Pat Martin, a long-time executive with less-than-truckload carrier Estes Express Lines, remembers a not-so-distant past when the spring meant trucks full of barbeque grills descending on Home Depot locations nationwide and delivering pallets of grills to the stores. Consumers would then walk the aisles, pick their favorite, cart the box out to their car or truck, and take it home.
“Today a lot of that is changing,” says Martin, who is Estes’ corporate vice president of sales. “We still [move] a ton of grills the old way, but now, with e-commerce, it’s also drop-ship from vendors. There is more LTL and more final mile. It’s trickier and requires a lot more work—and a lot more visibility and connectivity.”
Shippers want to know now exactly where that shipment is, when it’s being delivered, and, “if there is a hiccup, when and how that’s going to be fixed,” he says, adding that they want tech solutions that are agile, can quickly spin up and go live, are easy to use, and can link up quickly with new apps as supply chain technology evolves.
“They want to be able to plan better, move faster, and make better decisions with data that is fresh and accurate today—not from two or three days or a week ago,” he notes. “And that’s putting pressure on carriers and their technology platforms to step up and deliver far more than just the shipment.”
It’s a confluence of market dynamics and shipper demands that is changing the landscape of what a transportation management system (TMS) is; how it’s bought, built, and deployed; how it operates; and how it evolves. The strategic TMS decisions shippers and carriers make today are based on a myriad of market factors and modal and information needs. “One size fits all/does all” no longer works.
And in today’s venture-capital–fueled market, new players taking innovative approaches and delivering effective new apps and tools are forcing traditional platforms to adapt as never before. They have to be able to collaborate and connect with emerging new apps and tools, and compete in a transportation technology landscape ripe for innovation—and disruption.
In this market, “vendors are feeling the pressure to become more nimble in how they evolve, how they look at architecture,” observes Tom Curee, senior vice president of strategy and innovation for third-party logistics service provider (3PL) Kingsgate Logistics, whose brokerage operations manage over $100 million in freight spend annually.
In his view, a 3PL has to be equally nimble, agile, and strategic, able to quickly and seamlessly incorporate new tools as they reach the market and prove their value. His company has taken a blended approach to the TMS challenge, building out for its shippers a proprietary TMS for clients to tender their freight and Kingsgate to manage it.
On the carrier side, Curee’s strategy was to go outside and collaborate with multiple providers, stitching them together for carrier planning and execution. Kingsgate has partnered with three best-of-breed tech players to deploy a carrier portal providing planning and execution tools, rate benchmarking, and lane capacity analytics, respectively, using Trucker Tools’ Smart Capacity offering, DAT’s Ratecast product, and FreightWaves’ Sonar service. Application programming interfaces (APIs) then link the shipper platform and carrier portal so his team has a total view of the process.
Curee says the platform lets the carrier automate the process of matching loads to available trucks, plan out a week or more’s worth of multiple loads in preferred lanes, and use one-click booking, automated tracking, and digital document tendering. It also helps his team and his carriers identify and resolve capacity issues, reward Kingsgate’s best carriers with quality loads, and ensure it’s securing the most accurate, real-time market pricing. Importantly, Kingsgate also has kept in place traditional phone and email communications to support managing more complex or challenging loads—and keeping that personal touch between trucker and broker intact where needed.
Recognizing this trend, many TMS developers are building out “more robust API engines, allowing users to bring more tools into their TMS, not just what was built by the vendor,” Curee notes. He sees this as a fundamental shift—and a positive for the industry—that is driving wider and faster adoption of new technologies, particularly in specific areas like visibility, freight matching, and optimization.
Another evolution has been the increasing affordability of TMS platforms, how they are coming into the market, and the channels they are using to engage customers and accelerate growth. “In the last few years, a TMS has become affordable for every shipper,” notes Estes’ Martin. He cites as examples cloud-based TMS offerings from providers like Kuebix and My Carrier. “You can get up and running very quickly, in some cases 10 minutes. And it’s free to the shipper. The carrier is paying for it.”
For Estes, the platforms provide another digital channel to engage the customer that helps reduce cost of service and is more efficient, shipper-responsive, and cost-predictable. The TMS provider earns a transaction fee from the carrier based on how many shipments are booked and moving through the system. “These fully built APIs let you digitize many activities, like tendering, creating bills of lading, and tracking electronically,” Martin notes.
He says Kuebix, for example, has gone out to all the major LTL (less-than-truckload) carriers and built common APIs for dispatching, imaging, tendering bills of lading, and tracking. To complement these platforms, Estes also is investing in strategic technology upgrades of its own. It recently launched a new tracking API for shippers and is working on a pickup API.
