Transportation: TMS market grows to $1.2 billion

The Transportation Management Systems market grew almost 10% in 2007, expected to exceed $1.6 billion by 2012.

By Staff -- Modern Materials Handling, 11/7/2008

The Transportation Management Systems (TMS) market grew almost 10% in 2007 to nearly $1.2 billion, once again exceeding the expectations of ARC Advisory Group.

Positive momentum continued in the first half of 2008, with more than two-thirds of vendors surveyed reporting increased sales and larger pipelines, compared to the first half of 2007.   

“2007 was a banner year for almost all Transportation Management Systems (TMS) vendors,” Adrian Gonzalez, Director of ARC’s Logistics Executive Council and author of the new study, Transportation Management Systems Worldwide Outlook. “There are plenty of TMS sales opportunities available in the market for all vendors to benefit.”

ARC forecasts the market to exceed $1.6 billion by 2012, with a compounded annual growth rate (CAGR) of 7.4%. But the impact of the financial crisis and economy on TMS is unknown. The crisis and slowing growth is the biggest threat to the market.   

Gonzalez said it is unclear which path customers will take to cut costs in the next year.

“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,” he said. “Therefore, from this perspective, the economic environment could benefit the TMS market.” 

Gonzalez cautioned that companies also tend to delay IT investments during tough economic times, meaning possible longer sales cycles in 2009.