The route optimization software market is expected to witness a growth at a CAGR of 10.9% over the forecast period (2020-2025). Route optimization helps the drivers to complete the task in less time. This software eliminates the daily manual hours of planning with automated multi-stop route planning ability.
- According to a global survey conducted by Verizon, in 2019, among the surveyed fleet managers, more than one-third of fleet managers who do not use route optimization solutions were of the opinion that they would expect an increase in productivity if they implemented the technology. The survey also indicates that over 53% of companies that make use of route optimization software reported actual productivity increases – with most of the respondents reporting positive growth in productivity (53% respondents) and compliance (52% respondents).
- With the emergence of e-Retail, online cab services, online food delivery business has created a boost in the delivery operations and daily need for routing for delivery persons. Hence, with the help of route optimization software, the company can leverage the functionality and quickly deliver the content.
- Owing to the COVID-19 pandemic across the world, the transporting operations have been hit significantly. Most countries mandate the complete lockdown of services across states. This has resulted in an economic downturn for logistic transportation, as well as e-commerce companies. Hence, the investment towards route optimization significantly reduced.
Key Market Trends
Growing Focus on Reducing Environmental Impact and Increasing Productivity of Fleet is Expected to the Market Growth
- Nike Inc. mentioned that logistics are also the main contributor to carbon emission apart from raw material and manufacturing. Logistics is estimated to contribute over 10% of the total carbon emission by the company. The company has been focusing on reducing 30% CO2 emission through logistics by the end of 2020.
- Spelthorne Borough Council, England, mentioned adopting route optimization software for its kerbside collection services. With this implementation, the department was able to achieve a reduction in CO2 emission by up to 30% and driving time. Also, the company claimed that it increased the productivity of the fleet and was able to reduce its fleet size by over 15% and support future fleet planning.
- DHL, one of the largest courier and logistic company operating in over 220 countries and territories mentioned using route optimization software its last-mile B2C delivery product and orchestrate key last-mile processes. With this implementation, the company was able to achieve a 15% increase in the productivity of delivery agents, and reduced operational costs & increase profitability
North America is Expected to Hold Largest Market Share
- North America, there is a considerably high penetration of vendors offering route optimization software solutions. In 2019, it was estimated that over 35% of the companies that have deployed “Asset Management” solutions in the region have installed basic GPS location tracking equipment, while more than 44% of such users have customized asset tracking systems, especially for route management and optimization.
- Furthermore, in the case of the United States, there is a significant increase in demand for route optimization solutions, as interoperability regulations (especially for international and joint operations) in the country are evolving. In 2019, NATO’s standardization office via the AST WG announced that it is working to produce asset tracking standardization agreements and a business process model.
- The office plans to establish a standard route optimization system that makes use of an interoperability message set (STANAG 2185) that is triggered when a national tracking system reads a tag or barcode that belongs to another nation or when the asset is being tracked en-route to a theatre of operations.
With the increasing growth opportunities in the market, the market has been witnessing continuous new entrants offering similar route optimization software solutions. Due to these new entrants, companies are focusing on making product innovations to gain on competitive advantage. Some of the recent developments made by the vendors in the market are mentioned below.
- May 2020 - DispatchTrack, a provider of SaaS-based last-mile logistics Route Optimization solution announced to raise over USD 144 million from Spectrum Equity. With this funding, the company plans to transform the last mile deliveries for more businesses across categories and around the world.
- May 2020 - Dynamic Route Optimization - Route4Me announced to provide its last-mile route optimization platform to support its fight against Covid-19 in The Red Cross of Rome, Italy.
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