Imposing IoT adoption by governmental mandate is a concept that has spanned geographies and verticals, whether it's better monitoring water usage in draught-plagued Californian farms through flow sensors (California Bill 88), or enabling pharmaceutical supply chain compliance with track and trace serialization technology.

This incursion of forced technology adoption provides a sizeable addressable market for IoT providers, and in the context of the Federal Motor Carrier Safety Administration (FMCSA) Electronic Logging Device (ELD) mandate, that opportunity spans approximately eight million commercial vehicles across the US. This report, part one of a spotlight series, will outline this massive IoT addressable market. Part two will measure its recognized impact, major providers, pain points and other trends.

The 451 Take

The chance to capture the value for the ELD mandate has reenergized traditional North American telematics providers and attracted an influx of startups, a rare occurrence in this maturing industry. ELDs are breathing life into the North American region where telematics adoption in the generally Luddite, long-haul tractor-trailer industry had been stagnating over the past few years. Our findings in part two will illustrate this telematics resurgence while identifying competencies currently (low cost), over the next year (reliability) and further down the road (value-added fleet services) that are resonating with the market.

What is the mandate?

To measure the tangible impact of this governmentally mandated regulation and understand telematics provider's strategies, we must first identify and understand the opportunity. The FMCSA ELD mandate requires truck operators to comply better with Hours of Service (HOS) rules. These rules attempt to solve the trucking industry's 'drowsy driving' dilemma and, according to the FMCSA, prevent over 1,800 crashes, 560 injuries, and save 25 lives annually.

Specifically, the mandate seeks to replace this historically paper-intensive, unorganized and unenforceable process to ensure that drivers are taking rest breaks and limit consecutive hours spent driving. The mandate didn't officially pass until December 2015, even though it was part of Moving Ahead for Progress in the 21st Century Bill (MAP-21), which was enacted in 2012. The FMCSA outlines certain grace and transition periods for adoption over the next few years. Below is a timeline of these projected phases:
  • Phase 1: Awareness and Transition – The one-year period beginning February 16, 2016, and ending December 18, 2017, where trucking operators can voluntarily use ELDs, but will not be fined for using automatic onboard recording devices (AOBRD) and/or paper logs.
  • Phase 2: Phased-In Compliance – Beginning on December 18, 2017, and ending December 16, 2019, the mandate requires that operators have an installed ELD, unless they have previously (before December 2017) installed an AOBRD. Equally important, the FMCSA specified a 'grace period' that ended April 1, 2018, which now allows FMCSA and DOT enforcement officers to formally assess fines.
  • Phase 3: Full Compliance – After December 16, 2019, only registered ELDs are permitted to be used in the US.

What is an Electronic Logging Device?

An Electronic Logging Device (ELD) can pertain to a range of different IoT and telematics-oriented hardware that can connect with a vehicle's engine control module (ECM) and digitally 'log' prudent data points. For the mandate, a device must be able to automatically record, store and transmit data at different set interims for time, date, mileage, engine hours, location and driver identification.

There are several rules-based features that must be automated, such as an ELD only recording the driver as 'driving' if the vehicle is traveling over five miles per hour. These pieces of telematics hardware are typically aftermarket devices bolted onto commercial vehicles and can include OBD II dongles, GPS devices, tablets and other BYODs, equipped with various forms of connectivity (BLE, Wi-Fi, cellular) and vehicle configurations to the ECM (standard, heavy-duty, 6-pin, 9-pin) as well as integrations with other in-vehicle devices.

Typically there is a cloud-based fleet management platform implemented for presenting this real-time data for fleet administers and dispatchers. Other compliance-relevant features usually bundled into ELD packages include Driver Vehicle Inspection Reports (DVIR) and International Fuel Tax Agreement (IFTA) reports.

While ELDs are not required to track driver performance actions around vehicle speed, steering and braking, many ELDs integrate this capability because it can be used to identify potential driver risk factors that contribute to higher maintenance costs (brakes, repairs, etc.) and insurance premiums. Below is a common framework for what this IoT architecture can look like.

Diagram of IoT architecture

What are the rules?

