cars. While making sure that truck drivers are awake, alert and correctly operating their vehicles minimizes the risk of accidents, PeopleNet’s new on-board video camera system, dubbed “video intelligence,” goes further. “We want to create a safety zone around the truck,” McLaughlin explains.
Video intelligence, which is now in beta, with about 200 units in the marketplace, is not baked into the mobile gateway; it’s a separate offering that can even work with a competitor’s on-board device. It can include up to four separate video cameras: one forward-facing, one on each side of the vehicle, and one rear-facing. The side-mounted cameras provide a 150-degree view on each side of the vehicle, eliminating blind spots and providing drivers with real-time images on the in-cab display.
Technically, the system can accommodate up to eight cameras, including one in the cab. “We currently don’t offer a driver-facing camera because we want to respect the drivers’ privacy,” McLaughlin says, “and we don’t want to [push them out of] the workforce by stuffing a camera in their face.”
A wise decision, according to driver MacMillan. “I watched a video by a company called DriveCam,” he says. “They have dash-cam recorders videotaping ahead of the truck, which is a good thing, but now they’ve got them facing inside and focusing on the driver. They claim that the in-cab video only activates in a panic stop situation, but when you watch the video the camera is running all the time. Technology like that will force the old, experienced guys like me right out of the industry. They don’t trust me enough to look at my record and say, ‘Oh, this guy’s never had an accident in 40 years but we’re going to film him anyway.’ I’m a little insulted by that.”
Everything the PeopleNet video cameras see will be written to a DVR and preserved for about a week. The technology can produce live video streaming, which can be helpful if a driver is in danger or needs to monitor loading dock activity behind the truck. PeopleNet is the first in its space to bring together telematics and video in a fully integrated system, which allows users an all-encompassing snapshot of what happened when an accident occurs. “The on-board event recorder is extremely useful when there’s an incident or collision,” confirms PeopleNet customer Patrick Cozzens, president of Pittsburgh-based Modern Transportation Services (MTS), a provider of dry and liquid bulk material logistics. “It gives you all kinds of data, from GPS to speed to how hard the driver was pressing the accelerator or brake.”
PeopleNet units have helped MTS shorten the billing and payment process. “Manual invoicing could take up to two weeks,” Cozzens says. “Today, when a load is delivered, that information is automatically populated into our billing system. If a customer is operating in an EDI [electronic data interchange] environment, we can send invoices every single night electronically with no human intervention.
Behind the cameras
Founded in 1994 by four partners, including former president Ron Konezny, who left in December to become CEO of Digi International Inc., PeopleNet was acquired by Sunnyvale, Calif.-based Trimble Navigation in 2011. Trimble, a 37-year-old $2.4 billion public company, applies positioning technologies such as GPS, lasers and optics to make field and mobile workers in businesses and government more productive.
“Whether it’s money for acquisitions, or new technologies or expertise on supply chain, they’ve provided us with the leverage and capability of a $2 billion-plus company,” McLaughlin says, “which allows us to move quickly within our marketplace.”
Trimble wasted little time adding to its collection of transportation logistics companies. In 2012, it acquired Cleveland-based TMW Systems, a provider of transportation software to commercial and private fleets. Several months later, Trimble acquired New Jersey-based ALK Technologies, a developer of geologistics and navigation software solutions that can notify drivers of traffic and weather patterns. “PeopleNet and its sister companies are now aligned at the hip to provide joint support between our products,” McLaughlin says. “If you use products from more than one of us, you should have one number to call.”
PeopleNet has created and capitalized on other opportunities. Trimble’s 2012 acquisition of Calgary-based GEOTrac Systems, a provider of fleet management and worker safety solutions for the oil and gas industry, jump-started PeopleNet’s entry into that marketplace. Energy services is expected to account for 20 percent of new subscribers going forward.
PeopleNet’s success has been two decades in the making. “PeopleNet arose in the late ’90s as one of many challengers to Qualcomm’s Omnitracs, a pioneering satellite tracking and communications system which at the time dominated the industry,” notes Deborah Lockridge, editor in chief of Heavy Duty Trucking magazine. “PeopleNet is one of a handful of companies that has been flexible enough and in touch with the industry enough to still be a major player.”
Lockridge notes PeopleNet’s relevance in a dynamic niche: “It’s a segment that has changed rapidly, as technology itself has changed,” she says. “What started out as driver messaging and truck tracking has evolved into a business where the management of data is a key factor in a trucking company’s success. I see it as a strong company with a good reputation.”
McLaughlin challenges his employees to think outside the black box. “Every quarter we have a hackathon, where the best and the brightest on the technology side get locked in a room for 36 hours with lots of food and caffeine,” he says with a smile. “We ask them, ‘What is possible in mobile transportation technology that hasn’t been done before?’ It’s amazing what they come back with. Typically, we’ll commercialize one or two of those ideas every year.”
The “people behind the net,” as McLaughlin says, may be PeopleNet’s greatest strength, but they’re also its greatest challenge. “We’ve been growing so quickly—our annualized growth has been 10 to 20 percent over the last three years,” he says. “It isn’t easy to find engineers and technology people; at any given time, we’ll have 20 to 30 open [positions]. We’ve had to look at hiring in cities like Toronto, Raleigh, Dallas and Princeton, New Jersey, where we have field sales offices or service and support offices. We’d love to have everybody here in Minnesota but it’s not always possible.”
To that point, as this issue of TCB went to press, PeopleNet announced the purchase of New Hampshire-based trucking software developer Cadec Global. Terms of the purchase were not disclosed.
McLaughlin refuses to define his company around ones and zeros. “We don’t view ourselves as a technology company. Having a technology platform that can adapt to many processes and markets is key, but we’re all about solving customer problems through technology solutions. Anybody can throw out a widget. What withstands the test of time is a relentless focus on the customer.”
Phil Bolsta has been writing for Twin Cities Business since its inception.