Dedham, MA May 20, 2002 Companies spent more than $804 million on transportation management systems (TMS) in 2001, and this market is poised to grow to more than $1.7 billion by 2006, according to a recent study by technology consultancy ARC Advisory Group study.
In the study, Transportation Management Systems Worldwide Outlook: Market Analysis & Forecast Through 2006, ARC found that about 20 percent of spending in 2001 went toward recurring fees such as subscription, transaction and hosting fees.
ARC defined TMS as software solutions that facilitate the procurement of transportation services, the short-term planning and optimization of transportation activities, and the execution of transportation plans. The researchers also included international trade solutions, parcel shipping applications and transportation-focused supply chain process management (SCPM) solutions in the scope of the study.
Most companies have traditionally taken a fragmented approach to transportation management, and so the technology has also been developed and deployed from a silo perspective, said Adrian Gonzalez, a senior analyst at ARC and author of the study.
However, leading companies are beginning to take a holistic view of transportation, thereby driving software suppliers to expand the scope of their solutions, according to ARC. Transportation activities do not occur in a vacuum, said Gonzalez. They impact and are affected by other business functions. Not surprising, software suppliers are incorporating complementary capabilities into their solutions, such as order collaboration and inventory management. In the near future, TMS will become too limited a term to describe these solutions.
In addition to the growing adoption of recurring revenue models, ARC's research indicated that international trade and SCPM capabilities will drive growth in this market as companies seek to strengthen their trade compliance and trade security processes and look to improve their ability to manage inventory in motion.
Other findings in the study include:
- Inbound transportation management is becoming a top priority, especially as companies transition to collect payment terms. Solutions that enable better compliance with routing guides and optimize inbound moves will be in demand.
- Executing transportation activities via a hosted network will continue to gain momentum, as well as the demand for managed services.
- Fleet management solutions, namely routing and scheduling applications, will continue to lag the rest of the market, but wireless and collaborative dispatch solutions will stimulate growth.
- Parcel shipping solutions will play a more significant role and become better integrated with other transportation solutions as shipments become smaller and more frequent.