What is transportation management?
Transportation management is the planning and management of logistics operations to move freight from one location to another while maximizing the use of transportation resources and controlling costs.
Transport management operations encompass all transportation modes within an organization's supply chain network. Freight movements utilize primary transportation modes serving global markets, including ocean, air, over-the-road and rail.
Transportation management can include inbound, outbound, internal and external shipments. Activities focus on ensuring proper materials and products are in the correct place at the desired time and in the right amount.
Why is transportation management important?
Transportation management enables the flow of raw materials and finished products between organizations and from customer-facing businesses to their consumers.
By connecting suppliers, producers and consumers, transportation management plays a critical role in the global supply chain. Effective transport management provides freight shipment visibility and enables an organization to manage strategies for inventory, production, distribution, warehousing and final delivery.
Challenges in transportation management
Poor optimization of processes and resources
Limited planning of activities from the first mile through the final mile
Low inventory, logistics, transit status and annual spending visibility
Unmanageable freight claims processes
Higher return rates for e-commerce purchases
Globalization of the supply chain and risks of non-supply chain disruptors, like pandemics
Changing customer expectations, dynamic transportation rate markets, multimodal transportation and sustainability initiatives exert additional pressure on transportation management.
Transportation management companies
Transportation management companies offer services in three key product segments: business services, managed services and system integrators. These companies operate at a variety of levels to serve customers. Transportation management service providers can supplement a freight-shipping company's transport management or completely replace all supply chain activities.
Third-party logistics providers
Within these segments, transportation management service providers operate as third-party logistics providers (3PLs) to execute transportation management, distribution, warehousing, fulfillment and other managed or business services. Third-party logistics providers often specialize in certain supply chain operations, scaling and customizing based on a customer's needs, market conditions or transportation management disruptions.
Integrated within an organization's operations, the depth of a 3PL's managed services can extend broadly. Many cater to specific services such as freight audit and payment, while enterprise 3PL providers deliver complete managed transportation execution and supply chain management.
Transportation management software
Transportation management systems companies offer technology that helps freight shipping organizations manage overall costs, improve shipment efficiency and provide supply network visibility.
Transportation management systems integrate new technologies such as blockchain, artificial intelligence (AI) and digital freight matching.
Software as a service (SaaS) operates on subscriptions and is distributed through the internet. In this model, the TMS operates on servers maintained by the vendor, who updates the software periodically. A cloud-based TMS allows users to work in real time to execute transportation activities, connect and collaborate with trading partners and improve visibility of freight in transit.
Data and transportation management
A transportation management system (TMS) assimilates transportation data from disparate sources into a single resource. Information gathered through integrated systems—such as a warehouse management system (WMS) or claims management platform—can be analyzed for process improvements that drive cost savings.
Leveraging data and digital integrations to manage transportation activities often supports improved performance in:
Managing inbound and outbound freight shipments, reverse logistics and final-mile delivery
Automating transportation management in logistics
Validating package details and loading specifications to protect cargo
Tracking shipment status and location in real time using GPS-enabled sensors
Rerouting shipments to avoid adverse weather and traffic
Monitoring current freight spend for strategy compliance or rate negotiation opportunities
Accessing transportation documentation for service confirmation, financial settlement and claims management
Executing end-to-end freight transportation from initial order to load tendering and successful delivery
Measuring carrier performance with scorecard-based tracking
Improving rate negotiations based on carrier performance metrics
One platform, every mode
How technology supports transportation management
A modern Transportation Management System (TMS) streamlines transportation management activities across the supply chain. Core capabilities include:
Holistic, multimodal transportation management that supports execution across all modes and protects data with information security
Integrated freight claims management and reverse logistics in a single environment with universally accepted claims forms and electronic document management
Intelligent automation for dynamic route optimization, including street-level rerouting and driver-customer communications when changes occur