Our annual Transportation Management Systems (TMS) Market Outlook Study was delayed this year due to other priorities, but it will get published after the holidays with a forecasted market size for 2009 and a five-year outlook through 2014. I won’t steal the report’s thunder here, but it’s sufficient to say that despite the strong value proposition of transportation management systems, the market was not able to fully escape the ill effects of the financial crisis and global recession. Although the market experienced positive growth in 2008 and 2009, the percentage was lower than in previous years.
The TMS market, however, showed signs of recovery in the second half of 2009, and we expect this recovery to continue and strengthen in 2010 and beyond. It is important to note, however, that certain vendors and market segments have performed much better than average. The Global Trade Management (GTM) segment, for example, grew almost 10 percent in 2008 and the segment has performed very well this year too.
The study provides more detail on market trends and growth factors, but here are three things to look for in 2010:
- Interest in transportation procurement will remain high in 2010. I’ve written about this topic several times this year (here, and here, and here). Simply put, pricing conditions will continue to favor shippers in the weeks ahead, so I expect more shippers to put their freight out to bid. As the economy recovers, however, and capacity continues to tighten, pricing will start to firm up—i.e., the window of opportunity for shippers will shrink as the year goes by.
- Network Connectivity becomes more important for vendors and clients. I recently referred to network connectivity as “an overlooked (but critical) component of Transportation Management Systems.” Software-as-a-service TMS vendors (and analysts like me) have always positioned “the network” as a differentiator compared to TMS applications deployed in-house. But traditional TMS vendors are taking steps to address this gap in their offerings. For example, in my previous posting, I highlighted Oracle’s partnership with E2open, and this week I was briefed by SAP and Crossgate regarding their partnership (Oracle and SAP are ARC clients). In short, if you are in the market for a TMS, you should ask vendors about network connectivity and include it in your evaluation process. Likewise, if you’re a TMS vendor without a network connectivity offering, you’re at a competitive disadvantage.
- Continued movement towards a “holistic TMS” solution. Earlier this year, I wrote about the expanding footprint of TMS, how vendors are transforming TMS from a fragmented collection of applications to a unified platform where users across the enterprise and value chain can execute role-specific processes via configurable user interfaces, workflows, and web services. This unification is happening both organically and via acquisitions. Just this past Monday, for example, Descartes (an ARC client) announced its intention to acquire Porthus, a Belgium-based provider of global trade management solutions.
Well, that’s what I see in my crystal ball for TMS in 2010. Before the holidays, I’ll share some other predictions for the year ahead. Feel free to post a comment and share your 2010 predictions on anything related to supply chain and logistics.
