As high trucking demand and short supply roil supply chains, businesses large and small are turning to technology to access capacity, improve efficiencies and hold the line on rates. Several factors are driving interest in TMS, including:
- Tight trucking capacity. With the number of available drivers already on the decline, the April 1 ELD deadline is making space even harder to come by. In one survey, trucking companies said ELD has reduced their productivity by 83 percent by limiting the hours each vehicle can be in service. As carriers try to do more with less, the survey found, rates are up by 71 percent.
- Changing shipper needs. Continued e-commerce growth means more fulfillment points and complexities for brands. An ARC Advisory Group study found that shipment size has decreased but shipment frequency is increasing, putting pressure on already tight capacity. Truck shipments grew 5.9 percent from January to February, an 11 percent jump from the same month last year, as 2018 promises to be a historic year for freight volume.
- 3PLs go digital. The highly competitive trucking environment presents a huge opportunity for third-party logistics providers. With shippers flocking to well-connected providers to source capacity at reasonable rates, many 3PLs are offering new technologies to capture additional market share, driving TMS adoption among more customers. In a 2017 survey, 58 percent of respondents said digitization of 3PL services will be the most common 3PL enhancement over the next five years.
- Lower barriers to entry. TMS used to be a non-starter for small and mid-size businesses because of implementation costs and hassles. Now, many vendors offer streamlined, cloud-based solutions, putting a TMS within reach for more businesses. As a result, TMS usage is skyrocketing among SMBs.
Driving Value with a TMS
Once a tool for route planning and rate management, today’s more robust TMS solutions cover everything shippers need to automate and optimize ground transportation. Common features include route planning and optimization, freight auditing and payment, order visibility, and carrier management. Since many platforms have moved to the cloud, they can also offer real-time collaboration between shippers, carriers, trading partners and customers to improve visibility and efficiency further.
When done right, migrating to a TMS can yield great improvements on cost, productivity and customer service. Companies typically slash their freight spending by 8 percent with an effective TMS, thanks to load consolidation, lower-cost mode selections and multi-stop route optimization. On the other side of the coin, businesses like Home Depot are using transportation management to boost sales revenue through measurable customer service improvements.
For businesses mulling a TMS purchase, key considerations include the ability to work across modes, customization capabilities, and integration with existing systems to power automation. A supply chain partner who offers a deep carrier network as well as a TMS can help your business build a more efficient ground transport program, despite trucking industry turmoil that shows no signs of letting up.