TMS market going through ‘land grab’ phase

Fragmentation in the transportation management system market persists because there’s still so much of the market, across verticals and sizes, that is not using a system, according to an executive at TMS provider Cloud Logistics.    If it seems like there are a lot of transportation management system (TMS) providers out there, that’s because there are a lot of TMS providers out there.
   By one recent count from Inbound Logistics, there are at least 70 such vendors.
   That fragmentation hits on something a little deeper than just low barriers to entry: despite it being a three-decade old industry, the TMS market is still growing. The analyst Gartner estimates only a small fraction of the potential market is using a TMS.
   It all amounts to what David Landau, executive vice president with Cloud Logistics, calls a “big land grab.”
   “Every other industry consolidates, but even though TMS is 30 years old, we continue to fragment,” Landau said in a conversation with American Shipper Thursday.
   Landau, a long-time veteran of TMS provider Manhattan Associates, joined Cloud Logistics 18 months ago to help target an underserved segment of the TMS market – the mid-sized shipper.
   Cloud Logistics, he said, is focused on the speed and cost of implementation, two things that smaller shippers struggle with when considering larger TMS vendors in the space.
   “Some of the established TMS providers, their solution works if you’re a large company, but it doesn’t scale down,” he said.
   By that, he meant that mid-market shippers often don’t have the network complexity that makes a heavy-duty, on-premise TMS a necessity. In fact, the bigger challenge is highlighting the opportunity in front of mid-market shipper that doesn’t use a system, and may not even have a distinct transportation department or role.
   “The mid-market has had nothing for forever,” he said. “So doing nothing is still an option for that.”
   As with many technology vendors, Landau said the biggest impediment Cloud Logistics faces is those shippers who want the status quo, or shippers that feel safer handing off transportation management to a 3PL.
   The space where Cloud Logistics operates has been filled with a number of entrants in recent years – companies focusing on fast deployment of the system, simple user interfaces, and competitive pricing. It’s a slice of the market that the bigger TMS vendors have largely ignored because their systems tend to involve substantial deployments over months, if not years, and significant investment.
   Landau said his company’s more complex implementations last 10 weeks, the simpler ones two weeks. They’ve also deployed same-day TMS for a couple customers. And training sessions are about two hours.
   While size is a determining characteristic of what type of TMS a company might choose, supply chain complexity is actually more important. Landau noted, for instance, that a large lumber producer using only full truckload services might have less complexity – and hence less need for robust optimization in their TMS – than a small regional grocery retailer.
   “Our approach is to target the companies that are smaller and scale up,” he said. “It’s easier to scale up than scale down.”
   For context, Landau’s thoughts about scaling up and down hinge on what he called the difference between cloud-native and cloud-enabled applications (Cloud Logistics’ is cloud-native). The implication is that companies whose systems are rooted in established technologies are “trying to turn a 20-year-old TMS into something it’s not.”
   Many of the larger TMS providers have begun offering easier-to-deploy, cloud-based “entry level” options to compete in the market with recent cloud-deployed entrants.
   “Our upgrades are easy,” he said. “We upgrade four to six times a year. Cloud-enabled systems may be upgraded once a year.”