What is a transportation management system (TMS)?

Overview of the transportation management system

A transportation management system is a software program designed to assist businesses in managing the logistics involved in moving tangible items by land, air, sea, or a combination of these modes. TMS logistics software, which is a component of the larger supply chain management system, assists in ensuring that goods are delivered on time by tracking freight on local and international routes, optimizing loads and delivery routes, and automating time-consuming tasks like freight billing and trade compliance documentation. Both organizations and end users can cut expenses with a TMS system.

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The equal playing field has been achieved with the introduction of cloud-based transportation management system software. TMS software was formerly exclusive to larger organizations, but smaller businesses are now using it as well since they require an integrated digital system to be competitive in today’s market.

The e-commerce industry’s expansion together with cloud-based technologies are driving up demand for TMS software. According to Grand View Research, the market for these systems is anticipated to grow at a compound annual growth rate (CAGR) of 16.2% from 2019 to 2025.

A transportation management system’s essential components

These days, what is a TMS system? Features of contemporary TMS software may significantly decrease complexity and boost productivity. Important characteristics consist of:

Transportation planning and execution: Use automated carrier rate comparison and booking to expedite freight transportation and procurement. Select the shipping method (air, sea, truck, or rail freight) and determine the most cost-effective path to take the items. Optimize loading and track and trace in real-time to keep an eye on developments.

Streamline the quote-to-contract process for freight management. For both multimodal and intermodal transportation, effectively handle freight costing, order management, rate calculation, and freight billing and payment.

Analytics, reporting, and dashboards for TMS: Estimate the need for transportation, evaluate costs and profitability, and act fast to deal with unanticipated events. You have the ability to make prompt, data-driven choices when you have real-time visibility into every facet of the transportation process.

A transportation management system’s advantages

A contemporary transportation management system has several advantages for every business that transports products.

1. Savings on costs

In many crucial areas, a TMS system provides considerable cost savings for the business as well as the end user.

It lowers administrative expenses first. Finding the best alternative for carrier rate comparison is made simple by TMS software. Additionally, it simplifies the booking process, substituting effective digital booking for laborious phone calls. For increased productivity and fewer mistakes, the program automates, combines, and simplifies tasks including contract, payment, and order scheduling.

TMS also reduces the cost of shipping. The program helps find the most economical options—some of which could be overlooked in a human method—by automating the rating comparison process.

TMS also reduces expenses in the area of load optimization. Using rule-based optimization while building pallets allows businesses to increase productivity and expand.

2. Instantaneous visibility

Increased visibility is a crucial factor in a complicated logistical process, and TMS software provides this.

You may monitor the progress of products sent by air, sea, or land using real-time track and trace. Analyze your operations’ effectiveness and monitor KPIs using your TMS dashboard. And increase route efficiency: a contemporary TMS is capable of producing dynamically optimum routing ideas that find less crowded or shorter routes and instantly adjust to unanticipated roadblocks.

3. Enhanced contentment among clients

Meeting client promises is a must for any company operating in the current global economy.

Owing to the “Amazon Effect,” timely delivery is now more crucial than ever. Nowadays, customers everywhere anticipate same-day delivery or, at the absolute least, tight adherence to a scheduled delivery time. TMS software offers the visibility required to spot and resolve problems that might cause delays, irritated customers, and a decline in customer loyalty.

TMS software may also enhance the end-user experience by streamlining the invoicing and payment process and facilitating simple tracking of delivery status. Consumers frequently gain from lower prices that the company has negotiated.

How are TMS systems operated?

A TMS system accesses, saves, and compares comprehensive carrier information when it is connected to carrier systems. It also has features that let companies monitor the status of deliveries and optimize routes and types of transportation.

A TMS system integrates with other software to provide a more comprehensive supply chain management system; the majority of these systems also have ERP and warehouse management system (WMS) integration. The software systems listed below each have a distinct purpose; when combined, they provide a digital tripod that facilitates the delivery of the whole process.

Order management, invoicing, and accounting are all handled by enterprise resource planning, or ERP.

The warehouse management system (WMS) facilitates the administration of various warehouse operations, such as inventory tracking, palletization, shipping and receiving, and order fulfillment.

TMS is in charge of carrier and route optimization as well as freight management.

TMS’s future

Customers are becoming more and more demanding when it comes to timely delivery, two-day deliveries, and even same-day deliveries with real-time information given during the shipment process. Global trade laws that are always changing are also pushing supply chains to adapt, frequently by making investments in transportation management systems.

For companies to receive more precise information and for customers to receive faster replies, transportation management systems need to be more feature-rich and powerful. TMSs may now be more intelligent because to machine learning, which makes for more precise forecasts and better suggestions.

In order to increase visibility and provide better customer service, businesses might decide to integrate developing technology with their global trade management and transportation systems. Among the cutting-edge technologies that are now in use are:

Internet of Things fleet tracking

Real-time fleet monitoring, including in-transit visibility of driving conditions, routes, and assets, is becoming routine thanks to Internet of things (IoT) devices and sensors. In addition to reducing delays and raising driver safety, businesses may save their fuel and maintenance expenses.

Electronic assistants

Often referred to as chatbots, digital assistants provide prompt, conversational answers to shipping-related queries, increasing customer satisfaction.

Machine learning and adaptive intelligence

Transportation management systems are able to plan capacity, identify at-risk shipments (such as items that are about to expire and time- or temperature-sensitive), anticipate transit times more precisely, and much more by applying machine learning to previous data and patterns. Your TMS will be able to offer more precise and knowledgeable recommendations, such different delivery routes at peak traffic times, with enhanced artificial intelligence.


Blockchain technology is already being used to create intricate interfaces between carriers, clients, and shippers. While maintaining accurate and secure information, applications like intelligent track and trace help to promote transparency and traceability throughout your supply chain.

Cold chain supervision

Cold chain management is another blockchain-based solution that can be included into transportation management systems. This is helpful in situations where varied temperatures must be maintained at different supply chain checkpoints. For example, it may be necessary to store perishable or temperature-sensitive goods and materials at a low temperature in the truck and a little higher temperature on shop shelves. Through cold chain management, the temperature can be tracked throughout the supply chain, and the company and the nation of origin’s regulators can get real-time data on the temperature.