The liberalization of freight markets has proven that operators can lower costs effectively by handling shipments independently. While this shift began long ago, the past decades have seen a rapid and often turbulent evolution in transportation methods. Companies continue to refine their processes and systems to manage freight operations better and meet growing customer demands.
At the same time, digitalization is reshaping the logistics landscape. According to the UWaN survey, 27% of respondents identified digitizing, tracking, and managing assets at the edge as one of their top three funded supply chain initiatives for 2023. This trend highlights the increasing reliance on technology-driven solutions to enhance efficiency, reduce costs, and improve visibility in freight management.
Along with the independence above, very high competition came to light. It did not matter if it was about railway force operators or road freight forwarders. All companies involved in transport wanted and still want to unlock efficiency and increase gains by improving their cost competitiveness. This should be the way they can then lower prices and take share from others.
Another factor that allowed more efficient transport was the harmonization of trucking standards. Although progress in this area differed in various regions of the world, we may say that today, global transportation has aligned at some point. This step truly enabled the development of transport management systems that could communicate between various stakeholders around the world their provisions and regulations more effectively.
Our article gives you bright insights into what TMS solutions will be like in 2025. You get from us a comprehensive guideline that will give you more understanding of how to really work with the transportation management system. Along with that, you'll learn a couple more things that may change the way you currently conduct your transportation operations today.
What is TMS: implications for operational efficiency
A transportation management system (TMS) is a software platform designed to help companies manage and optimize the movement of goods.
One of the factors that companies started with developing a TMS system was the need to become more competitive and win more market share. Since 2023, the transportation management system (TMS) in the USA market has been dominated by on-premise solutions (56.85%) instead of using the TMS cloud. This is because companies focus solely on keeping all data in-house. Significant growth is on the path of optimizing logistics and reducing costs.
From 2024 to 2030, the transportation management system market is projected to grow at a 17.4% CAGR. So, there is no doubt that integrating TMS with warehouse systems might be crucial for distribution centers. Having this in mind, we can share shortly what TMS system modules drive business efficiency:
Transportation planning and optimization
This module allows companies to optimize every aspect of transportation planning. Route optimization allows for the most efficient routes. Moreover, load consolidation maximizes vehicle capacity. This module also allows for selecting the best transportation method based on cost and speed.
McKinsey says that "even in a well-oiled logistics chain, something can go wrong." Its analysis has found that about 19% of logistics costs, including transportation, could stem from these inefficient interactions. This amounts to up to $95 billion in losses a year in the United States economy alone.
Shipment execution and tracking
This module focuses on the practical execution of shipments. So, we move from selecting the right carrier to precise scheduling and real-time tracking. Carrier selection ensures optimal service levels, among other things, while shipment scheduling optimizes resource allocation and real-time tracking.
McKinsey highlights that close fulfillment and solid tracking of shipments are of the utmost importance in maximizing delivery value. The global e-commerce landscape was experiencing explosive growth in 2020, with 9.3 billion cross-border orders, 60% of which were placed via continents. International deliveries have since rebounded and now exceed domestic growth by a factor of two, indicating a powerful shift in global trade. This is another factor that makes this transportation management system module even more important than ever.
Documentation and compliance
This module in the TMS automates the creation of shipping documents. In the short and long term, it ensures accuracy and compliance. These functionalities ensure operational efficiency and provide data-driven decision-making.
In 2022, McKinsey revealed a surprising reliance on traditional paper processes within global trade. Specifically, the bill of lading, a crucial document, must still be physically transferred for approximately 40% of container trade transactions. This seemingly outdated practice carries a significant financial burden, as McKinsey analysis suggests that the bill of lading contributes between 10% and 30% of total trade documentation costs.
While digitizing such documentation may be seen as a routine task, the potential for cost reduction and efficiency gains is significant. Moreover, modern transportation management systems (TMS) are increasingly addressing this area.
Customer service and collaboration
This system module enhances customer satisfaction by providing a single platform for shipment tracking and real-time updates. So, we are talking here about platformization. It also fosters seamless collaboration between all stakeholders, which most likely includes carriers and, for example, customs offices.
McKinsey provided a good example of using a TMS system in eCommerce and omnichannel development. They projected that the total value of omnichannel distribution will continue to grow by 7% every year, from $600 billion in 2019 to $840 billion by 2025.
