Technological developments in the transportation and logistics business, as well as exponential growth in the eCommerce industry, are two main causes propelling the TMS market forward.
The global TMS market is predicted to increase at a Compound Annual Growth Rate (CAGR) of 18.2 percent over the forecast period, from USD 7.7 billion in 2020 to USD 17.8 billion in 2025.
Impact of Covid -19 on the TMS Market
In 2020, the pandemic will have a detrimental influence on enterprise TMS hardware demand. Manufacturing plants are being shut down or run at a reduced capacity, resulting in lesser output. The supply chain and logistics have been impacted as a result of this. The use of TMS solutions has decreased as a result of this. Due to rising demand for their services, TMS demand for healthcare is predicted to rise between 2020 and 2021. TMS vendors would be able to benefit from this.
Technology improvements in the transportation and logistics industry are a driving force.
Digital transformation is driving the desire for increased agility in transportation and logistics operations, which helps organisations deliver better customer experiences. As part of the digital transformation trend, the majority of firms are adopting a new set of digital technologies, resulting in unprecedented prospects for operational efficiencies, sustainability, new business models, and richer consumer experiences. Digitalization in the logistics business, according to the World Economic Forum, might uncover a USD 1.5 trillion opportunity by 2025. Smarter and more efficient transportation operations are enabled by advanced technologies such as the Internet of Things (IoT), big data, and Artificial Intelligence (AI) and their predictive capabilities. Back-office automation, predictive operations, intelligent transportation assets, and innovative customer experience models, for example, have all been made possible by AI. These new technologies digitise the whole order administration, contracting, delivery, and payment process in the transportation industry. The transportation industry’s digital transformation has shown to be a competitive catalyst for increasing any company’s ROI. As a result of digital innovation ranging from connected warehouses to new autonomous last-mile delivery systems, TMS has grown in importance and visibility, transforming an ageing sector into an exciting location to drive change for the betterment of society. The market for TMS is projected to be driven by the growing digital revolution in the transportation industry, which holds the potential of enhancing productivity by enabling innovation and lowering the costs of a variety of business operations.
Restraint: Concerns about data security are growing.
With the digitization of procedures by shippers, forwarders, transportation providers, and infrastructure operators, the risks of data exploitation and theft are increasing. According to a report, the logistics industry could lose $7 billion in revenue by 2025. Enterprises have confidential data that must be protected to avoid data breaches and theft, which could harm the company’s overall reputation. Data from businesses may leak across the internet and be accessed by unauthorised people, posing an increasing threat. TMS, for example, necessitates a multitenant architecture, in which a single version of the programme operates on a server shared by a number of customers. Subscribers to an enterprise may be able to examine the data of competitors in this scenario. These data security risks involving unauthorised users would jeopardise the enterprise’s data security as well as its competitive business position. The logistics industry is the second most targeted industry by attackers, according to Hornet security. As a result, these concerns about security and privacy are increasing among businesses, limiting the TMS market’s growth throughout the projection period.
Autonomous and connected vehicles have the potential to revolutionise the transportation and logistics industries.
Over the last few years, the transportation and logistics industry has seen a growth in the use of autonomous cars. The expansion of autonomous vehicles is being driven by increasing technological developments in AI and increasing substantial investments in the development of sensors and visual technologies to revolutionise the way vehicles are manufactured, operated, employed, and serviced. By unlocking new levels of safety, efficiency, and quality, autonomous vehicles aspire to change logistics from trucks to last-mile robots. Many businesses are attempting to hasten the acceptance of completely autonomous automobiles. Google and Tesla, for example, have made substantial advancements in driverless vehicle technology. Tesla, a renowned electric vehicle manufacturer, is taking steps to develop completely autonomous heavy-duty freight vehicles. Amazon and UPS, for example, are investing in the creation of flying drones to streamline delivery procedures.
TMS solution adoption is slow due to costly capital investment.
The digitalization of transportation operations necessitates significant capital expenditures, including the installation of automation equipment, software, and solutions, all of which are costly. The expense of replacing existing procedures is high. Another factor impeding the TMS market’s growth is the slow adoption of many IoT platforms, numerous protocols, and a large number of APIs due to the integration complexity. Organizations’ unwillingness to change from manual procedures to a digitalized process necessitating large capital re-investment is slowing the adoption of TMS systems. Most businesses have a laid-back attitude toward emerging digital technologies and rely on their intuition to make business decisions rather than adopting digital technologies. As a result, enterprises with low financial resources are unable to invest in automation systems, limiting the TMS market’s growth.
During the projection period, the Large Enterprises segment will have the biggest market share.
Large organisations are more likely to use TMS solutions and services, and this trend is predicted to continue during the forecast period. TMS solutions combine route optimization, carrier tracking, analytics, order administration, and account settlement into a single centralised system. As a result, huge corporations invest extensively in modern technology in order to boost their total production and efficiency. Large organisations’ demand for flexible, scalable, and easy services is projected to push market players to develop newer technologies and novel solutions.
During the forecast period, the consulting service segment will increase at the fastest rate.
Vendors provide consultancy services to help internal workers learn about TMS systems. These services are a cost-effective approach to ensure that in-house employees perform at their best. End users benefit from consulting services since some businesses lack the skills to comprehend the complexities of TMS configuration. These services are critical to the successful adoption of TMS solutions. Consulting firms assist businesses in deploying TMS to meet specific business-process requirements in the most efficient way possible. These services aid businesses in making proper and well-informed decisions that result in the intended business outcomes.
During the projection period, North America will account for the greatest market share.
North America, Asia Pacific (APAC), Europe, Middle East & Africa (MEA), and Latin America are the five key geographic regions covered by the worldwide TMS market. Because of the existence of TMS suppliers and technologically advanced countries like as the United States and Canada, North America is predicted to account for the biggest market size throughout the forecast period.