Fleet-vehicle managers in Winnipeg are partnering with Ottawa's Netistix Technology Corp. to cut fuel consumption and with it greenhouse gas emissions.

Rising fuel costs are the main reason behind decisions by Winnipeg's fleet management agency (WFMA) and Manitoba Hydro (MH) to start monitoring just how their vehicles are used.

They are using an on-board telematics system from Netistix's FleetPulse that monitors everything from fuel consumption to fluid levels. The information is transferred wirelessly to a fleet manager's computer where a web application suggests a cut in vehicle idling or calls for preventive maintenance.

WFMA is involved in two separate projects. One started in January, involving 16 light trucks, and uses telematics to monitor all vehicle systems. The other started in September, involving 10 light trucks, and tracks idling.

Photos courtesy Netistix
Netistix has scaled telematics to work with mid-size vehicles.

"The city's fleet of 1,700 vehicles will pay $3 million more this year in fuel costs. We see these projects with Netistix as a good fit for reducing that consumption," says Ajaleigh Williams, WFMA project manager.

Manitoba Hydro has also started a 10-vehicle idling trial that started in September and runs through November.

"The goal is to show how much a vehicle is idling and how much it's costing. The next step is to ask (drivers), 'Now what can you do to reduce this?'" says Ken Thomas, MH's manager of fleet operations.

"Any gains will improve the company's bottom line, so I think this could be the first step in a comprehensive program."

Netistix' telematics technology is geared to improving efficiency in all vehicle systems.

"A delivery truck can use four to five litres of gasoline an hour while idling. And if you can pinpoint mechanical problems before they cause roadside breakdowns, there's huge savings potential," says John Woronczuk, VP of marketing and sales.

Other applications include scheduling efficiency, mileage tracking and back-office automation. FleetPulse hardware costs less than $500 per vehicle. Web hosting for its software application runs between $5 and $9 a month, depending on the extent of diagnostics monitoring.

While telematics isn't new for long-haul freight trucking, its use in light and medium-sized vehicles has only taken hold in the past few years.

Identifying the market came almost coincidentally for Woronczuk and Netistix CEO Gord Echlin, who escaped from large high-technology companies during the tech wreck.

Woronczuk and Echlin put in two decades of product and business development at Newbridge and Mitel before looking for a bigger challenge.

John Woronczuk

"Basically it was no fun in a huge company where individual ideas got lost. We didn't know each other well, but I think we were both looking for something smaller and more-responsive," says Woronczuk.

Each moved to startups for a year before coming together in 2002. Their first idea was to put vehicle diagnostics into a home-automation setting, but the price point was not in the individual-consumer range.

"So we put the idea into a business-to-business environment and found it would work in a fleet scenario. Our research found costs were affordable, with a payback (for customers) in less than 12 months," says Woronczuk.

Seed money came out of their own pockets, from friends and family and from some Ottawa angel investors. FleetPulse was readied for pilot-project testing in 2004 on the strength of a $750,000 first-round, venture-capital investment from Access Capital. A second $750,000 round came this year from the Business Development Bank of Canada.

While Woronczuk won't release specific figures, he did put the total investment so far at between $2 million and $3 million.

In early 2004 Netistix landed its first pilot project with Ottawa Police Services, which wanted to be able to check odometer readings quickly and easily. Later in the year Ottawa's RCMP installed the hardware in 50 vehicles.

They wanted to track mileage, but also to cut idling in an effort to take a leadership role in reducing greenhouse gas emissions.

But the plum was a pilot project with Canpar, a parcel-delivery service based in Toronto. The first stage, started in 2004, was a 10-vehicle test in Ottawa; the second covered 76 trucks across Canada. Both are ongoing.

The hardware fits under the vehicle's dashboard and is connected to its on-board diagnostics system. It collects data that are then transferred via Wi-Fi technology once the vehicles return to base.

Paul MacLeod, Canpar's vice-president of operations, says his department is trying FleetPulse for its ability to save fuel throughout the company's 800-vehicle fleet.

"I can't comment (on test results) because we haven't reviewed the data yet," he says.

Telematics for small- and medium-vehicle fleets are catching on right across North America, according to Joerg Dittmer, senior industry analyst for research consultancy Frost & Sullivan.

But Dittmer says the penetration rate remains relatively low, "partially because early systems didn't perform well and were quite expensive. That's changed today because costs have come way down, but also because it is improving efficiency and with it customer satisfaction."

Yet there are still barriers.

Lack of standardization confuses the market; small fleets don't provide an attractive market because marketing costs are high; and telecommunications coverage and bandwidth issues limit the technology's applications, says Dittmer.

But in its 2004 study on the North American telematics market, Frost & Sullivan predicted that penetration of hardware and (subscriber) software would grow about 40 per cent a year between 2003 and 2012 within small fleets.

Some insurance companies offer discounts if the system can track lost or stolen vehicles using a global positioning system (GPS) function.

The upside seems high enough that big players such as Bell Canada have entered the space. Its Telepod product is a high-end package that can analyse a vehicle's entire diagnostics system and transmit data by cellular communications or at a wireless hotspot.

The Telepod hardware can cost up to $1,375 per vehicle, with Autovision software hosted for up to $50 a month Netistix has decided to stay in the mid-range to appeal to all sizes of business.

"We don't know where the market is going - especially with respect to pricing - so our goal is to have a product that satisfies a marquee customer. Fleet operators still need convincing, so providing an affordable, dependable product is part of the education process," Woronczuk says.

Some tests are revealing surprising results.

At the Elizabeth Bruyere Health Centre, an extended care facility in Ottawa, Netistix installed FleetPulse in several residents' cars to track driving styles of the elderly or those with head injuries.

The result was, in effect, health research, although it can also affect licensing issues.