The challenge for streamlining operations is integration between the transportation management system, WMS, and order management systems, as all operations depend on inventory fulfillment. So, companies using eCommerce platforms to become more competitive should integrate a TMS system as a major part of their strategy.
Transportation management system in the supply chain
Digitization is reshaping the modern supply chain. Industry 4.0 and the need for resilience are forcing companies to redesign their operations and explore digital business models. This is happening not only in transportation but also in manufacturing companies.
They want to adopt new technologies like those in Supply Chain 4.0. Companies are seeing something that can deliver significant improvements. A modern system in Supply Chain 4.0 can provide up to 75% fewer lost sales and inventory, up to 30% lower transportation and warehousing costs, and up to 80% lower administrative costs. It leads to unprecedented efficiency and agility.
TMS solutions in the supply chain can overleap these obstacles:
Revenue and margin pressures. TMS optimizes transportation costs, directly impacting margins. Industry data indicates that transportation management system implementation can reduce freight costs by up to 5-10%. The text states that "transformers" have improved revenues by an average of almost 9% annually.
Rising customer expectations. TMS enables faster and, without a doubt, more reliable deliveries. To meet customer demands, we can give an example of the "Amazon Effect," which has driven expectations for same-day or next-day delivery — something a transportation management system helps facilitate.
Hiring and retention challenges. TMS optimizes routes, reducing driver idle time and improving job satisfaction. The text shows that improvements to the delivery schedule, which a TMS helps with, increased retention by roughly 15%.
Demand variability. TMS provides real-time visibility, allowing for agile adjustments to transportation plans. Transportation management enables efficient rerouting and carrier selection to meet fluctuating demand.
Supply lead times. The transportation management system optimizes carrier selection and routing to mitigate delays. It also provides real-time tracking, offering early warnings of potential disruptions.
TMS system examples: case study experience
In our over 10-year journey, we can highlight four strategic IT implementations driving operational transformation today. The examples below demonstrate how we targeted technology and aimed to move beyond legacy systems to improve efficiency and transparency.
In many cases, there is a mirroring of 5-15% service level uptime and 20-40% inventory gains seen in transformed logistics supply chains — achieved only by implementing single TMS modules. Here are some examples:
AI-powered eProcurement solution
We implemented an eProcurement solution for Its Astra, created to streamline the acquisition process for schools and universities. This system features an eCommerce platform. It digitalized document flow and order management, keeping a transparent supply chain tracking. It significantly simplifies the procurement of essential materials.
Parking management system
An AI-powered parking management system for 6sense Innovations optimizes parking operations through advanced cloud software and license plate recognition. This solution integrates seamlessly with a shipping document management platform, creating a comprehensive ecosystem for efficient parking management and potential integration with broader smart city initiatives.
Blockchain-based document management system
For eTEU company, we developed a blockchain-backed paperless document management system. This system ensures secure and compliant document generation, editing, and exchange. It enhances data security and streamlines operations using immutable, auditable records.
Truck owners' assistance app
We created a comprehensive application and web portal for truck owners. It was created to simplify payment and documentation submission so that truck owners could support cargo pick-up and delivery. This platform provides truckers with the tools needed to manage their operations efficiently.
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Explore moreWhat are the key benefits of transportation management software?
In the low-margin transportation sector, we all know that revenue is king. As transport managers, we mostly move with all efforts reach, though customer satisfaction remains key. A TMS system delivers many benefits and is vital to our business. It enables performance tracking and efficient routing. Gartner projects 5-10% cost savings with TMS, and while they suggest a $15-20 million expenditure threshold, customized solutions exist for smaller firms. The booming TMS market, projected at $1.7 billion, highlights its value for optimizing operations and finances.
Let's take a look at the main benefits of TMS:
Cost savings. A TMS optimizes routes, minimizes empty miles, and enhances load efficiency, translating to significant savings. Reports indicate shippers can achieve a 2-10% reduction in annual freight costs, directly impacting the bottom line. TMS also helps with fleet management, resulting in huge cost savings.
Enhanced operational efficiency. Automation is key. A TMS automates manual tasks like scheduling and dispatching, streamlines communication, and reduces administrative overhead by 15-50%, freeing up valuable resources.
