What Is a Transport Management System? The Shipper’s Essential Guide

Did you know that that the global transport management system (TMS) market is expected to have a compound annual growth rate (CAGR) of 6.92% from now until the end of 2025?

But, what is a transport management system in the first place?

Well, TMSes have gained momentum as facilitators of global commerce and logistics during the last decade. If you’re new to the wide world of logistics software and how a warehouse management system can elevate your performance ratings, no worries. You’ve come to the right place.

Keep on reading for our full breakdown of everything you need to know about transport management systems.

What Is a Transport Management System?

Let’s start with the basics.

A transportation management system (TMS) is specialized software. One that assists in the planning, executing, and optimizing goods transportation. In a TMS, users do three primary tasks. Find and compare carrier rates (prices) and services to send a customer’s order, book the cargo, and monitor its progress to delivery.

TMSs enhance shipping efficiency. Also, save costs, obtain real-time supply chain insight, and guarantee customer satisfaction. Shippers and carriers mainly use TMS software.

TMS software is used by manufacturers. And, distributors, e-commerce companies, wholesalers, retailers, and third-party logistics providers (3PLs).

A TMS is one of the essential technologies in supply chain management (SCM). Which includes both supply chain execution (SCE) and supply chain planning (SCP). TMSs are available as stand-alone software. Or, modules inside enterprise resource planning (ERP) and supply chain management (SCM) software packages.

While some TMSes are focused on a single mode of transportation, most systems allow for multimodal and intermodal travel.

A single carrier utilizes at least two means of transportation. Like truck, rail, air, or sea. And, it’s legally responsible for fulfilling the contract’s requirements. Even if it hires subcontractors.

Shipments that need more than one carrier and contract are referred to as intermodal transportation. Shippers have greater control over carriers. As well as pricing, and modes of transportation with intermodal. But, they are also more accountable for managing the process.

Understanding How Transportation Management Systems Work

A TMS is essentially a database of precise carrier information. But, it is also a transactional and communication system. One that allows users to plan, execute, and monitor shipments.

To accomplish all of that, it has to be well-integrated with carrier systems and data sources. Or, it needs to download carrier data. It should also make it easier to enter client orders that indicate what should be delivered.

Orders are often received automatically from TMS-integrated ERP or order management systems.

A TMS may be used with a warehouse management system (WMS). This is to improve the coordination of activities such as palletization and labor scheduling.

There’s also yard management load building, and cross-docking. Those occur at the interface between warehouses and freight carriers.

ERP, WMS, and TMS are the three major SCM systems. And, they all play significant but mainly separate roles in order processing. The integration allows the three to exchange specific data. And, standard documents are required to provide the appropriate goods to consumers as quickly as feasible.

The Differences Between a TMS and a WMS

A warehouse management system (WMS) is another popular digital instrument. It’s a software application that helps shippers monitor inventory.

Also, coordinate warehouse and distribution center operations. And, manage order fulfillment is a Warehouse Management System (WMS).

A WMS is responsible for the control of freight while it is on-site at the shipper’s facility. While a TMS is responsible for the transportation of freight to and from the shipper’s facility.

Some businesses use a WMS to manage their transportation. Others use a TMS to manage their warehouse, although these are typically separate systems.

A TMS and a WMS are often linked with an organization’s Enterprise Resource Planning system (ERP). ERP stands for enterprise resource planning. And, it is a software solution that enables shippers to handle all of their day-to-day company activities from a single platform.

If you’re looking for a comprehensive TMS, then you’ll want to check out CartonCloud.

Shippers may monitor every element of their supply chain. They can also create a complete operational plan. And, make measurable changes to their company using this software connection (typically done via API access).

The Benefits of TMS

Let’s take a deeper look at some of the TMS’s most essential features and advantages.

We’ll explore every feature with its own unique benefit.

Load Planning

Shippers may quickly discover prices, plan routes, and choose carriers using a TMS.

Shippers save time and money not just on the front end. But, also throughout the shipping process, thanks to the sophisticated algorithms used by TMSs to optimize each cargo.

Load Execution

Based on the shipper’s routing guidance, a TMS automates the freight tendering process. By digitally tendering loads to the suitable carrier at the specified rate.

A TMS filters through a large amount of data and expedites freight booking and tendering. Rather than shippers manually evaluating carrier capacity, rate acceptance, and performance before dispatching carriers.

Freight Tracking

A TMS collects and consolidates precise tracking information. And, it tracks shipments throughout their entire lifetime, from warehouse to ultimate destination.

Shippers may not only receive real-time information on their freight. But, they can also monitor and evaluate carrier performance.

Actionable and Insightful Reporting

A TMS provides detailed reporting on a shipper’s network and facilities and performance data to aid future planning.

Shippers may create continuous improvement plans to minimize unnecessary costs. As well as enhanced levels of service (i.e., on-time pickup and delivery). They can also evaluate total cost reductions after monitoring and evaluating the comprehensive data given by TMS reporting.

Simplified Payment

Companies may use a TMS to audit each carrier invoice and pay carriers more simply automatically.

When it comes to money, a TMS makes the payment process easier and faster for both shippers and carriers by giving them access to freight audits, invoices, payments, and cost performance statistics.

Ready to Get the Right Platform for Your Logistics Management?

We know how overwhelming it can be to balance your tight budget with your logistical needs. Hopefully, our guide has shed some light on the different factors you need to know about TMS.

Now, you understand what is a transport management system so that you can make a well-educated choice. And, if you’ve enjoyed our article, then you’ll love checking out our additional tips and tricks. All of them will be available in our business section.