Recent growth in technology spending by motor carriers may be an indication that the economy is improving and that trucking companies will continue to view information systems as a tool for achieving efficiencies and identifying competitive advantages.
IT companies that produce management software for the transportation and logistics industries are noticing this trend. Arsenault Associates of Atco, NJ and Cleveland-based TMW Systems Inc. both report that business is beginning to turn around.
Charles Arsenault, president of Arsenault Associates, which designs, develops, markets and supports the Dossier32 family of fleet application computer software programs and services, said his company’s software had a 30% increase in sales for June.
“We won’t see a lot of frivolous buying as we had in the past,” Arsenault told Fleet Owner. “To say IT is a cautious purchase is an understatement, but it is the best way to describe it.”
Tom Weisz, president and CEO of TMW, said his company believes that carriers are optimistic about the future and are choosing TMW for enterprise solutions that favorably impact carrier productivity and efficiency.
“As last year ended and 2001 began, many carriers postponed purchasing decisions longer than usual. Responding to the economic slowdown, they went into short-term survival mode,” Weisz said. “Now, however, we are seeing carriers again broadening their planning horizons and shortening their decision cycle.”
Arsenault points to the Y2K scare as the start of the economic downturn for companies in his sector. Companies spent extra in 1999 to make sure their systems wouldn’t crash on New Year’s Day. However, once the year 2000 began, IT departments had people “sitting around” without much work to do, and a lot of outdated Y2K software.
Then during the Presidential campaign, around July or August, the economy started to see a downturn, Arsenault said, adding that customers started taking a “wait-and-see” attitude when it came to IT purchases. This made things disastrous for many companies, he stated.
Although business is starting to pick up, and projected sales are at an upturn, Arsenault said there most likely will not be as much random spending on IT products.
Weisz also cited recent news from the U.S. Dept. of Commerce for reasoning that the economy is strong and is leading trucking companies to confidently position themselves for renewed growth. A rise in consumer spending and construction spending are among those reasons. Also, while activity in the manufacturing sector is still declining, June saw the slowest rate decline in seven months.
In its second quarter, TMW’s sales volume was up 272% over the previous quarter, which also leads Weisz to believe carriers are confident in an economic turnaround.