China will soon become the world’s largest market for commercial telematics as government regulations and the nation’s supply-chain woes drive technology adoption, according to a new study by C.J. Driscoll & Associates.
The research and consulting firm predicted that the number of tracking devices installed in China will surpass the U.S. market by 2019, but it could happen as soon as 2017, depending on how aggressively the Chinese government establishes and enforces technology mandates, said Clem Driscoll, the firm’s president.
There are currently more than 5 million tracking devices using GPS technology and China’s BeiDou Navigation Satellite System to monitor commercial fleet vehicles, heavy equipment and other assets in China, the report found. That number will jump to more than 12 million by 2018, it said.
Despite China’s strong economic growth, the country continues to have “tremendous problems” with an inefficient transportation system, Driscoll said.
China’s logistics costs as a percentage of gross domestic product are more than twice the logistics costs in the United States, he said.
He said China’s transportation providers, the majority of which are owner-operators, tend to overload their trucks with more freight than they are built to carry due to delays and heavy traffic.
That in turn leads to accidents and trucks moving at very low speeds on the road, contributing further to the traffic problems, he said.
The government already is mandating that all trucks carrying hazardous materials be equipped with a tracking system, as well as certain types of buses, Driscoll said.
Meanwhile, the rapid growth of commercial vehicle production in China is expanding the potential market for telematics technology.
Driscoll said several overseas telematics suppliers are doing business in China today and other players also are interested in selling their products there.
“It’s not an easy market, but it’s such a fast-growing market that you can’t ignore it,” he said.