What Is a TMS For?

Category: Logistics Author: Corentin Mathias Date: 6/17/2024 Reading time: 7 min

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Discover the purpose, features, and ROI of a TMS

A Transport Management System (TMS) is an essential tool in the field of international logistics. With the growing complexity of global supply chains and the recent crises affecting the sector, an increasing number of companies are adopting a TMS alongside other logistics-dedicated software. The TMS market is expected to grow by 14.1% annually through 2025.

Today, the adoption rate in France remains low at 10%, below the European average and far behind the United States.

This detailed guide explores what a TMS is, its key features, the benefits it delivers, its typical users, its integration with other enterprise systems, and the factors that influence its pricing.

What Is a TMS?

A Transport Management System (TMS) is software designed to help companies manage and optimize their transport logistics. It is used to plan, execute, and monitor freight transportation operations efficiently. A TMS centralizes information and facilitates communication between all stakeholders in a logistics chain, from supplier to end customer.

TMS adoption is particularly high among large corporations, where the need to manage complex logistics flows on a global scale makes these systems indispensable.

Since the Covid pandemic, mid-market companies have been massively adopting these technologies, attracted by more accessible solutions and cloud-based pricing models that reduce the initial cost of implementation.

Before going further in this article, the first parameter to consider when understanding a TMS tool is its scope of action. It can cover one or several of the following areas:

• Domestic scope — this type of TMS focuses on road transport
• International scope specific to a single transport mode, such as ocean freight
• International multimodal scope

What Are the Key Features of a TMS?

The features found in most TMS platforms are:

1. Shipment Planning and Booking

This feature allows users to prepare and launch shipments from a single workspace. It often includes tools for:

• Shipment consolidation: Grouping multiple orders into a single shipment to reduce costs.
• Transport mode selection: Choosing the most efficient transport mode (road, ocean, air) based on cost, speed, and reliability.
• Carrier selection: Selecting transport operators, most often through a freight forwarder. This choice can be made via spot quotes, rate requests, or framework agreements signed with carriers.

2. Real-Time Operations Tracking and Invoice Auditing

Real-time tracking is crucial for maintaining visibility over all shipments. This feature includes:

• GPS tracking: Tracking data can be uploaded manually by the transport provider or, on some TMS platforms, automatically retrieved from telematics systems embedded on aircraft, vessels, and trucks.
• Alerts and notifications: Automatic alerts sent in case of delays, route issues, or itinerary changes.
• Dynamic dashboards: Real-time display of KPIs and performance metrics for proactive transport management.
• Storage of operational documents

TMS platforms may also offer an invoice auditing module that compares the actual cost of transport against the quote or rate schedule.

3. Operational and Financial Reporting

Reports generated by a TMS help companies analyze their transport operations and identify improvement opportunities. These reports can range from individual shipment level to product level depending on the software chosen. They cover:

• Cost analysis: Detailed tracking of transport expenditure for each lane, including handling costs, freight charges, pre- and post-carriage, and customs duties.
• Carrier performance: Assessment of carrier performance based on criteria such as on-time delivery, compliance with contractual terms, and service quality.
• Order lifecycle reports: Tracking of lead time for each stage of transport, from collection to delivery.

4. Carbon Emissions Reporting

With growing awareness of environmental impacts, carbon emissions reporting has become an essential TMS feature. It allows companies to:

• Calculate CO2 emissions: Assess emissions generated by each shipment and produce detailed emissions reports for internal and external audits.
• Reduce transport carbon intensity: Identify routes and practices that can be modified to lower environmental impact.

What Benefits Can You Expect from a TMS?

Companies that implement a TMS can expect several significant benefits:

• An overall reduction in transport costs of 3 to 15%, thanks to:
  1. Streamlined carrier benchmarking, which can save 5 to 10% of the transport budget
  2. Implementing an invoice audit or pre-billing solution that can generate savings of around 3% on procurement budgets
  3. Optimizing truck or container load factor, which can save up to 5% of the transport budget
  4. Reducing exceptional charges (storage, detention/demurrage, etc.)
• Improved operational efficiency by eliminating errors and repetitive manual tasks. The estimated time savings are 10 to 15 minutes per shipment for the shipper.
• Supply chain management powered by reliable and comprehensive data
• Increased customer satisfaction: Improved delivery accuracy and better communication with customers.
• Implementation of a CO2 emissions reduction policy for transport, including both reduction levers and accurate calculation of avoided emissions.

Who Are the Users of a TMS?

Typical TMS users include:

• The shipper: who is the TMS administrator and regularly ships goods. Logistics teams, procurement, sales administration, and import/export departments are commonly found on the TMS.
• Third-party logistics providers (3PLs): Logistics service providers that manage transport on behalf of other companies. These are primarily freight forwarders.
• The shipper’s customers and/or suppliers

Integrating a TMS with Other Enterprise Software

A TMS can be integrated with other enterprise systems, primarily ERPs (Enterprise Resource Planning) and WMSs (Warehouse Management Systems), to provide a complete logistics solution. This integration enables better data synchronization between sales, inventory, and logistics. These integrations can be performed manually (by uploading flat files) or automatically through integrations (EDI, API, etc.).

How Is a TMS Priced?

The price of a TMS varies depending on the breadth of features and the volume of shipments managed. Costs increase with the level of customization needed to adapt the system to the company’s specific processes.

Pricing is typically set per transport order or as a flat fee. The overall cost ranges from €10k to €250k per year. The payback period for a TMS is generally less than 2 years and decreases as the volume of goods shipped increases.