“We’re moving to more of a ‘push’ environment, giving them the latest status as soon as available,” says Martin, noting that this includes updated live delivery ETAs and notifications that tell the shipper how many stops away the truck is from delivery. “We are doing all we can to give that customer a 360-degree view of the shipment,” he emphasizes.
Bart De Muynck, vice president, transportation technology research at Gartner, notes the enormous impact e-commerce has had on the evolution of the TMS. That’s because “virtually every industry now has e-commerce shipments, whereas before it was mainly retailers.”
TMS platforms, De Muynck says, were initially created to solve for the larger first- and middle-mile movements, primarily with full-truckload and LTL freight. And while that is still an important segment, solutions are expanding to cover international and last mile as well as the exponential growth in parcel shipping.
He identifies three distinct market needs: last-mile delivery solutions, for shippers with complex last-mile requirements covering a multitude of delivery options; multicarrier parcel management, for shippers with high reliance on parcel shipping and dealing with the likes of UPS, FedEx, DHL, and regional parcel carriers; and vehicle-routing solutions, for shippers mainly using private fleets or contractors to deliver their e-commerce shipments.
“This landscape is de facto complex, and often there is no one way to skin the cat,” De Muynck says. “Most companies therefore might choose a mix of all these solutions.” He cites as well an important distinction: “It is not as much [about] functions or tools, but rather being more user-friendly, intuitive, easier and faster to implement, and easier to support,” he says, adding that TMS platforms need to serve as hubs that connect “networks of carriers, visibility partners, digital freight [marketplaces], and others.”
What is the No. 1 problem a TMS has to solve for today? “Visibility across the supply chain—all modes, all players. Integration, real-time data access, and system availability,” says Stephanie Silvestre, senior vice president of supply chain for Southern Glazer’s Wine & Spirits, a family-owned company and the nation’s largest distributor of beverage alcohol.
“There is definitely a need for TMS providers to become [more of] a neutral, all-comers connectivity hub,” she adds. Silvestre manages global supply chain operations that are multimodal, and roughly 50/50 domestic and international. The company is the 57th largest importer in the U.S.
She also cites the challenge of integrating service providers, shippers, and suppliers—and their data—into TMS platforms. “One of our biggest holdups is we don’t have all the information coming into our TMS from them, so the TMS can’t optimize and do what it was designed to do,” she explains. “Sometimes, TMS platforms can make that integration very cumbersome … it needs to be more Google-like.”
Another challenge is the sheer volume of data available and deciding what is “must have” versus “nice to have.” “We have to pick the 10 or 15 data points that really matter,” she emphasizes. “You can’t show up at [the carrier’s] doorstep and ask for 100 things; you will never get them. Ask for what they realistically can provide and what you need; then set up measures to hold them to it.”
She agrees that the world has changed with respect to the demands and expectations of e-commerce, how sensitive supply chains are to breakdowns, and how that impacts supporting technology—and the economy. It’s also brought to the forefront a fundamental question every company has to ask: Is managing freight a core competency of my company? “You have to figure out what you are, what your real strengths are before you answer that question. I see a lot of companies struggle with that,” she’s observes.
It really comes down to what is the vision for your company, Silvestre says. For Southern Glazer’s, the answer was to outsource its needs for TMS technology, which led it to expand an existing relationship with Ryder.
Managing supply chains with multiple product locations, carriers and modes, and ship-to locations is challenging in itself, but some in the technology world are making it more complex than it needs to be, says Satish Jindel, founder and chief executive officer of ShipMatrix, which provides freight data analytics and management services.
Particularly when it comes to parcel, Jindel, who was on the founding management team of Roadway Package System, which today is FedEx Ground, believes some providers are misleading their clients by “telling them we can optimize your costs by picking the right carrier for every package and trying to play the carrier rate game package by package. That’s insane,” he says.
“That in my mind is completely irrelevant and unproductive, and can create difficulties for the shipper.” Parcel transit times don’t change every day for every package, he notes. The focus should be on meeting volume criteria with a carrier—which ensures the shipper doesn’t miss out on discounts or rebates.
At the end of the day, Jindel says, shippers will get the best deal and service performance by making and keeping volume commitments to carriers. Truck lines as well have to live up to their shipper promises of capacity at a predictable cost—regardless of the market.
“That leads to partnerships where both have skin in the game, and both benefit—the carrier with predictable, plannable volumes, and the shipper with reliable capacity, rates, and service,” Jindel says.