Executive Briefings

Transportation Management Systems Market Exceeds Expectations in 2007-08

The Transportation Management Systems (TMS) market once again exceeded ARC's growth projections, growing almost 10% in 2007 to almost $1.2 billion. The market continued to experience positive momentum in the first half of 2008, with over two-thirds of the vendors surveyed reporting increased sales and larger pipelines compared to the first half of 2007.

According to Adrian Gonzalez, Director of ARC's Logistics Executive Council and author of the new study, Transportation Management Systems Worldwide Outlook, "2007 was a banner year for almost all Transportation Management Systems (TMS) vendors. Although there were some changes in market share rankings, the reality is that most vendors continue to grow their revenues and client bases. In short, there are plenty of TMS sales opportunities available in the market for all vendors to benefit."

ARC is forecasting the TMS market to exceed $1.6 billion by 2012, representing a compounded annual growth rate (CAGR) of 7.4%. However, several factors exist that could limit the market's growth potential next year and beyond.

The crisis facing the financial markets, coupled with slowing economic growth, is by far the biggest threat facing the TMS market in the coming year. According to Gonzalez, "It is unclear at the moment which path customers will take next year. On the one hand, companies often look for ways to reduce costs during weak economic times, as a way to boost their net income and earnings per share. Transportation is a natural target because most C-level executives still view it as a 'cost center' and a 'low hanging fruit' opportunity to add hundreds of thousands of dollars, or even millions of dollars, to the bottom line. Therefore, from this perspective, the economic environment could benefit the TMS market. On the other hand, companies also have a tendency to delay IT investments during tough economic times, so it's highly probable that TMS vendors could see longer sales cycles in 2009, at least during the first half of the year."

ARC's study discusses in more detail the various factors that will influence the growth of the TMS market in the years ahead, along with other important trends such as:

1. Increased focus on Transportation Spend Management
2. Growing demand for business intelligence capabilities
3. Role of TMS in creating "green" supply chains
4. Continued growth of the Logistics Service Provider sector
5. Importance of trade and regulatory/customs compliance
6. Growth opportunities in the small and midsize businesses segment
7. Emerging importance of desktop shipping

The study also includes market shares and forecasts by solution type, geographic region, customer tier, and vertical industry.
ARC Advisory Group

The Transportation Management Systems (TMS) market once again exceeded ARC's growth projections, growing almost 10% in 2007 to almost $1.2 billion. The market continued to experience positive momentum in the first half of 2008, with over two-thirds of the vendors surveyed reporting increased sales and larger pipelines compared to the first half of 2007.

According to Adrian Gonzalez, Director of ARC's Logistics Executive Council and author of the new study, Transportation Management Systems Worldwide Outlook, "2007 was a banner year for almost all Transportation Management Systems (TMS) vendors. Although there were some changes in market share rankings, the reality is that most vendors continue to grow their revenues and client bases. In short, there are plenty of TMS sales opportunities available in the market for all vendors to benefit."

ARC is forecasting the TMS market to exceed $1.6 billion by 2012, representing a compounded annual growth rate (CAGR) of 7.4%. However, several factors exist that could limit the market's growth potential next year and beyond.

The crisis facing the financial markets, coupled with slowing economic growth, is by far the biggest threat facing the TMS market in the coming year. According to Gonzalez, "It is unclear at the moment which path customers will take next year. On the one hand, companies often look for ways to reduce costs during weak economic times, as a way to boost their net income and earnings per share. Transportation is a natural target because most C-level executives still view it as a 'cost center' and a 'low hanging fruit' opportunity to add hundreds of thousands of dollars, or even millions of dollars, to the bottom line. Therefore, from this perspective, the economic environment could benefit the TMS market. On the other hand, companies also have a tendency to delay IT investments during tough economic times, so it's highly probable that TMS vendors could see longer sales cycles in 2009, at least during the first half of the year."

ARC's study discusses in more detail the various factors that will influence the growth of the TMS market in the years ahead, along with other important trends such as:

1. Increased focus on Transportation Spend Management
2. Growing demand for business intelligence capabilities
3. Role of TMS in creating "green" supply chains
4. Continued growth of the Logistics Service Provider sector
5. Importance of trade and regulatory/customs compliance
6. Growth opportunities in the small and midsize businesses segment
7. Emerging importance of desktop shipping

The study also includes market shares and forecasts by solution type, geographic region, customer tier, and vertical industry.
ARC Advisory Group