Over the last 4 years, I have released an annual analysis of the global transportation management systems (TMS) market. The research combines the analysis of large amounts of information with interviews with executives from numerous TMS software companies. The end result is the publication of ARCs TMS Global Market Research Study, which analyzes the market shares across numerous categories of the leading TMS suppliers. I am in the process of kicking off that research once again, with a final report ready to go live in the late March / early April timeframe.

One of the key pieces of information that I look at, aside from the market shares of TMS suppliers and the industries that are driving the market, is the growth factors for the market as a whole. These growth drivers have certainly been written about here on Logistics Viewpoints before, However, one thing that I have not blogged about, but do keep a close eye on, is the factors that could inhibit the growth of the TMS market. So today, I wanted to quickly highlight a few growth inhibitors that could have a long term impact on the TMS market.

The Global Economy

The US economy has made steady gains, and the dollar has gotten stronger. However, the global economy and slowing global trade could slow the growth of TMS. With the United Kingdoms exit from the EU, many are left to wonder how this will affect trade, and whether other countries will follow the UKs lead. In the US, President Trump has pulled the country out of the Trans-Pacific Partnership trade pact, and stirred up a lot of emotions and fears about the future state of global trade. All of these factors could slow global trade and the TMS market in turn.

LSPs Technological Sophistication is Increasing

Many suppliers sell robust TMS solutions they have developed. However, their sales of transportation managed services far exceed their standalone TMS deals. Historically, one of the leading complaints about logistics service providers (LSPs) was that their technology was not good enough. As LSPs overcome that barrier, potential TMS customers may increasingly choose the managed services path.

There is also an argument that a shipper needs to get to a certain level of sophistication before they can effectively make use of a TMS. Beginning with managed services can be a good starting point for these companies. The companies can then defer the TMS decision until their internal skills improve and may end up never going down the TMS path.

The Rise of Transportation Execution Solutions

Transportation execution (TE) systems and marketplaces allow shippers to connect to multiple carriers and then tender, track, and pay using the software or marketplace. These solutions do not feature optimization, but can certainly allow smaller organizations to connect to the carriers they use. These solutions are generally less expensive than a traditional TMS, but for smaller companies, they provide all the functionality that is needed.

Free TMS Solutions

Some brokerage companies offer a free TMS. The route guide is populated with carriers the broker has a relationship with, and the broker makes their money based on the spread between what shippers pay for the shipment and what the broker pays the carrier. Currently, the free TMS solutions optimization capabilities are limited. Further, the objectivity of such solutions can be questioned. But for many shippers, especially small shippers, free is hard to beat.

Conclusion

As I get ready to kick off another TMS market study, I will certainly keep a keen eye on the factors outlined above. Each of these plays a unique role in determining just how big the TMS market can get. The changing nature of global trade, and potential regulatory changes, will have the biggest impact when it comes to cross-border trade and commerce. But the alternative solutions for a traditional TMS, including the use of LSPs, transportation execution systems, and the rise of the free TMS, will certainly play a big role as well. Once my research and analysis is done, I should have some more answers.

Original post:

A Sneak Peak into the Future of the TMS Market - Logistics Viewpoints (blog)