Tier 1 companies with over $1 billion in revenue seeking growth in global markets are driving growth in the worldwide market for transportation management systems (TMS), according to a report from the ARC Advisory Group. The TMS market has experienced year over year double digit growth as a result. ARC is forecasting continued robust growth through 2017.
“A key driver of growth,” according to Steve Banker, service director of supply chain management at ARC Advisory Group. “The TMS market is a large—over $1 billion in 2012 revenues—established market. What you would expect to see is small and midsized companies beginning to be much more important in driving growth. That is not what we are seeing in this market.”
Banker, the principal author of ARC’s “Transportation Management Systems Global Market Research Study,” states that in emerging markets, it is not unusual to see growth driven by Tier 1 companies.
“Tier 1 companies headquartered in North America or Europe, who had gotten a good payback from TMS in a regional deployment in their home region, are beginning to roll out that solution in other regions of the world,” he says. “And some of the larger multinational companies headquartered in Latin America and Asia are buying their first TMS for deployment in their home regions. Further, the largest TMS suppliers in the market are not having to discount their solution when sold into Latin America or Europe.”
This multi-region rollout by large shippers is being supported by TMS solutions whose functionality has become more global in recent years. This global functionality includes the ability to optimize international shipments, regional specific functionality, and analytics that can effectively deal with currency fluctuations that occur during a process that spans from planning, to booking, to settlement.
In addition to large shippers driving growth, there is a new wave of buying among logistics service providers (3PLs) who are abandoning legacy solutions and standardizing on modern TMS, particularly TMS solutions offered by the large ERP vendors.