MAGTEC Value Proposition & Benefit Analysis
November 2012
Value Proposition
&
Benefit Analysis
1
MAGTEC Value Proposition & Benefit Analysis
November 2012
BENEFIT MODEL
MAGTEC’s advanced technology, provides fleets with unparalleled security, driver safety,
operational efficiencies and empowers the user with the ability to control their vehicles and drivers
remotely and in real-time.
For the purpose of review and understanding, MAGTEC has created this generic model in order to
discuss the value proposition of implementing its technology on commercial vehicles. This analysis
will address a number of areas that, without attention, can have a negative impact on a company
and its bottom line. These addressable areas of a fleet operation are:
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•
•
•
•
•
•
•
operating costs
performance and productivity
compliance
claims
insurance
driver retention
customer retention
competitive advantage
We will provide a way to determine, and validate, a cost-benefit calculation inherent in each of
these areas. These are all items that can be directly addressed by the application of MAGTEC’s
advanced security and vehicle control devices and MAGTEC’s MCC (Mobile Command & Control)
platform. MAGTEC is providing this analysis for discussion its customers to use in their
consideration of the benefits of implementing this advanced vehicle security and remote
management technology. Further discussion can establish how the MAGTEC systems can be
tailored to meet the customer’s unique situations to create optimum benefits and savings.
Six distinct sets of benefits are being provided by MAGTEC based on its understanding of the
business problems fleets want to overcome. MAGTEC has made realistic but conservative
assumptions, most of which are based on data from scientific studies or actual testimonials from
others within the transportation industry.
In this model, total benefits equal the sum of cost reduction and productivity improvements. The
cost reduction benefits are considered “hard” benefits, and are a dollar for dollar savings, which
can be estimated with some degree of certainty and accuracy. The performance, productivity and
mitigating factors benefits are “softer” benefits that contribute to a more efficient operation
through improved management and control mechanisms to help reduce financial seepage as well
as performance and productivity loss.
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MAGTEC Value Proposition & Benefit Analysis
November 2012
Fleet Operation Issues
A recent survey of 380 fleet management professionals in North America found that reducing fuel
costs and crash rates were their two major concerns going into 20121. Of those surveyed, 40% said
reducing fuel consumption was their most important challenge and 21% said reducing crash rates
was their most important issue.
Fleet managers surveyed stated that they would be interested in technology that would help their
respective companies successfully address these and other concerns.
The benefits of vehicle control technologies that go beyond simple AVL or Fleet Management
systems are discussed in the following pages and can be shown to be both sustainable and have a
significantly positive impact to a company’s operation and bottom line. These benefits are:
1.
2.
3.
4.
Reducing fleet fuel consumption
Enforcing driver compliance, performance and productivity
Eliminating truck, trailer and cargo theft
Mitigating risks, reducing claims and insurance rates
5. Improving resource efficiencies and productivity
6. Increasing customer retention and growing the business
1
3
GreenRoad’sFleet Leader Survey http://www.automotive-fleet.com/News/Print/Story/2011/12/Fleet-Management
MAGTEC Value Proposition & Benefit Analysis
November 2012
1.0 REDUCING FLEET FUEL CONSUMPTION
Fuel economy has always been an important consideration for commercial truck owners. Fuel is
one of the main operating costs in the trucking industry. Today, fuel economy is even more
important with record high diesel prices. The numbers below are based on an over-the-road Class 8
truck, travelling 100,000 miles per year and fuel purchases at an average of $4.00 per gallon. Based
on an evaluation by the American Trucking Association, fuel costs represent between 16 to 32% of
a fleet’s operating expenses2.
In order to show a reduction in fuel costs and the company’s carbon footprint, MAGTEC will
provide value propositions in the following areas:
1.
2.
3.
4.
5.
1.1
IMPROVING MPG VIA REMOTE SPEED MANAGEMENT
IMPROVING FUEL SAVINGS VIA REMOTE SPEED-SETTING
REDUCING EXCESS IDLING VIA REMOTE IDLING MANAGEMENT
ENFORCING LEGISLATED SPEED COMPLIANCE VIA REMOTE SPEED MANAGEMENT
REDUCING ‘OUT-OF-ROUTE’ MILES VIA GEO-ROUTING
IMPROVING MPG VIA REMOTE SPEED MANAGEMENT
According to the white paper on Fuel Economy, the ‘Comparative Evaluation of Rail and Truck Fuel
Efficiency on Competitive Corridors’ final report, dated November 19, 2009, truck fuel economy can
be improved by reducing highway driving speeds3. Excessive speed is a primary factor in
contributing to higher fuel consumption, followed closely by excessive and unnecessary engine
idling, an area we address a little later.
