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Supply Chain Complexity Could Drive TMS Market to $25 Billion by 2023

The market for transportation management systems could double over the next five years, fueled by shippers' need to reduce costs and monitoring time.

Due to the continued complexity of transportation from regulation, taxes, staffing and e-commerce, market-foresight advisory firm ABI Research is predicting that companies will spend at least $12.8 billion globally this year on transportation management systems (TMS). Further, that number could double by 2023 to over $25 billion, fueled by the need to reduce transportation costs by up to 10% and reduce monitoring time by up to 50%, as well as find alternatives to rapidly increasing spot market pricing.

TMS solutions have been present as a part of supply chain management (SCM) for years and are used across many market verticals, including retail, automotive, pharmaceuticals, and food products. The TMS market is a strategic enabler of the supply chain, with numerous established companies eyeing potential acquisitions to bolster cloud, geographic, and modal coverage. This will create a significant opportunity over the next five years to use cloud platforms to level the playing field for small- to medium-sized businesses (SMBs) as well as diversify and extend businesses initially built for ERP, SCM and telematics markets.

“Vendors that focus on a given geography, mode, or enterprise need to partner, acquire, or develop more extensive solutions to provide flexible, end-to-end (ETE) coverage,” says Susan Beardslee, principal analyst at ABI Research. Established companies need to “future-proof” through developments in predictive analytics, blockchain, emerging transit modes and communication technologies (5G, satellite, etc.).

A further shift away from on-premise, high-investment, and lengthy training/upgrade cycles will continue to ramp toward cloud-based, scalable “as-a-service” models, with cloud-hosted platforms expected to begin to surpass those of on-premise adoption by next year and exceed 70% of the market by 2022. TMS revenues are roughly split between licensing, subscriptions and professional services.

TMS will need to incorporate continued advancements in technology, including advancements in transport mode evolution; recent developments in software, such as predictive analytics and machine learning; and changes in the concept of manufacturing, such as 3-D printing. Additional technologies for consideration include linkage to autonomous vehicles, blockchain and delivery drones.

A host of new solutions are going to market from both startups and well-established market leads. ERP and SCM vendors such as SAP, JDA Software and Oracle are integrating more TMS processes to help shippers align and enhance manufacturing and production along with their logistics processes. 3PL and telematics vendors driving TMS include C.H. Robinson, Trimble, Omnitracs and Cerasis. SMB and “freemium” focused business models include Kuebix and Cloud Logistics. Omni-mode TMS suppliers such as Amber Road, One Network Enterprises and MercuryGate are finding traction in TMS. Disruption lies ahead from dominant scaling players like Amazon and Alibaba as well as machine learning/AI solutions from ClearMetal.

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