newswor thy
as economy slows,
TMS vendors get creative
IT’S TOUGHER TO PEDDLE JUST ABOUT
anything these days. Even transportation
management systems, tools that long ago
ProLogis exits
China, sells part of
Japan portfolio
proved their value in the marketplace, are not
slam-dunk sells anymore.
A late December study by ARC Advisory
Group noted that the stellar growth in TMS
demand could slow down in 2009 and
beyond, as cash-strapped companies delay IT
investments during the economic downturn.
As a result, “TMS vendors could see longer
sales cycles in 2009, at least during the first half of the year,” says Adrian
Gonzalez, director of ARC’s logistics executive council and author of the study.
Gonzalez adds, however, that it’s also possible that TMS vendors will benefit
from tough times as top executives that have long viewed transportation as a cost
center seek to slash millions of dollars from their shipping budgets through
more efficient operations. “It is unclear at the moment which path customers
will take” in 2009, he says.
Any retrenchment in TMS investment should be kept in perspective, Gonzalez
says. The TMS market, which hit $1.2 billion in sales at the end of 2007, should
post compounded growth of 7. 6 percent a year through 2012, according to ARC.
“There are plenty of TMS sales opportunities available in the market for all vendors to benefit,” Gonzalez says.
A no-risk proposition
In a vote of confidence in their products, and in an effort to increase market
awareness, some vendors are putting their money where their TMS tools are.
LeanLogistics Inc., based in Zeeland, Mich., is offering its procurement services,
which leverage the company’s TMS tools to compare and identify the most cost-effective routings for domestic truck, parcel, and intermodal services, at no risk
to the user. Lean has said that if its services cannot reduce a customer’s transport
spend by at least 3 percent in 2009, Lean will not charge for the services.
According to Lean, customers in 2008 saved an average of 11. 7 percent using
its procurement services. For customers that annually spend $50 million on
transportation—the average Lean customer spends between $50 million and
$70 million each year—the savings in 2008 would approach $6 million.
Chris Timmer, Lean’s vice president, sales and marketing, says the offer sends a
message that “now is not the time not to invest in systems that will make you more
efficient, more competitive, and better positioned for an economic recovery.”
Greg Johnsen, co-founder and vice president of marketing at GT Nexus,
which offers TMS services primarily to the international market, says his company has launched low-cost TMS programs over the past two years to demonstrate the software’s value. Like Lean, GT Nexus offers its TMS software as a
Web-enabled service that companies essentially rent from IT providers on an
as-needed basis rather than buying applications they’ll have to install, p. 10
ProLogis, the world’s largest
developer of industrial property, will sell its operations in
China and 20 percent of its
Japanese property fund interests to GIC Re, a real estate
investment company owned
by the Singapore government. ProLogis will receive
$1.3 billion in cash for the
assets, and will use the proceeds to reduce debt. The
deal was set to close by the
end of January.
ProLogis’s current Chinese
staff will remain in place, and
its portfolio will stay
unchanged, though the company will not be involved
with the properties, a company spokeswoman said. She
added that the decision to
exit China and scale back in
Japan “is not a market call.
Business is softening everywhere, but the decision …
was more a function of the
scope of our exposure [in
Asia] and the ability to
accomplish a significant portfolio sale quickly.”
Among the assets in China
to be sold are 20. 7 million
square feet of completed
properties and properties
under development. ProLogis
expects to have invested
$861 million in those assets.
As of Sept. 30, 2008, ProLogis
had 548 million square feet
owned, managed, and under
development worldwide.