Many fleets have adopted maximum speed thresholds as a means of both saving fuel and
improving in-transit safety. For the purpose of the following calculations, studies have shown that
for every 1 mile per hour (mph) over 55 mph, fuel economy is reduced by 0.1 mile per gallon4.
A recent 2009 study, states that current fuel consumption for Class 8 trucks is estimated by the U.S.
Department of Energy at 6.0 mpg5.
2
www.fra.dot.gov/.../Comparative_Evaluation_Rail_Truck_Fuel_Effic...
http://www.fleetequipmentmag.com/Content/Site310/ContentBlocks/66391KWFuelEcon_00000026200.pdf
4
http://cumminsengines.com/assets/pdf/Secrets%20of%20Better%20Fuel%20Economy_whitepaper.pdf
5
http://www.greencarcongress.com/2009/11/icct-20091120.html
3
4
MAGTEC Value Proposition & Benefit Analysis
November 2012
The Chart below (Fig.1) demonstrates the yearly savings based on fuel consumption and improved
miles per gallon:
Target Miles per Gallon & Approximate Yearly Savings ($ & %)
5.5
6.0
6.5
7.0
7.5
8.0
5.5
$7,276
(9.1%)
-
6.
-
$13,336
(16.7%)
$6,060
(8.4%)
-
6.5
-
-
$18,460
(23.1%)
$11,184
(15.4%)
$5,124
(7.7%)
-
7.
-
-
-
$22,860
(27.2%)
$15,584
(21.4%)
$9,524
(14.3%)
$4,400
(7.2%)
-
7.5
-
-
-
-
$26,668
(33.0%)
$19,392
(26.7%)
$13,332
(20.0%)
$8,208
(13.3%)
$3,808
(6.7%)
-
$30,000
(37.5%)
$22,724
(31.2%)
$16,664
(25.0%)
$11,540
(18.8%)
$7,140
(12.5%)
$3,332
(6.3%)
Current
MPG
5
SUMMARY
5.0 miles per gallon/100,000 miles = 20,000 gallons x $4.00/gallon = $80,000
5.5 miles per gallon/100,000 miles = 18,181 gallons x $4.00/gallon = $72,724
6.0 miles per gallon/100,000 miles = 16,666 gallons x $4.00/gallon = $66,664
6.5 miles per gallon/100,000 miles = 15,385 gallons x $4.00/gallon = $61,540
7.0 miles per gallon/100,000 miles = 14,285 gallons x $4.00/gallon = $57,140
7.5 miles per gallon/100,000 miles = 13,333 gallons x $4.00/gallon = $53,332
8.0 miles per gallon/100,000 miles = 12,500 gallons x $4.00/gallon = $50,000
Fig.1
Fuel Economy: A Matter of Dollars and Sense
Calculate your own potential fuel savings by finding your current mpg on the left. The column to
the right shows your approximate dollar savings per year as you improve your fuel economy
The data in the following chart (Fig.2) represents a conservative example of the savings that can be
achieved after implementing MAGTEC’s Speed & Idle Management (SIM) feature to improve fuel
consumption by .5 miles/gallon by remotely adjusting the vehicles top speed from 65 to 60 mph.
SIM allows a company to remotely set and/or adjust maximum speed thresholds in real time. This is
a valuable tool to help manage through unexpected and unbudgeted increases in fuel prices. At
the same time, a seasonal drop in fuel prices can be managed to provide a slight increase to a
vehicle’s top speed for time and productivity purposes. The downward adjustment in speed and
the subsequent increase in MPG represent an annual savings of 7.7% or $5,124 per truck.
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MAGTEC Value Proposition & Benefit Analysis
November 2012
MPG
Total
Annual
Miles/Truck
Cost of
Fuel/Gallon
Total
Annual Fuel
Cost/Truck
100,000
Total
Gallons
Fuel
Annual/Truck
16,666
6.0
$4.00
$66,664
6.5
100,000
15,385
$4.00
$61,540
Total
Annual Fuel
Saving/Truck
$5,124
(7.7%)
Fig.2
With MAGTEC:
MAGTEC helps companies to:
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•
1.2
Reduce fuel costs by $5,124/truck/year
Reduce their company’s carbon footprint
Improve safety compliance and mitigate auto-liability risks, by reducing top speed
thresholds at the vehicle
IMPROVING FUEL SAVINGS VIA REMOTE SPEED-SETTING
Engine Control Modules (ECMs) are electronic controls units that have been installed on truck
engines since the early 1990s to allow better control over performance and emissions. In order to
adjust engine settings, fleet managers have had to, up until now, manually program each vehicle’s
engine’s ECU or Engine Control Unit. The ECU can be programmed to set maximum engine RPM
and speed thresholds to improve fuel performance and cut emissions.
