ARC's TMS Market Study Exceeded $804 Million: 16.4% Annual Growth Is Projected.

Business Editors

DEDHAM, Mass.--(BUSINESS WIRE)--March 27, 2002

Companies spent over $804 million on Transportation Management Systems (TMS) in 2001 according to a new ARC Advisory Group study titled "Transportation Management Systems Global Outlook: Market Analysis & Forecast Through 2006." About 20 percent of the revenues were derived from recurring fees such as subscription, transaction, and hosting fees. This pricing model will continue to gain traction over the next five years as the market grows to over $1.7 billion by 2006, representing a cumulative annual growth rate (CAGR) of 16.4 percent.

Transportation Management Systems: Procure, Plan, Optimize, and Execute

ARC defines TMS as "software solutions that facilitate the procurement of transportation services, the short-term planning and optimization of transportation activities, and the execution of transportation plans." International trade solutions, parcel shipping applications, and transportation-focused Supply Chain Process Management (SCPM) solutions are also included in the scope of the study.

"Most companies have traditionally taken a fragmented approach to transportation management, and so the technology has also been developed and deployed from a silo perspective," comments Adrian Gonzalez, Senior Analyst and author of the study. Leading companies, however, are beginning to take a holistic view of transportation, thereby driving software vendors to expand the scope of their solutions.

"Transportation activities do not occur in a vacuum," says Gonzalez. "They impact and are affected by other business functions. Not surprising, software vendors are incorporating complementary capabilities into their solutions, such as order collaboration and inventory management. In the near future, TMS will become too limited a term to describe these solutions."

Key Findings and Predictions

In addition to the growing adoption of recurring revenue models, ARC's study reveals other important findings and predictions, including:

- International trade and SCPM capabilities will drive growth, as companies
seek to strengthen their trade compliance and trade security processes and look
to improve their ability to manage inventory in motion.

- Inbound transportation management is becoming a top priority, especially as
companies transition to collect payment terms. Solutions that enable better
compliance with routing guides and optimize inbound moves will be in demand.

- Executing transportation activities via a hosted network will continue to
gain momentum, as well as the demand for managed services.

- Fleet management solutions, namely routing and scheduling applications, will
continue to lag the rest of the market, but wireless and collaborative dispatch
solutions will stimulate growth.

- Parcel shipping solutions will play a more significant role and become better
integrated with other transportation solutions as shipments become smaller and
more frequent.

The study also includes market shares by solution type, geographic region, customer tier, and vertical industry, plus forecasts and supplier profiles.

Note to Editors: This document can be used with attribution to ARC Advisory Group and Adrian Gonzalez. For a graphic containing "Total Shipments of TMS Solutions - License, Services, and Recurring Revenues in Millions of Dollars", please contact Maryanne Flynn at mailto:[e-mail] .

ARC Advisory Group provides strategic planning and technology assessment services to leading manufacturing companies, utilities, and global logistics providers, as well as to software and solution suppliers worldwide. From Global 1000 companies to small start-up firms, ARC has the strategic knowledge needed to succeed in today's technology driven economy. Further information can be obtained from ARC, Three Allied Drive, Dedham, MA 02026, 781-471-1000, Fax [phone], E-mail [e-mail], Web ARCweb.com.