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The evolution of TMS: The next phase of logistics technology is defined by democratization

Accessible tech to help freight market achieve consistent stability and growth

Photo: iStock

By Steve Barber, VP of Product Management, Uber Freight

It’s been a slow and steady journey — one that has taken around two decades — for the TMS to become what it is in the market today.

Before its debut in the early 2000s, shippers were forced to build proprietary logistics systems from scratch, working off Excel spreadsheets, and figure out how to integrate their strategy directly into the supply chain execution suite.

The rise of e-commerce and the demand to ship more goods produced a crucial need for enterprise resource planning in transportation and an opportunity for logistics technology platforms to create solutions that met this need. TMS platforms launched more than 20 years ago with capabilities that included data entry, rate management and freight load consolidation. However, integrations and capabilities were limited until technology advancements helped TMS platforms create cloud-based solutions for shippers that could be directly integrated into their supply chain operations. 

As they’ve matured, TMS platforms have expanded their capabilities to allow shippers to better track shipment status, access network and industry data to inform business decisions and  collaborate with other shippers to improve capacity and loading strategies. 

Throughout the pandemic, TMS technology was put to the test by many shippers suddenly facing unprecedented supply chain disruptions and volatility. The tech’s ability to help manage these challenges supported many shippers through the crisis. In fact, a market survey at the time found that 65% of shippers said having a cloud-based TMS in place to access shipping operations was “critical or very important” during the pandemic, while 56% were planning to reevaluate adopting a cloud-based TMS. 

Now, there is an industrywide push to streamline supply chain operations, increasing visibility, predictability and collaboration. TMS will be at the heart of this transformation, offering robust tools to shippers reimagining operations — and, most importantly, to those that historically haven’t enjoyed access to the technology.

The TMS adoption gap 

Gartner Research estimates that the TMS market is expected to grow 60% by 2024, powered by the shift from on-premise software and manual processes to software-as-as-service applications. But while about 50% of large shippers currently have adopted TMS, the numbers are much lower among small (10%) and medium-size (25%) shippers. 

Factors such as the cost of platforms and complexities of integrating and deploying the technology have long been barriers to adoption, particularly for smaller shippers. But as the industry ushers in a new generation of supply chain leadership, it will likely be more willing to invest in TMS technology, especially as it becomes more advanced to address numerous shipping needs and streamlined to support smaller operations. 

Another roadblock to more widespread adoption is that TMS platforms often specialize in a single aspect of the supply chain management process, such as carrier management, appointment scheduling and procurement management. And many of these platforms aren’t equipped to connect an entire shipper and carrier network, leaving shippers isolated from more freight business opportunities.

To increase TMS acceptance among small- and mid-market shippers, in particular, it will be essential for them to have access to TMS tech providers that account for every need within a single platform, as opposed to using multiple vendors to tackle different demands. 

The last few years have also seen a rise in application programming interfaces and connected systems within web-based companies, allowing large-enterprise shippers to seamlessly plug TMS platforms into their existing freight management operations in a way not previously possible. The ability to manage shipping operations within a single interface is cost-effective and streamlines the tech integration process required to onboard a TMS solution while also eliminating the responsibility of managing multiple vendor partnerships. 

Future of TMS capabilities and adoption 

The outlook for TMS technology’s impact on the freight market is promising, as it will help shippers of all sizes be more efficient with costs and business operations. Industry research has shown that companies with a TMS typically save 3% to 12% on freight expenses, thanks to improved RFP processes and access to more spot rate capacity, and 2% to 5% on operating costs across all business departments. 

Fully managed transportation service providers are revolutionizing important tools for shippers that will allow them to achieve real-time visibility into shipment tracking and offer access to performance data and analytics. This next wave of TMS technology is designed with flexibility in mind to suit the needs — both in terms of capabilities and costs — of different-sized shippers. Logistics vendors will also give their customers access to a broader freight network, which could improve collaboration among shippers and carriers and boost overall business performance. 

Working with fully managed transportation service providers offering these solutions under one platform will be key for shippers that need to integrate and deploy TMS technology efficiently and effectively. As shippers adopt TMS solutions, they will need to seek vendors with access to a large network of shippers, carriers and freight, as well as knowledge of shipping pain points and the operations side of a shipping business.

On top of that, a shipper and TMS vendor will need to reach a level of transparency to understand important business components such as which key performance indicators should be used to measure success and what that vendor’s relationship looks like with other shippers and carriers in their network. 

Moving forward, it’s clear that using a robust TMS tech stack won’t just benefit small- and mid-sized shippers but carriers and end consumers as well. The need for TMS solutions that address as many supply chain management needs as possible has never been more apparent,

That’s why democratizing its access will ultimately help the freight market achieve more consistent stability and growth in the future.


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