Speeds in excess of 60 miles per hour dramatically decrease a vehicle's fuel economy. A speed
decrease of two to three miles per hour results in a 4%-5% savings6 in fuel costs. Speed reduction
can be achieved through driving practices and through electronic devices known as speed limiters.
With MAGTEC:
MAGTEC’s Speed and Idle Management allows companies to remotely adjust maximum
speed thresholds to:
•
•
6
6
Reduce fuel costs
Reduce their company’s carbon footprint
www.e3fleet.com/ecm.html
MAGTEC Value Proposition & Benefit Analysis
November 2012
•
1.3
React pro-actively to fuel price fluctuations and adjust maximum speed thresholds
accordingly, anywhere, and in real-time
REDUCING EXCESS IDLING VIA REMOTE IDLING MANAGEMENT
According to estimates by Argonne National Laboratory (ANL), in any given year a long-haul trucker
can travel 150,000 miles and idle more than 1,800 hours7. With today’s high cost of fuel, an
average Class 7 or 8 truck’s idling costs can exceed $8,000/year. The ANL developed a formula for
calculating the cost of truck engine idle times. This formula is intended to serve as a guideline to
assist truck owners in estimating potential savings directly attributed to reducing idling times.
Although the actual results may vary since they rely on individual circumstances, they do indicate
that, with proper management tools, significant fuel savings can be achieved.
Figure 3 shows the typical annual cost of idling.
Average
Fuel Cost
Average
Idling Hours/Yr
Idling Hours/Mo.
/gallon
1800
150
$4.00
Fig.3
Annual Idling
Cost/Truck
$8,640
The following charts (Fig.4 and Fig.5) represent a conservative example of the savings that can be
achieved by implementing MAGTEC’s Speed & Idle Management (SIM) feature to reduce the
vehicle’s maximum idle time by 25% to 50%. SIM allows a company to remotely set, adjust and
enforce maximum idling times and better manage a fleet through unexpected and unbudgeted
increases in fuel cost.
25% Reduction in Idling
Average
Average
Idling Hours/Yr Idling Hours/Mo.
1350
113
Fig.4
Fuel Cost
/gallon
$4.00
Annual Idling
Cost/Truck
$6,480
Annual Savings
Truck
$2,160
50% Reduction in Idling
Average
Average
Idling Hours/Yr Idling Hours/Mo.
900
75
Fig.5
Fuel Cost
/gallon
$4.00
Annual Idling
Cost/Truck
$4,320
Annual Savings
Truck
$4,320
7
7
www.transportation.anl.gov/engines/idling_research.html
MAGTEC Value Proposition & Benefit Analysis
November 2012
With MAGTEC:
MAGTEC helps companies to:
•
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1.4
Reduce unnecessary or excessive idling and save $2,160 to $4,320/truck/year
Reduce engine wear
Reduce the company’s carbon footprint
ENFORCING LEGISLATED SPEED COMPLIANCE VIA REMOTE SPEED MGM’T
Fleets can set maximum speeds of each of their vehicles by physically plugging into the engine’s
control unit (ECU). However, recent regional jurisdiction legislation requires fleets to pre-set their
truck governors or speed limiters, to that jurisdiction’s maximum speed8, before entering the
jurisdiction, and this has placed further financial burdens on commercial fleets. Any person failing
to comply can be found guilty of an offence and is then liable to fines between $250 and $20,000.
For vehicles whose maximum preset speed thresholds do not comply with a jurisdiction’s maximum
speed limit, requires that the driver stop at a third party service center to have the engine’s
maximum speed threshold physically reduced in order to comply, before entering that jurisdiction.
This inconvenience typically costs anywhere from $50 to $100 per service and can delay the trip by
several hours. Subsequently, when leaving that jurisdiction the truck’s maximum speed threshold
must then be reset, involving additional costs and further delays.
With MAGTEC:
MAGTEC remotely sets maximum speeds on one or all trucks, across the country, in real time
to:
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1.5
8
8
Eliminate in-transit audit delays
Eliminate speed limitation violations, convictions and fines
Save $100 to $200/round trip/truck by not having to service speed limiters
Eliminate delays in-transit by NOT having to stop at service centers for speed limiter
adjustments
REDUCING OUT-OF-ROUTE MILES WITH GEO-ROUTING
http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90h08_e.htm#s68p1s1
MAGTEC Value Proposition & Benefit Analysis
November 2012
Route management can significantly impact fuel economy and it’s estimated that out-of-route
miles account for 3% to 10% of a driver’s total mileage each year9, contributing to unnecessary fuel
consumption.
