The Benefits of an Optimized TMS for Small to Mid-Sized Carriers

Higher freight costs, due to the perfect storm of port congestion, truck driver shortage, capacity shortage, and COVID, are here to stay. Shippers are passing these increased costs onto the consumer. To avoid backlash from increased freight costs and a hit on margins, companies are looking at ways to improve efficiencies within their transportation operations to keep costs down. Shippers are reaching out to their carriers to help them reduce costs.

Companies live to make their customers happy. Passing on higher freight rates is something that executives don't necessarily want to do, nor is telling their customers that there’s no capacity to carry their load and they can't meet their delivery requirements. But this is the reality of today's market.

Shippers look to carriers to reduce their freight costs and meet service delivery dates. Bigger carriers utilize technology to find the lowest freight rates and the right lanes. Yet small to mid-sized carriers make up 97% of the truckload market. These smaller carriers can’t afford all the technologies that bigger carriers use, such as transportation management systems (TMS).

Nevertheless, new solutions are appearing in the market with all the functionality of an enterprise TMS, at a price that smaller carriers can afford. Using tools like this helps them optimize their transportation operations for greater efficiencies. Unlike older TMS software, which aims to ensure freight optimization while relying on older processes and sometimes outdated or delayed information, an optimized TMS is designed to lower transportation costs by as much a 30%-40%, improve logistics efficiencies and productivity, and provide real-time visibility that enables proactive actions and responses.

By automating processes that involve paperwork and manual tasks such as customer invoicing, driver settlement and document-management offloads, carriers can focus on growing their business. They can conduct their day-to-day tasks in less time, leaving them hours in the day to focus on profit-making opportunities.

An optimized TMS is designed and operated in the cloud to automate decision-making. By employing real-time data that supports proactive, real-time decisions, smart load selection, trip planning, driver selection and tour planning, optimized TMS users can:

• Gain efficiencies and logistics operations productivity. Some of these new TMS packages employ engines that help to create optimized transportation plans, schedules and routes, and select the driver with the right skills for the job. An optimized TMS also helps trucking firms choose the most profitable loads and shows the best loads for drivers, taking into account their hours of service and personal preferences.
• Improve customer service and satisfaction. Many new optimized TMS applications feature digital load-tracking updates on trucks and load locations that are shareable with customers. This data sharing is designed to reduce expenses and disruptions for customers, who can better manage their resources and identify inefficiencies in their operations. Optimization intelligence also lets users separately evaluate the impact of decisions on profit and service quality, to offer the best service to customers.
• Reduce costs and increase profits. With more efficient tools in hand, users can do more with less, ensuring that resources and assets are used to their maximum potential.

All of these activities level the playing field for smaller carriers to better compete with the big players.

Outlook:

The rise in freight costs is here to stay for the long term. Today, many small- and medium-sized trucking firms work in a competitive and increasingly complex freight environment. To keep costs down, carriers must do everything they can to automate processes, increase efficiencies and improve productivity for their shipper clients. Carriers must deploy a responsive, cloud-based optimized TMS to avoid some of the everyday supply chain disruptions that can frustrate customers and create havoc for their shipping partners.

Ravi Ahuja is founder and CEO of Axele.