Route optimization uses algorithms to find the shortest route between two or more points while reducing expenses and maximizing performance. As transportation and logistics technology evolves, more software businesses are embracing advanced technologies to maximize route delivery time and fuel economy.
"The global route optimization software market share is expected to grow at a CAGR of 11.56 % during the forecast period (2017–2030)."
According to the Sustainable America study, the typical American driver idles for over 16 minutes per day, wasting 3.8 million gallons of petrol and about USD 7,980,000 each day. According to the Mobility Lab, Americans spend an average of 41 hours a year battling traffic during peak commute times. In 2017, traffic congestion in the US cost about USD 305 billion, or USD 1,445 per motorist. The region's significant traffic impacts the logistics business. It affects just-in-time business models and raises operational expenses. As a result, logistics businesses in the region are increasingly using route optimization software to avoid gridlock.
According to a UNCTAD report, African states must foster industrial growth to increase economic progress and eliminate poverty. Moreover, Africa's IT infrastructure is undeveloped, and digitization is low. Thus, the region's adoption of route optimization software is limited, limiting the market growth. Government initiatives and rapid smartphone adoption in the area are expected to boost route optimization software industry growth in the near future.
Globally, online shopping is on the boom. The world's booming e-Commerce business is due to increasing digitization and smartphone usage. The rise of e-Commerce in Asia-Pacific has boosted online delivery. E-commerce enterprises are increasingly implementing route optimization technologies to optimize delivery efficiency and consumer satisfaction. Customers nowadays demand next-day delivery, and businesses struggle to meet deadlines.
Customers leave purchasing with a business if they receive an inaccurate delivery, thus corporations rely on route optimization software to keep customers. Supply chain and logistics operations are hampered by late deliveries, ineffective route planning, rising delivery costs, and vehicle idle. The above causes have decreased in prevalence since the advent of route optimization software, which reduces vehicle idle time and increases delivery executive productivity by allocating optimal routes.
People's lives and companies were affected by the COVID-19 outbreak worldwide. During the COVID-19 outbreak, delivery service companies confront several obstacles. Due to the tight restrictions, more people are purchasing online. In response, e-commerce and online retail & grocery enterprises faced a big issue in delivering groceries on time. By assigning delivery executives optimal routes, route optimization software helped to reduce vehicle idling time and enhance delivery executive productivity, therefore promoting the route optimization software business during the pandemic crisis.
The route optimization software industry is divided into segments based on deployment method, enterprise size, and vertical sector.
The market is categorized into on-premise and cloud deployments depending on deployment. The on-premise segment dominated the major share of the route optimization software market. The route optimization software that has been installed is saved on the company's servers. The customer acquires a license, and the program becomes the buyer's property following the purchase. This solution has a greater initial cost and maintenance fee, but the software is handled internally by the organization using location analytics.
Large firms and small and medium-sized enterprises are divided into two categories based on their size. In route optimization software, the SMEs category accounted for USD 1,172 million in 2019 and will have the greatest market share in 2021. SME presence in emerging nations like Peru, Colombia, Chile, Argentina, and Nigeria is likely to boost market growth. Furthermore, small businesses will have repeated ups and downs over the growth period, necessitating a focus on staff and asset management to fulfill client expectations.
As a result, technology such as route optimization software can provide scalability to deal with unforeseen market fluctuations.
North America dominated the route optimization software industry. Vendors in this market have created cutting-edge route optimization software solutions for location analytics to meet the needs of various sectors, including taxi service providers, restaurant chains, FMCG, and others.
The market in Asia-Pacific is predicted to increase significantly, during the forecast period. The necessity of proper management of connected devices in the supply chain network and optimal route planning of items in transit has been recognized by industry participants. The market in this area is predicted to increase due to the high demand for route optimization software solutions and expansion in the online transportation business, which includes companies such as ANI Technologies Pvt. Ltd., Uber India Technology, Kiwitaxi, and others.
Some of the major players in the global market of route optimization software are