What Is TMS and Why Do We Need It?

What is a transportation management system, or TMS system? In short, it’s a type of logistics management for organizing the movement of goods and managing the operations of transportation fleets. A TMS system goes a long way to improving efficiency, keeping costs low, and making the supply chain more transparent and easier to track.

The Need for a TMS System

In 2013, the Bureau of Labor Statistics reports that the trucking industry transported almost 15 billion tons of cargo. They expect that number to go up to nearly 19 billion tons by 2040. The market for LTL shipments alone is worth an estimated $35 billion, and the value of freight being moved is expected to go from $882 per ton in 2007 to as much as $1,377 per ton in 2040: at least according to the Department of Transportation. In addition, the LTL shipment market continues to grow with demand for less than full truck shipments. Managing LTL shipments, in particular, can be extremely difficult to pull off in an efficient and cost-effective way. A lot is being transported, and it has a lot of value. Systems are needed to manage all this.

What a TMS System Does

A fully integrated TMS system automates the planning process for shipments, including managing orders and warehouse issues, purchasing systems, and even providing customer relationship management. Whether shipments are international or domestic, full load or LTL, the TMS system can quickly find the cheapest and most efficient carrier, mode, and route. It can then manage load optimizations. A TMS shipment also allows for real-time tracking and monitoring throughout the entire life of a shipment, with an accurate prediction of arrival times and enhanced accountability and visibility for all involved.

How Effective is a TMS System?

Because the TMS system automates so much of the process, invoice errors are greatly reduced. Shipments are far less likely to be lost or stolen, and transport intelligence is enhanced as TMS systems generate reports and collate data in a way that gives great insight into freight data and transportation metrics. This allows companies to improve delivery while reducing costs.

How Has The TMS System Developed?

The TMS market is expected to be worth $1.72 billion by 2019 and has been growing enormously over the last decade as transportation realities change and the TMS systems themselves prove their worth. These days, systems can either be installed on-site or manage through the cloud, and the trend is toward the cloud as it offers ease of connection over various devices and in many locations.

There are almost 12 million trucks, railways cars, vessels, and trains moving goods all over America’s transportation network. The Federal Motor Carrier Safety Administration estimates there are nearly 6 million commercial motor vehicle drivers alone working in America. Efficiently and cost-effectively using and managing this immense force is key, and transportation management software and systems are key.

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