No doubt, the current crisis gripping the financial markets, and the slowdown of global economic growth, will be the overriding issue facing the logistics industry this year. What will happen to IT investments in 2009 is the most common question I’ve been getting in recent weeks. The simplest answer: It's too soon to know which path customers will ultimately take. If you consider the Transportation Management Systems market, for example, it con-tinues to exceed expectations. As reported in our recently published Transportation Management Systems Worldwide Outlook study, the TMS market grew nearly 10 percent in 2007 to nearly $1.2 billion. All signs show that 2008 will end on a positive note, too, and the long-term outlook for the TMS market remains positive (ARC forecasts the market will reach $1.6 billion by 2012).
But the market will be tested in 2009 (and possibly 2010) in light of the global economic downturn. On the one hand, companies often look for ways to reduce costs during weak economic times to boost their net income and earnings per share. Transportation is a natural target because most C-level executives still view it as a cost center and a low-hanging-fruit opportunity to add hundreds of thousands of dollars, or even millions of dollars, to the bottom line. Therefore, from this perspective, the economic environment could benefit the TMS market.
On the other hand, companies also have a tendency to delay IT investments during tough economic times, and there are indications that this is happening. The main objective for TMS and other software vendors in the weeks ahead is to convince the executive team of a pro-spective client to adopt Warren Buffet’s investment philosophy: Invest when others are fearful.