Assumptions: 100,000 miles/yr, averaging 6 mpg, at a cost of $4.00/gallon
Out-of-Route
Miles/Year
3%
6%
10%
Out-of-Route
Miles/
Year/Truck
3,000
6,000
10,000
Extra
Gallons
Fuel
500
1,000
1,666
Gallons/
Year/Truck
$4.00
$4.00
$4.00
Additional
Fuel Cost/
Year/Truck
$2,000
$4,000
$6,664
Fig.6
By implementing MAGTEC’s geo-route technology, the company can specify pre-determined trip
routing and get notification of any deviations. By better managing trip routes, a fleet can reduce
out-of-route miles and realize considerable fuel savings. Chart (Fig.7) demonstrates savings from
33% to 50% reductions in current fuel consumption.
Current Outof-Route
Miles/Year
New
Out-of-Route
Miles/Year
(%Reduction)
3%
6%
10%
2% (33%)
3% (50%)
5% (50%)
Out-ofRoute
Miles/
Year/Truck
2,000
3,000
5,000
Reduced
Gallons
of Fuel
Fuel
Cost
Fuel Cost
Savings
Year/Truck
167
500
833
$4.00
$4.00
$4.00
$668
$2,000
$3,332
Fig.7
With MAGTEC:
MAGTEC provides the ability to establish routing to and from destinations to:
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Ensure on-time pick-up and delivery
Receive immediate route deviation event notification
Improve productivity
Reduce fuel costs by between $668 to $3,332 per truck per year
www.fleetequipmentmag.com/.../Site310/.../66391KWFuelEcon_...
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MAGTEC Value Proposition & Benefit Analysis
November 2012
2.0 DRIVER COMPLIANCE, PERFORMANCE & PRODUCTIVITY
Commercial fleets are largely dependent on their drivers to ensure that the company’s assets are
being driven lawfully and responsibly. These drivers are often a company’s only line of defense
when it comes to safety, security, compliance, on-time pick-up and delivery, and safeguarding the
company’s assets and shipper’s cargo.
Managing transportation fleet personnel is an increasingly complex task. Drivers don’t report to an
office every morning for work, or work under close supervision, to be easily monitored. Drivers are
often hundreds, if not thousands of miles, from their immediate supervisor, resulting in minimal
supervision. Some fleets utilize GPS tracking of their trucks and can almost always see their truck’s
location on a map, as long as the driver has not chosen to temporarily disconnect or interfere with
the tracking device. Most fleets have little to no control over their drivers, trucks, trailers and
cargo, once they leave the company’s terminal or yard.
Smart technology can assist fleets with day-to-day management of their drivers; increase
productivity and efficiencies; and, attract and retain good drivers and MAGTEC will provide value
propositions in the following areas:
1. ENFORCING DRIVER COMPLIANCE
2. DRIVER SAFETY, SECURITY & RETENTION
2.1
ENFORCING DRIVER COMPLIANCE
Not too many fleets can honestly say that they’ve never had serious driver issues at some time or
another. As a matter of fact, the larger the fleet, the more driver issues a fleet encounters. Most
companies will admit that some issues are more serious than others but they’ve all had incidents
where they would have liked to have been able to shut their trucks down and park them if they
could, and then deal with the driver issue.
Fleets rely heavily on their in-transit drivers to be responsible while driving their company vehicles,
and as such, a company’s financial risk is heightened and their reputation is more vulnerable than
many less visible businesses when incidents of driver non-compliance occur. Whether the driver is
behind the wheel in heavy traffic at interstate speeds, or has left the truck and cargo unattended at
a truck stop, the risks of an incident occurring are high.
Some of the issues fleets have to deal with each and every day from their driver and/contractors
are:
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•
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Not 100% sure who is behind the wheel
Posted speed limits being exceeded
MAGTEC Value Proposition & Benefit Analysis
November 2012
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•
•
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Aggressive driving
Driving in dangerous weather conditions
Off-route personal detours
Driving while under the influence of alcohol, drugs, or excess stress
Exceeding Hours of Service limitations
Incidents deemed to have been preventable
Safeguarding assets and cargo
With MAGTEC:
MAGTEC can maintain control of assets and enforce compliance 24/7, across the country to:
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2.1
Let you know who is driving what vehicle, where, when and for how long
Prevent off-route travel
Receive immediate real-time alerts of driver breaches
Enforce Hours of Service compliance
Deal with non-compliant drivers
Restrict a driver to company speed thresholds
Shut down a truck and driver, for aggressive behavior or DUI incidents
Ensure use of automated electronic driver logs to improve efficiency and save time
Improve safety and reduce auto-liability risks
Negotiate better pricing on flexibility on insurance premiums and deductibles
Demonstrate to customers a commitment to their cargos well being
DRIVER SAFETY, SECURITY & RETENTION
Most commercial trucks are operated by lone drivers. Although the transportation industry is
considered a relatively safe environment, there are risks associated to working alone, in unfamiliar
and remote locations, surrounded by a largely transient population. Whether at truck stops, rest
areas or waiting at a loading dock, drivers can be targeted and find themselves in harm’s way.
