Transportation Software - SWOT Analysis
New technology and increasing e-commerce activities are some strengths driving the U.S. transportation software industry. Its weaknesses include high competition and customers being unable to identify the right software for their needs because of lack of awareness. In the following section are analyses of the full details of the strengths, weaknesses, opportunities, and threats (SWOT) of the U.S. U.S. transportation software industry.
SWOT ANALYSIS OF THE U.S. US TRANSPORTATION SOFTWARE INDUSTRY
- Increasing automation in the transportation industry, characterized by advanced cloud-based solutions and artificial intelligence platforms to manage various trucking operations, have been driving the transportation management system (TMS) industry.
- As online business platforms continue expanding, consumers are also expecting timely delivery of their orders and at reasonable rates. Thus, the trucking industry provides a critical connection for the omni-channel needs of online businesses, from pick up to delivery. Therefore, growing e-commerce activities increase the demand for trucking-related businesses.
- Another important strength the industry faces is the increasing collaboration between hardware and content providers. This collaboration is said to be a key element driving the transport management system market.
- Rising transportation costs due to complex and intensive transportation routes are also facilitating the growth of the adoption of transportation management systems.
- High initial installation and integration costs are among the key hindrances to the growth of this industry. Research findings indicate that the initial high cost associated with installing transport management systems is an inhibitor to the growth of this sector.
- The lack of awareness about transport management systems among many end-use industries and businesses is also another great challenge undermining the growth of this market.
- There is also increasing competition among the key players in this industry. Some vendors are building more advanced solutions using technologies such as AI and blockchain. Notably, these technologies require huge investments in R&D, which further slows the growth of this industry.
- While there exist numerous trucking solutions in the market, Trucking Office asserts that finding the right solution is a challenge many customers face, especially one that works for them.
- According to an IBIS World report, the trucking software industry serves the needs of companies actively involved in providing services for imported and exported goods. Therefore, an increase in trade volumes results in higher industry demand for trucking services, including trucking software. For instance, the total trade value in 2019 is anticipated to increase, representing an excellent opportunity for the industry.
- The development of high-tech solutions such as IoT (Internet of Things) and big data support "smarter implementations of software solutions" is expected to deliver greater opportunities for the players operating in the TMS market.
- Moreover, the rising demand for software as a service (SaaS) based TMS is further forecasted to stimulate the TMS industry.
- The TMS market anticipates to grow at a CAGR (Compound Annual Growth Rate) of 14.8% over the next five years; thereby, presenting enormous opportunities in the industry as the growth is expected to reach $3,640 million by 2024, from $1,830 million in 2019.
- An IBIS World report notes that based on the freight transportation services index that measures the annual output of the U.S. transportation sector, the economy expands resulting in increases in consumer spending and a surge in industrial, retail, and trade activity levels. Currently, the freight transportation services index is expected to increase at a slower rate; thereby, representing a potential threat to the industry.
- Changes in economic activities pose another greater threat to businesses in the TMS industry because these businesses heavily depend on how the economy is performing. Therefore, during times of economic hardship, the demand for trucking services can decline rapidly and pose a major threat to the industry.
- The "Amazon Effect," which is causing dynamic changes to the e-commerce ecosystem, also threatens businesses in the TMS sector. Shifting distribution models affecting retailers online and in brick-and-mortar stores are causing major changes in the trucking industry. Additionally, Amazon's innovations in the consumer market are also posing disruptions to the trucking sector.
- Increasing customer demands driven by evolving technologies requiring simple and easy ways to order products online, including tighter delivery deadlines, instant communication, and immediate reporting are also threatening the trucking software industry.
To perform a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the U.S. transportation software industry, your research team stared by examining industry reports focusing on the trucking software industry. While we found many reports published by top market research vendors like PR Newswire, Market Watch, IBIS World, and Reuters, most of them featured a global scope and none regarding the U.S. market alone. Nevertheless, we adopted those reports focusing on the global trucking software market because most of them stated that North America is the leader in the "adoption and implementation of transportation management systems." Likewise, we explored business news and blogs published by industry players such as Omnitracs, Paragon Routing, Trucking Research, and Trucking Office. We also supplemented our search with findings published by business and analytics news sites such as Fortune Business Insights, Menafn, and The Analytics News. With the lack of pre-compiled findings specifically focusing on the U.S. market, and reports dominantly focusing on the trucking software segment alone, we amalgamated different reports and pulled different excerpts from each to inform the SWOT analysis presented above.