Increased customer satisfaction. Real-time shipment tracking, proactive communication, and improved on-time delivery rates enhance customer satisfaction. A TMS provides the transparency customers expect, building trust and loyalty.
Data-driven decision-making. A TMS delivers valuable insights through analytics and reporting, enabling proactive planning and identifying cost-saving opportunities. Data empowers businesses to make informed decisions and optimize their operations.
Improved compliance and risk management. A TMS strengthens compliance, from regulatory adherence to risk reduction. Features like electronic logging devices (ELDs) and telematics enhance safety and accountability.
Scalability and integrations. As businesses grow, a TMS adapts. It supports expanding operations, accommodates new market demands, and provides the flexibility to respond to unforeseen events. Moreover, integration with a warehouse management system (WMS) also affects TMS scalability. WMS integration provides real-time synchronization of inventory data, order processing status, and location information.
Environmental sustainability. Route optimization, fuel-efficient driving behaviors, and reduced paper waste contribute to a more sustainable transportation industry. A TMS helps businesses minimize their environmental footprint.
Transport management software in 2030: SMBs problem-solving
The transportation and logistics (T&L) industry is a keystone of global trade. It has faced unique challenges in an increasingly volatile economic landscape for years. The current geopolitical situation in Europe plays a role here and will continue to do so for a long time.
Considering a recent resilience study, McKinsey has found that T&L companies delivered a whopping 267% higher cumulative total shareholder return (TRS) compared to their non-resilient counterparts. This means that companies are growing, underscoring resilience's critical importance.
This will show that transport management software (TMS) will be vital in 2030 for SMEs on this path, as it provides tools to optimize operations and ensure sustainable growth. But what challenges are they facing, and where can the transportation management system help them tackle these downturns?
Challenges for SMBs in transportation and logistics and TMS solutions:
1. High driver attrition and workforce management
Challenge. SMBs struggle with high driver turnover, which impacts operational continuity and costs. Traditional methods lack data-driven insights to address root causes.
TMS solution. It integrates data from various sources (let's say, HR, dispatch, and vehicle computers) for comprehensive analysis. It uses advanced analytics to identify driver clusters at risk of attrition. The transportation management system enables targeted initiatives to improve the driver experience and implements more digital workforce management tools, which can unlock 10-20% additional value.
2. Inefficient operational processes and asset management
Challenge. Manual processes, lack of real-time data, and reactive maintenance lead to asset failures, delays, and increased costs.
TMS solution. It automates routine tasks (e.g., report generation scheduling) to improve efficiency. Moreover, it provides real-time data for proactive asset monitoring and predictive maintenance. Based on data analysis, it optimizes maintenance planning, reducing downtime and costs.
3. Supply chain inefficiencies and procurement costs
Challenge. SMBs often lack sophisticated procurement capabilities. Knowing this first hand while working in a supply chain leads to higher costs and limited visibility in the supply chain.
TMS solution. The system integrates eProcurement tools for efficient tendering and vendor management. Personnel can use advanced analytics to understand demand and market dynamics. Ultimately, the transportation management system automates transactional activities across the source-to-pay process.
4. Limited visibility and responsiveness
Challenge. Companies suffer from a lack of end-to-end visibility in operations, which hinders responsiveness to disruptions and customer demands.
TMS solution. The system provides a centralized platform for real-time tracking and monitoring of shipments and assets. Companies can enable seamless communication and collaboration across the supply chain, which facilitates faster decision-making with access to accurate and timely data.
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Explore moreFinale takeaway
The evolving nature of transportation management systems (TMS) reflects a broader digital transformation trend across all industries. As we have demonstrated, TMS solutions aren't reserved for large enterprises but are a necessity for companies of all sizes seeking to optimize operations. Whether simplifying resource procurement in the German education sector or using blockchain for secure shipping documents.
Transportation management systems are delivering tangible results. We can see it through lower costs or even highly improved operational efficiency and power. Mostly, this all is led by data-driven decisions that are driving significant growth in the TMS market. For companies looking to manage today's complex supply chains and build long-term success, implementing a TMS is a strategic necessity.
Contact us today to discover how a customized TMS solution can transform your business and increase your competitive advantage. Don't let uncertainty hinder your growth - leverage the power of TMS to optimize your logistics and transportation operations. Below, you can find our transportation management FAQs.