Drivers can’t be in the truck 24/7 and must leave their truck and cargo unattended to comply with
Hours of Service, or take meals, showers and restroom stops. This is the point at which the truck
and cargo are generally most vulnerable; when left unattended. Although some companies do
track their assets and cargo, the driver is the prime security resource the company relies on and is
the only onsite presence.
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MAGTEC Value Proposition & Benefit Analysis
November 2012
It is not uncommon for drivers to get followed into truck stops, while out of their vehicles be
monitored by an accomplice, enabling the criminal partners to steal the driver’s truck and cargo.
Alternatively drivers are followed from truck stops or distribution centers and are at risk of being
hijacked, injured and in some cases killed, when they are forced to stop.
Drivers, like all of us, are susceptible to personal health issues, but can find themselves alone, and
in some cases, unable to call for emergency assistance.
Driver retention in the trucking industry, especially during driver shortages, is a major concern as
the cost of replacing drivers can be tagged at anywhere from $5,000 to $8,50010. Paclease Truck
Rental and Leasing pegs replacement costs at upwards of $15,00011. Drivers who know the
company has invested in their well being are more likely to stay on.
With MAGTEC:
MAGTEC drivers can carry a MAGTEC Personal Alert & Disabler (PAD), a remote panic button,
on their person at all times, enabling them to call for help from anywhere in the country,
at any time, and in real-time, to:
•
•
•
•
•
•
10
11
Notify their company of an urgent event
Initiate a remote shutdown of their truck, from up to a mile away
Remain out of harm’s way while dispatch notifies authorities to intervene
Give the driver the peace of mind of knowing that they’re never alone and that medical help
is accessible
Improve the retention of good drivers
Save companies driver replacement costs
Frost & Sullivan http://Frost.com/prod/serlet/CPO_77958079
https://www.paclease.com/newsletter/2004/April_PB_Driver_Retention.web
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MAGTEC Value Proposition & Benefit Analysis
November 2012
3.0 ELIMINATING TRUCK AND CARGO THEFT
The U.S. Department of Transportation’s Federal Highways Administration’s industry statistics state
that trucks in 2010 hauled approximately $10 trillion worth of merchandise annually12. It is
estimated that cargo theft nationally exceeds $30 billion/year13 and during tough economic times,
the risks of being victimized increase exponentially.
According to a 2010 report by FreightWatch International for the U.S.14:
•
•
•
•
•
•
•
There were approximately 900 reported cargo theft incidents (most ever recorded)
Average loss value was $512,000 per incident
Reported cargo loss was approximately $460,800,000
Average pharmaceutical loss was approximately $3.8 million
Food and beverage theft accounted for 21%, with an average loss of $125,000 per
incident
Thefts of electronics accounted for 19% of losses
Thefts of high value precious metals, such as copper and aluminum, are rapidly
increasing
Total annual cargo theft summary:
i)
ii)
iii)
ESTIMATED
REPORTED
DIFFERENCE
@
@
@
$ 30,000,000,000+
$
460,800,000; and,
$ UNKNOWN (Unreported)
Thieves are not just targeting high value goods, they will steal whatever they can easily dispose of
and in tough economies, that’s just about anything. Determining the risk-mitigating benefits of a
security system is as difficult as measuring exposure. Most of the problems stem from the fact that
security doesn’t directly create anything tangible, but rather it prevents a loss. A loss that’s
prevented is a loss that companies probably won’t know about.
During tougher economic times, black market economies flourish and the demand for high value
brands heightens. Professional organized theft rings recognize the opportunity, can easily identify
target loads, and take possession at the weakest link within the supply chain, generally while being
transported from one secured distribution center to another.
12
http://www.ops.fhwa.dot.gov/freight/freight_analysis/
www.fbi.gov › News › Stories › 2010 › November
14
www.joc.com/.../cargo-theft-rose-record-high-2010_20110118.html
13
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MAGTEC Value Proposition & Benefit Analysis
November 2012
It is a fact that many losses are never reported, either out of fear of increased insurance premiums
or loss of reputation. The risks of losing a load and becoming a victim have never been higher. Most
commercial fleets depend largely on their drivers when it comes to areas such as security and
safeguarding the company’s assets and shipper’s cargo.
In order to better understand and appreciate the risks, MAGTEC will provide a value proposition
and cover the following:
1. SUPPLY CHAIN SECURITY INVESTMENTS
2. PREVENTING TRUCK, TRAILER & CARGO THEFT
3.1
MAKING THE CASE FOR SUPPLY CHAIN SECURITY INVESTMENTS15
With a clear need for increased security in global supply chains, firms are tasked to make
appropriate supply chain security investments to protect their assets and operations. Yet, a unique
characteristic about security investments is that they defy many traditional methods of calculating
ROI if firms only consider cost avoidance.