There are numerous HOS rules that telematics providers have to accommodate for. These HOS rules predate the mandate, but were extremely difficult to enforce with telematics data out of the equation, and paper logs being easily falsified by drivers. Separate hours rules exist for 'passenger carrying' vehicles not exempt from the rule (buses), but we'll focus more on the 'property carrying' drivers, which is the larger opportunity from a telematics provider perspective. The HOS rules are more stringent for property carriers primarily due to on-duty labor-intensive and tiresome work, such as yard moves.

A driver will be tracking four different 'duty statuses' (driving, on-duty not driving, off-duty, sleeper berth), each of which has its own set of hourly, daily and weekly rule implications. For example, a truck operator can drive no more than 11 hours after 10 uninterrupted hours of being 'off duty' and can also have a maximum of a 14-hour day of being 'on duty' (which can occur when combining driving and on-duty operations such as yard moves).

A driver also must take a 30-minute break before recording eight consecutive hours of being on duty, and cannot drive after incurring 60/70 on-duty hours for seven/eight straight days. The motor carrier must retain and back up ELD data on a driver-by-driver basis for six months. Then there are even special recording cases for personal use, yard moves, adverse operations (weather, accident, etc.) or even 'oilfield operations.'

As mentioned, there is an equally exhaustive list of rules on the telematics device side as well. The main technological themes (and potential points of differentiation for telematics providers) are around data, reliability, connectivity, transmission and analytics, among others.

Who must comply?

There has been much debate on number of drivers affected, but the mandate is estimated to affect eight million vehicles over the next few years. Included are any commercial vehicles in the US, as well as Canadian and Mexican domiciled vehicles operating across the US. However, there are several exemptions for a variety of drivers categorized as 'short haul' – drivers operating less than eight out of 30 days, tow-away operation drivers, commercial vehicles that were manufactured before 2000 and also those weighing less than 10,001 pounds (Class 1 & 2).

According to the Owner-Operator Independent Drivers Association (OOIDA), there are approximately 350,000 owner-operators that own one-to-few trucks and as we will discuss in part two, represent a major challenge and largely untapped market.

Fleet management M&A leading up to ELD mandate (December 2017)

The months leading up to the initial enforcement date (December 17, 2017) saw a few notable ELD M&A transactions from both traditional telematics providers and others in the automotive realm. In the chart below, the bolded deals and rationales were more fixated on ELDs, while the other deals were for broader fleet management, but do have ELD and HOS products in North America.

ELD M&A transactions of note

There have also been a few notable investments in promising fleet management and ELD startups. KeepTruckin recently closed its $50m series C funding round, which brought total venture funding to $78m. FleetUp also raised $20m in funding from HUMAX, and made HUMAX America's president Albert Son its CEO in February 2018.

Sumeru Equity Partners took a majority stake in Azuga in April 2018. Samsara is mostly focused on applying intelligence to the semi-trailer, but does have an ELD offering (Samsara Driver App) and has obtained $130m in total venture funding since being founded in 2015.


An IoT addressable market of eight million has attracted widespread attention, and it is clear that with the many aforementioned mandate specifications that a variety of avenues will exist for telematics provider differentiation. But trucking operators transferring between compliance phases will not be a seamless experience for any side. An experienced driver who has been accustomed to the paper logging process will not make this transition overnight.

This driver pushback element grows in concern as an influx of drivers are approaching the retirement age (average age of OOIDA members is 55), which presents a haunting problem with the impending driver shortage in North America. In part two, we will dissect these societal and behavioral trends with analysis of how some of the more than 370 FMCSA-registered ELDs are strategically navigating this market.
Associate Analyst, Internet of Things

David Immerman is an Associate Analyst in 451 Research’s Internet of Things (IoT) Channel. He covers the smart transportation space and its various segments, including but not limited to fleet management, telematics, connected cars and autonomous vehicles.

Research Director, Internet of Things

As Research Director of 451 Research's Internet of Things practice, Christian Renaud covers the ongoing virtualization and digitization of the physical world around us. For 25 years prior to joining 451 Research, Christian built nationwide networks at large and small enterprises, worked with Fortune 50 companies in the systems integrator channel, built products at Cisco Systems and ran the company's New Markets and Technologies team.

Speaker Name
Speaker Title

Want to read more? Request a trial now.