According to the Council of Supply Chain Management Professionals’ (CSCMP) 2024 State of Logistics Report, over the last year “U.S. business logistics costs are $2.3 trillion, which translates to 8.7% of the national GDP.”
Logistics is a major cost center for most businesses in the U.S. Inefficiencies within logistics departments have direct effects on organizations’ bottom lines. Addressing the biggest freight challenges can have immediate and measurable impacts for companies.
Fortunately, modern transportation management systems (TMS) offer a lifeline to logistics teams needing to reduce operational complexity and find cost savings. The right TMS solutions can slash costs, boost efficiency and improve visibility across the supply chain. They help organizations navigate rising costs, capacity issues, and transport disruptions.
This guide will explain how advanced TMS technology can help your business conquer common freight challenges — and give shippers an advantage in a competitive industry.
Major freight challenges and the TMS solutions that help
Here are some of the most significant risks within the trucking industry, along with the TMS features that mitigate them.
1. Rising transportation costs
The increase in freight costs stems from several factors. Fuel price fluctuations, for example, impact carriers’ operating expenses, while driver shortages hike up labor expenses. Carrier capacity limitations also drive higher rates, especially during peak seasons.
A modern TMS offers powerful tools to resist these rising costs.
- They optimize carrier selection by comparing rates and performance across a wide network. This allows shippers to find the best quotes for each leg of each shipment.
- A TMS also aids in rate negotiation by providing market trend and historical pricing data. Combined, they may offer bargaining leverage.
- Multi-modal services within a TMS can help with less-than-truckload (LTL), vLTL, and intermodal shipments. Choosing from additional mode types can help to lower overall transport costs.
- Many modern TMS solutions offer automated freight procurement. With a built in RFP tool, these TMS platforms can streamline the bidding process and enable fast capacity sourcing when needed.
- Dynamic pricing capabilities enable businesses to adjust rates in real-time based on market conditions, ensuring competitive pricing for freight loads.
By leveraging these TMS features, companies can significantly reduce their freight spend despite challenging market conditions.
2. Maintaining on-time delivery performance
Late deliveries can wreak havoc on customers’ satisfaction and your overall brand reputation. They often even lead to costly penalties and lost business. A TMS is a powerful ally in ensuring timely deliveries through the following key advantages.
- A good TMS will present multiple carrier options to you side-by-side so your team can evaluate which carrier to choose based on a combination of service and cost. While rates are obviously important, the logistics rep can make the choice to spend a little more if a faster delivery option is available, preserving service levels and maintaining OTD.
- Real-time shipment tracking provides visibility into each shipment’s location and status. By providing this capability, a TMS empowers fleet managers to spot potential issues early and take action.
- Exception management tools in a TMS flag shipments at risk of delay. They alert managers who can then intervene proactively, for instance, by rerouting a shipment or communicating with the customer.
- Automated alerts notify all stakeholders of potential delays, which enables quick decision-making and keeps customers informed with status updates. The result is improved overall satisfaction.
3. Limited visibility and tracking
Limited visibility in freight transportation can lead to confusion, inefficiency, and frustrated customers. Transparent communication and real-time shipment visibility are vital for all stakeholders.
An advanced TMS tackles this challenge head-on with the following features and capabilities.
- A TMS offers end-to-end visibility into shipment status, location, and estimated arrival times. This integrated, and often visual map view, helps companies manage expectations and respond quickly to issues.
- Most TMS platforms offer easy-to-use dashboards that give bird’s-eye insights into all active shipments, highlighting those that need attention. Users can also drill down for detailed information on individual loads.
- Mobile tracking apps extend this visibility to smartphones and tablets, allowing logistics teams to access information on the go.
- Automated status updates are another key TMS feature that keeps all parties informed without manual intervention.
By improving visibility, a TMS reduces uncertainty in the supply chain. It allows for better planning, more efficient operations, and improved service. This transparency can become a significant competitive advantage.
4. Carrier relationship complexity
Managing a network of carriers is a complicated undertaking. It requires balancing costs, capacity, and service quality across multiple providers.
Fortunately, TMS technologies simplify the complexity of carrier relationship management.
- They streamline the selection process by storing and analyzing carrier data. This helps logistics reps choose the best carrier for each load based on factors like cost, reliability, and capacity.
- Carrier on-boarding becomes more efficient with a TMS product. The systems often include digital tools for managing relationships, ultimately reducing paperwork and simplifying processes.
- Performance management is another TMS benefit. Many platforms offer carrier scorecards, which track metrics like on-time delivery rates, claims ratios, and tender acceptance. Businesses can use this data to make informed decisions about their carrier mixes.
- TMS communication tools improve carrier coordination by sending load tenders, tracking responses, and managing exceptions automatically. Some even offer in-app chat that connects directly with carriers! This reduces manual work and improves efficiency.
- Self-service carrier portals are becoming common in modern TMS platforms. These allow carriers to update information and view and accept loads. Such portals improve collaboration and reduce administrative burden for both parties.
By leveraging these TMS features, companies can build stronger, more efficient relationships with carrier partners.
Additional benefits of modern TMS solutions
A TMS offers benefits well beyond basic freight management. It serves as a powerful tool for data management and analytics. By centralizing freight data, a TMS enables better decision-making and performance analysis across the supply chain.
Enhanced reporting capabilities are another key advantage. A TMS can generate detailed reports for cost analysis, carrier performance tracking, and regulatory compliance. This data-driven approach helps businesses identify trends, optimize operations, and stay ahead of industry regulations.
Increased efficiency is one of the main advantages of a TMS implementation. Automation streamlines workflows, reducing time-consuming manual tasks and the potential for human error. This frees up valuable resources, allowing staff to focus on more strategic, high-value activities.
Productivity gains from TMS products can be substantial thanks to the technology’s ability to streamline complex processes. This leads to faster turnaround times, reduced administrative costs, and improved overall supply chain performance.
By leveraging these additional benefits, you can turn your freight operations into a strategic advantage, driving growth in a challenging market.
Invest in your success with transportation management software
Even at a time when money is tight, upgrading to a modern TMS can transform your day-to-day operations. No other technology empowers you to address challenges like rising costs, limited visibility, and complex carrier relationships in one cost-effective integrated tool.
The benefits are clear: cost reduction, greater efficiency, enhanced visibility, and improved customer satisfaction. In a competitive space like the freight industry, these advantages can set your business apart.
Explore how a TMS can address your specific needs and drive your business forward. Contact a TMS provider to learn more about TMS solutions tailored to your unique needs.
FAQ
A TMS company provides software and services for managing transportation logistics. These organizations offer solutions that help businesses optimize freight shipping processes, from planning and execution to tracking and analytics.
The best TMS software depends on a company’s specific needs and scale of operations. Popular options include products like Loadsmart’s ShipperGuide TMS, but the ideal choice depends on factors like business size, industry, and required features.
TMS system costs can range from a few hundred dollars per month for cloud-based solutions to several hundred thousand dollars for enterprise-level implementations. Pricing often depends on factors like the number of users, shipment volume, and complexity of features required.