Need for operational efficiency drives tech spending in transportation and warehousing service markets, Frost & Sullivan says
Palo Alto, CA — April 12, 2005 — Rising fuel prices and security-related expenses are increasing the overall operating costs in the transportation and warehousing service markets, while an expansion of the product and service portfolio in the transportation sector is compelling participants to increase investments in efficient and economical Web-based solutions to streamline expenses and stay ahead of the competition, according to a new report from consulting company Frost & Sullivan.
In its study, entitled "IT and Telecom Spending Trends within the U.S. Transportation and Warehousing Services Markets," Frost & Sullivan reports that IT/Telecom spending in this market totaled $30.3 billion in 2004. The consultancy projects spending will hit $38 billion in 2010.
Certain transportation companies have been successful in transferring the brunt of the rising prices to the end users. However, some organizations, such as passenger airlines, are unable to do so due to price sensitivity and overcapacity in the airlines industry. As a result, companies are paring down costs on specific areas, such as customer care.
Efficiency a Lead Priority
For instance, the airlines industry, a leading adopter of IT/telecom technology, is offering its consumers e-services such as e-tickets, online reservations and interactive voice response (IVR) systems. Other transit service providers such as Amtrak, Greyhound Lines and metropolitan transportation authorities (MTAs) also offer passengers e-services.
"With the growth in logistics due to expansion in e-commerce activity, the need for effective and efficient fleet management has become a leading business priority for commercial freight service providers," explains Imran Khan, an industry analyst with Frost & Sullivan.
Others, such as UPS and FedEx, continue to invest in package-tracking systems in an attempt to enhance customer experience as well as realize operational improvements. This is especially so for logistics service providers (LSPs) that require enhanced fleet management capabilities, Frost & Sullivan said.
Pressure on Service Providers
Most companies are also investing in vehicle-tracking systems to create orderly schedules for lead pick-ups and deliveries and to fulfill growing consumer demands. The growing demands from customers are also placing pressure on LSPs to handle the entire supply chain responsibility.
"For example, the growing migration of manufacturers and retailers to radio frequency identification (RFID)-based inventory tracking and management systems is forcing LSPs to incorporate this technology into their logistics solutions," points out Khan.
IT/telecom adoption in the transportation sector is on an upward swing as the sector grows rapidly, providing numerous opportunities for revenue maximization. Technology providers must develop an understanding of the clients' business needs and their operational priorities, the consultancy said. They must also work in collaboration with each other to provide holistic solutions to transportation customers.
"The IT and Telecom Spending Trends within the U.S. Transportation and Warehousing Services Markets" provides an analysis of the technology spending drivers and industry challenges to enable better understanding of the market scenario by participants.
Additional Articles of Interest
For more information on the latest trends in the logistics space, see the article "The Analyst Corner: Fulfillment & Logistics" in the October/November 2004 issue of Supply & Demand Chain Executive.
Palo Alto, CA — April 12, 2005 — Rising fuel prices and security-related expenses are increasing the overall operating costs in the transportation and warehousing service markets, while an expansion of the product and service portfolio in the transportation sector is compelling participants to increase investments in efficient and economical Web-based solutions to streamline expenses and stay ahead of the competition, according to a new report from consulting company Frost & Sullivan.
In its study, entitled "IT and Telecom Spending Trends within the U.S. Transportation and Warehousing Services Markets," Frost & Sullivan reports that IT/Telecom spending in this market totaled $30.3 billion in 2004. The consultancy projects spending will hit $38 billion in 2010.
Certain transportation companies have been successful in transferring the brunt of the rising prices to the end users. However, some organizations, such as passenger airlines, are unable to do so due to price sensitivity and overcapacity in the airlines industry. As a result, companies are paring down costs on specific areas, such as customer care.
Efficiency a Lead Priority
For instance, the airlines industry, a leading adopter of IT/telecom technology, is offering its consumers e-services such as e-tickets, online reservations and interactive voice response (IVR) systems. Other transit service providers such as Amtrak, Greyhound Lines and metropolitan transportation authorities (MTAs) also offer passengers e-services.
"With the growth in logistics due to expansion in e-commerce activity, the need for effective and efficient fleet management has become a leading business priority for commercial freight service providers," explains Imran Khan, an industry analyst with Frost & Sullivan.
Others, such as UPS and FedEx, continue to invest in package-tracking systems in an attempt to enhance customer experience as well as realize operational improvements. This is especially so for logistics service providers (LSPs) that require enhanced fleet management capabilities, Frost & Sullivan said.
Pressure on Service Providers
Most companies are also investing in vehicle-tracking systems to create orderly schedules for lead pick-ups and deliveries and to fulfill growing consumer demands. The growing demands from customers are also placing pressure on LSPs to handle the entire supply chain responsibility.
"For example, the growing migration of manufacturers and retailers to radio frequency identification (RFID)-based inventory tracking and management systems is forcing LSPs to incorporate this technology into their logistics solutions," points out Khan.
IT/telecom adoption in the transportation sector is on an upward swing as the sector grows rapidly, providing numerous opportunities for revenue maximization. Technology providers must develop an understanding of the clients' business needs and their operational priorities, the consultancy said. They must also work in collaboration with each other to provide holistic solutions to transportation customers.
"The IT and Telecom Spending Trends within the U.S. Transportation and Warehousing Services Markets" provides an analysis of the technology spending drivers and industry challenges to enable better understanding of the market scenario by participants.
Additional Articles of Interest
For more information on the latest trends in the logistics space, see the article "The Analyst Corner: Fulfillment & Logistics" in the October/November 2004 issue of Supply & Demand Chain Executive.
- More analysis from Frost & Sullivan.