Security investments by their nature do not directly increase revenues but are intended to prevent
costs — when effective, supply chain security measures prevent disruptions, supply chain security
breaches, product adulteration, and brand/franchise destruction. In most cases, it is difficult at best
to prove that a specific action prevented a problem from occurring, much less how frequently the
problem would occur or the costs that were prevented. Aside from theft reduction, where there is
tangible evidence of improvements when loss levels are reduced, one cannot measure the cost of a
security breach or disruption that did not occur. Ironically, only when a security measure fails can
one calculate the cost of the loss for that particular incident.
Theoretically, one could better understand and predict the cost impact of security breaches by
studying security breaches and the subsequent costs and losses on a broad, industry-wide scale.
Such data could be used to create a probability distribution function that approximates a
predictable set of losses across industry. Sadly, this data is not widely available for various reasons,
mostly because firms believe that they expose themselves to additional costs and risks by sharing
this data. Sharing their loss data and experiences opens up the firm to additional risks: Exposing the
loss data may make security weaknesses more evident to the general public, which may result in
further losses; exposing actual losses may lead to higher insurance premiums as insurers would
adjust premiums to more accurately reflect the higher loss levels; firms may fear reduced access to
capital if exposing loss data causes negative public perception of their operations.
15
www.businessofgovernment.org/.../investing-supply-chain-security-c...
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MAGTEC Value Proposition & Benefit Analysis
November 2012
As one industrial executive noted, the benefits of security investments are often in the form of
avoiding losses, saying “nobody gets credit for solving problems that did not happen,” as suggested
previously.
With these fundamental constraints, business leaders and security managers have had limited
success quantifying the business case to fund desirable security investments, leaving supply
chains knowingly vulnerable.
An emerging and more powerful way of viewing return on investment for supply chain security
Investments, entails considering more than just cost avoidance benefits. Some firms are
recognizing the potential to extend beyond cost avoidance benefits to actually capture cost
reduction and efficiency improvements from those same investments. These may be possible by
considering the impact of these investments on supply chain operations, and subsequently
designing those operations to leverage the investments for process improvement. Those firms
pursuing this approach have begun to identify and enjoy collateral benefits of their investments.
With MAGTEC:
MAGTEC’s advanced security and control technology provides significant collateral benefits in
terms of cost reductions and efficiency improvements while heightening transportation
security and:
1. Eliminate the costs associated with cargo theft
2. Reduce fuel consumption
3. Negotiate more pricing flexibility on insurance premiums and deductibles
4. Gain significant collateral efficiency savings
5. Provide a competitive advantage
6. Provide security-minded shippers with the security they expect
3.2
PREVENTING TRUCK, TRAILER & CARGO THEFT
Cargo theft continues to grow at an alarming rate. In tougher economies, every load is at risk, not
just electronics, pharmaceuticals, apparel, and high value merchandise. It’s important to recognize
that often a loss that’s prevented is a loss that you probably won’t know about.
The costs associated with a stolen load, far exceed the value of the load and equipment, when you
factor in recovery efforts, loss of use, hikes in premiums for insurance, increased deductibles, loss
of use of equipment and damaged reputation.
15
MAGTEC Value Proposition & Benefit Analysis
November 2012
Victimized companies have to deal with post-theft issues and costs, such as:
•
•
•
•
•
•
•
•
•
•
•
Notifying local law enforcement
Notifying shipper of loss
Notifying insurance of loss
Getting driver back home (travel, expenses...)
Replacement equipment
Paying out deductibles
Investigation related resources and costs
Determination of how truck and cargo were successfully stolen
Identifying weaknesses in security policies and procedures
Assessing both short and long term impact the loss will have on the customer
Assessing impact of theft on future insurance
With MAGTEC:
MAGTEC’s advanced security and control system provides a comprehensive layer of security
and protection to:
•
•
•
•
•
•
•
•
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Prevent theft
No need to notify law enforcement, shipper, or insurance provider
No need to worry about getting a driver back home, or replacement equipment
No need to pay deductibles, investigation costs
Justify more pricing flexibility on future insurance premiums and deductibles
Guard against the disabling of the vehicle’s covert tracking system
Satisfy security-minded shippers’ theft concerns, keep and grow their business
Gain a competitive advantage and solicit new business
MAGTEC Value Proposition & Benefit Analysis
November 2012
4.0 MITIGATING RISKS, REDUCING CLAIMS & INSURANCE RATES
Any company that owns a truck permit is responsible for all accidents involving their truck with the
name of the trucking company displayed on the vehicle – regardless of whether the driver is an
employee or independent contractor. Trucking companies can also be held responsible for
negligence, including:
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Failure to maintain the truck
Failure to provide proper training to drivers
Failure to hire safe drivers
Failure to conduct thorough background checks
Failure to properly monitor truck driver safety
Failure to check log books and require accurate entries
Failure to enforce limited driving hours
When a trucking accident occurs, the driver is often the first to be blamed. And indeed, drivers who
speed, drive under the influence, or fall asleep behind the wheel are acting negligently. However,
trucking accidents are different from those involving regular passenger cars, because a truck driver
is acting as a commercial representative of the trucking company. Therefore, the trucking company
can often be held liable as well. Understanding who shares the blame in a trucking accident can be
complicated – but it’s important to determine what happened and why, when any accident occurs.
