Transportation Management Market Selling More To Logistics Service Providers

Sales to LSP outpacing sales to manufacturers and retailers.

As Logistics Service Providers (LSP) take a more strategic view of their IT requirements and infrastructure, they are causing a growth spurt in the Transportation Management Systems (TMS) market.

The TMS market grew to over $989 million in 2005, with sales to LSP increasing by over 11 percent, significantly outpacing sales growth to manufacturers and retailers, according to a new study, "Transportation Management Systems Worldwide Outlook," by the ARC Advisory Group.

ARC is forecasting the TMS market to exceed $1.3 billion by 2010, representing a compounded annual growth rate (CAGR) of 6.9 percent.
According to Adrian Gonzalez, Director of ARC’s Logistics Executive Council and author of the  study, "The success of TMS in the LSP sector last year was enabled by the fact that vendors are adding LSP-specific functionality, such as freight forwarding capabilities, to their solutions.”

A move to Services Oriented Architecture (SOA) is responsible for this trend. The scope and value proposition of a TMS is shifting beyond the transportation department to other groups within an organizaton, including customers and partners.

Unlike previously, where access to a TMS was usually limited to a handful of people within a company, now hundreds or even thousands of users can log onto a TMS to execute processes or access information, depending on their role and access privileges.

The study noted other key trends in the TMS market including the growing importance of transportation spend management; the continued growth of on-demand deployment and pricing; the emergence of managed transportation services; the shift from parcel shipping to total package management; the continued priority of inbound transportation; and better visibility of drivers and mobile assets.


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