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Shutting down of 2G Networks – Looming challenges for IOT in Logistics industry

Telecom Service Providers globally have been shutting down 2G networks. Operators in United States, Europe, Japan, Singapore, Australia have shut down 2G networks. With the advent of 5G, some Operators are also shutting down 3G Networks as well. Here’s a region-wise list of countries with 2G switch-off dates. This India-focused article proposes to examine the implications of switching off as well as poor availability of 2G Data services, that is the backbone of over a million vehicles in operation. Several fleet operators have deployed GPS devices in their vehicles and have integrated the data as a critical part of their supply chain for transport of people and goods. The challenges that have increased significantly in the last five years, as India moved rapidly to 4G and the advent of 5G, are detailed below: -
  • We are noticing significant deterioration in the performance of 2G networks especially 2G data being given low priority prevent availability of information in real-time. This is across all Telco providers in India. Even SOS situations, in case of people logistics may not be addressed in real-time. Help may not be available in real-time in vehicles that have GPS and SOS button deployed. Whilst all statutory authorities are making GPS mandatory, none of them seem to worry or address this issue
  • The cost of a 2G Data only plan is presently less than Rs 50 per month. This plan also provides for 100 SMS which are used to communicate with the devices. The cost of a 4G plan (pure data plans are not available) is upwards of Rs 150 per month. In other words, SIM monthly charges are going to go up by 300%.
    • Do not expect the SIM costs to go down as all the TELCO have bought their licenses at huge cost and have to make a reasonable return on their capital.
  • The cost of a plain vanilla 2G GPS tracker manufactured in India is around Rs 2,000/- per device (local manufacturers such as Autocop). Imported Chinese Devices are available around Rs 2500 and High-quality devices from China and Israel are available at over Rs 3200. Thanks to the rapid dollar rise against the rupees, the costs are expected to go up by 15% soon.
    • Against the above, the cost of 4G/Wifi GPS trackers are upwards of Rs. 10,000 /- per device. We expect the costs to increase by 300% on account of this. The high cost of these devices increase instances of theft of these devices
  • Exposure to huge risks including criminal in nature if SIM cards are misused by drivers for illegal activities. We have experienced several times drivers taking the SIM card out of GPS devices only to realize the data rates are unusable for them to enjoy unlimited high bandwidth at the cost of fleet owners/device service providers. 4G SIM cards are extremely valuable and is liquid currency for the drivers. With stringent cyber laws, Fleet owners run the risk of being booked for various offences if the driver watches inappropriate child videos by stealing the SIM. It would be arduous for the owners to prove their innocence and get out of the mess. SIM locking will become mandatory to protect the interest of the SIM Card owners.
  • Several discussions can be found on Phone Vs GPS and using the driver phone as a primary IOT device for Location Based Services. This works very well when the Phone is the source of income for the driver and not otherwise when it is a part of the process that monitors his own performance. Most importantly, a mobile phone provides 100s of other services that we do not need for IOT logistics and hence power consumption in the vehicle can be managed exceptionally well when the need to manage vehicles on 24/7 basis even when they are not in use.
Summing up, we can expect a 200% increase in vehicle tracking costs in the near future, if we need reliable, real-time IOT data from moving vehicles.

ETS Outsourcing Dilemma – Should you outsource entirely or select specialists for different parts of the Solution

Companies are on the constant look out for opportunities to improve efficiency across all functions and save costs across all items of expenditure. The costs of transporting employees range from ₹ 3000 to ₹ 9000 per employee per month, based on different types of vehicles and company policies. Agreements with fleet providers also provide for cost escalations due to fuel and with the current diesel price at ₹ 73 per litre the rates are bound to go up. A company that transport 1000 employees in individual cars is likely to spend around $1.5mn a year on transport costs. Most companies, by now, have understood the benefits of implementing a robust transport automation system. In addition to improving the quality of commute for their employees, reducing commuting time and enhancing the safety during travel, Companies can also obtain insights for optimizing routes, rationalize use of different types of vehicles provided by the fleet operators and automate and streamline billing. Transport automation systems also ensure implementation of fairness across multiple vendors based on their SLAs and ensures 100% transparency in operations in additions to meeting all regulations and addressing safety of employees. However, while choosing the type of “outsourcing” model, there are many options available in the market today. Some companies prefer to outsource end-to-end fleet operations (fleet, personnel, automation) while the others prefer to have different vendors providing fleet, automation software, BGV services and Escort Security. Organizations who choose an end-to-end service provider do so as they do not find adequate management bandwidth or lack specialized skills required for transport management. They also believe that this is not core to their business and are willing to sacrifice various benefits by choosing “convenience” over “operational efficiency”. On the other hand, there are discerning companies who are obsessed with Operational efficiency and will leave no stone unturned to get the best transport management solution for their employees. They are conscious of the conflict of interest between these vendors and do not want to take chances by selecting one vendor to provide all these services. Thus, these companies meticulously identify “horses for courses” who specialize in providing fleet, transport automation software, BGV services and Escort Security. As a result, these companies benefit from the following advantages: - We are noticing recently that large facility service providers with ‘risk management competencies’ such as JLL, ISS, CBRE are providing end to end transport in partnership with Fleet vendors and technology partners such as MoveInSync, Routematic and Safetrax. With large capital and managerial resource pools behind them they are well positioned to capitalize and grab market share with large companies. Some Technology providers such as MoveInSync as well as Routematic are also offering end-to-end transportation services and it will be interesting to observe how these offerings perform after a couple of years given the fact these startups have constraints in capital and resources. Technology providers offering end-to-end transportation can result in conflict of interest and may require third party audits on routing and size of vehicles from time to time. Pureplay SaaS technology companies will have to live with the fact that the technology stack in the costs of transportation are not likely to exceed 2 to 4 percent of the total transportation costs and hence the revenue market opportunities are likely to be small, not attractive to be funded by VC firms. Such companies may have to expand their markets vertically and horizontally via different offerings. There is also no scope for these players to compete with Ola or Uber as the B2C market is likely to be dominated by these two players. The choice of outsourcing model is a strategic decision and is entirely dependent on a combination of factors such as an organization’s risk appetite, cost consciousness and availability of management bandwidth. Thus, companies based on their sizes and needs are expected to choose an integrated provider to provide end-to-end transport management with SLAs and risk management or deal with all the individual providers of services for better control and cost efficiency.