Issues fleets have to deal with each and every day:
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Not 100% sure who is behind the wheel
Exceeding posted speed limits
Aggressive driving
Driving while under the influence of excess stress, alcohol, or drugs
Driving in dangerous weather conditions
Off-route personal detours
Exceeding Hours of Service
Mitigating risk
Safeguarding assets and cargo
With MAGTEC:
MAGTEC’s advanced security and smart control system provides companies with defense
mechanisms to mitigate their risk and the ability to interact remotely with the onboard
system either prior to or during an incident, to:
•
17
Ensure only authorized and qualified company personnel operate company owned vehicles
MAGTEC Value Proposition & Benefit Analysis
November 2012
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Prevent unauthorized use of company equipment
Prevent unqualified and unauthorized people from driving company vehicles
Know who’s driving what, when, where, why, and for how long
Enforce maximum speed thresholds remotely
Interact and take control on matters of aggressive driving reports
Interact and take control on suspicion of driving while overly stressed or under the
influence of alcohol or drugs
Interact and enforce lower speeds or delays on account of dangerous weather conditions
Prevent off-route personal detours
Enforce Hours of Service compliance
Mitigate risk
Prevent theft
Prevent authorized personnel from after-hours use of company vehicles
Satisfy insurance company requirements
A company and its management that can demonstrate their decision to implement solutions that
mitigate their exposure to risks, by having the ability to interact remotely on incidents that may be
deemed to be preventable can, whenever they may occur, go a long way to reduce claims,
negotiate more price flexibility on insurance and deductibles, protect their business, and legal
liability.
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MAGTEC Value Proposition & Benefit Analysis
November 2012
5.0 IMPROVING RESOURCE EFFICIENCIES & PRODUCTIVITY
Two areas within the supply chain that can gain efficiencies are:
1. ELIMINATING TEAM DRIVERS ON SHORT ROUTES
2. MOBILE ASSET MONITORING EFFICIENCIES
5.1
ELIMINATING TEAM DRIVERS ON SHORT ROUTES
Commercial fleets providing team drivers on short lanes, that is, on lanes 600 miles or less, as a
means to heighten the level of security for their customer, do so at a significant cost. Fleets using
teams, expect that one of the drivers remain in the truck at all times for security reasons. Although
fleet criteria and circumstances vary, the annual cost of employing a second driver can range
between $45,000 and $60,000.
The underlying assumptions associated with using teams on short lanes, involves always having one
of the drivers remain in the truck at all times for safety and security reasons. Although this may be
the fleet’s policy, often it is not the case, as many teams do leave their trucks unattended at truck
stops, rest areas or other areas, out of convenience and to limit their down-time.
With MAGTEC:
MAGTEC provides advanced security systems for drivers and assets 24/7, anywhere, to:
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5.2
Secure the vehicle without depending on a driver to remember to initiate and activate
Protect assets, even if left unattended and idling
Provide immediate notification of any tampering with the truck’s security system
Satisfy shippers’ concerns on security
Reassigning the second driver to a revenue generating driving position, or eliminate the
position
Save $45,000 to $60,000 per year, on each dedicated short-lane
MOBILE ASSET MONITORING EFFICIENCIES
Most commercial fleets employ both dispatch personnel and a team to monitor their GPS/AVL
tracking system of their vehicles 24/7. Those responsible for monitoring must adhere to strict
guidelines in order to detect security breaches in order to intervene and mitigate the risks
associated with a breach. Some companies, experience firsthand incidents where the monitoring
personnel are either distracted or away from their desks allowing breaches to go unnoticed,
compromising their drivers’ safety, their assets, and their customer’s cargo.
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MAGTEC Value Proposition & Benefit Analysis
November 2012
With MAGTEC:
MAGTEC’s ‘smart’ technology eliminates the need to monitor a fleet, due to its selfmonitoring feature, that sends immediate notification of breach alerts from anywhere, in
real-time, to:
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Reduce dependency on monitoring personnel’s attentiveness
Eliminate costly monitoring costs
Receive breach alerts at dispatch, on personnel PDAs and cell phones
Have the ability to intervene remotely, take immediate control of an incident
Initiate remote vehicle disabling and law enforcement intervention
Reassign or eliminate monitoring personnel and costs
Justify more pricing flexibility on insurance premiums and deductibles
Save money
MAGTEC Value Proposition & Benefit Analysis
November 2012
6.0 INCREASING CUSTOMER RETENTION & GROWING BUSINESS
Customer-company relationships should never have a time limit and shouldn’t end once the deal is
done. It’s a fact that identifying potential new customers is not all that difficult, but recruiting new
customers and gaining their trust to give you an opportunity to earn their business, is the first of
two critical steps to growing any business. However the biggest challenge, after recruiting, is
turning that one-time purchaser into a repeat and loyal customer. With the right approach, repeat
customers can quickly become your biggest ambassadors and bring in endless referral traffic.
It’s important to meet the needs of the customer, then take it up a notch and over deliver, again
and again. Creating and developing a broader connection with a customer helps position that
supplier as a key partner to the customer’s growth and success.
The transportation process is considered to be the weakest link in the overall supply chain and
represents an area that can always benefit by heightened security initiatives and enhanced intransit controls.
With MAGTEC:
MAGTEC’s advanced vehicle security and control technology not only provides numerous
collateral benefits but helps fleets differentiate their services from their competition, to:
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Lead the way and be the industry’s gold standard when it comes to security, safety,
management and growth
Offer unparalleled security and operational efficiencies
Prevent theft and have built-in safeguards to counter hijackings
Satisfy the needs of security-minded customers
Securely move high value and sensitive goods at premium rates
Save money on short lanes that called for ‘teams’ for security purposes
Act and intervene on incidents involving non-compliant drivers and mitigate their risks
Enjoy preferred insurance pricing and position themselves for better negotiation flexibility
Ensure better productivity and less downtime
Instill customer peace of mind
Recognize that MAGTEC’s progressive technology will continue to move their control
forward
MAGTEC Value Proposition & Benefit Analysis
November 2012
BENEFIT SUMMARY
While it may be that some of the above examples may not apply to every fleet, the point of this
exercise is to demonstrate a range of benefits, MAGTEC’s technology can provide. The benefits
covered in this model have been broken down into three categories: Hard, Medium, and Soft.
HARD BENEFITS WITH MAGTEC
Remote Speed Management –
Estimated Fuel Savings
Remote Idle Management –
Estimated Fuel Savings
Reduce Carbon Footprint –
Value Proposition Rating
(Credits may apply)
Speed Limiter Compliance –
Estimated savings per single round trip
Out-of-Route Miles –
Estimated Fuel Savings
($668 - $3,332/truck/year)
Eliminating Team Drivers on Short Lanes –
Potential Wage & Benefit Savings
Reducing System Monitoring –
Value Proposition Rating
Fig.7
$5,124/truck/yr
$2,160 to $4,320
/truck/yr
A+
$100 to $200
/truck/trip
$668 to $3,332
/truck/yr
$45,000 to $60,000
/driver/yr
A+
MEDIUM BENEFITS WITH MAGTEC
Preventing Truck & Cargo Theft –
Potential savings on a single theft of truck and cargo
Reducing System Monitoring –
Value proposition of being able to reduce security personnel required to
monitor fleet and reassign to revenue generating positions
Lessen Risk Exposure & Lower Claims –
Value proposition of reducing preventable Auto Liability claims and cargo
theft claims
Insurance Flexibility –
Value proposition of having more flexibility in negotiating insurance,
premiums, and deductibles
Fig.8
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$50,000 - $Million+
/theft
A+
A+
A+
MAGTEC Value Proposition & Benefit Analysis
November 2012
SOFT BENEFITS WITH MAGTEC
Return On Security Investment –
Value proposition of collateral benefits associated with investments in
security technology
Driver Safety, Security & Retention –
Value proposition of being able to retain existing good drivers and attract
new good drivers
Customer Retention –
Value proposition in being able to retain good customers and grow that
revenue stream
Competitive Advantage –
Value proposition of being able to offer differentiating services to
customers that competitors can’t offer and take on more lucrative freight
Fig.9
A+
A+
A+
A+
In summary –
MAGTEC can provide a customized benefit model for specific applications, based on the accurate
information it receives from the customer.
MAGTEC, if given the opportunity, can demonstrate how maximum utilization of its technology’s
full scope of features will deliver a very compelling return on investment and provide numerous
collateral benefits.
MAGTEC can show a fleet how it can save as much as $8,000 to $10,000 a truck, per year; that’s
close to $40,000 over a truck’s 4 year in-service term; and, never risk losing another truck or load
again.
Confidential – The above examples of potential savings do not in any way represent a
commitment from MAGTEC.
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MAGTEC Value Proposition & Benefit Analysis
November 2012
Notes:
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