TMS providers add tools for a stormy market

Logistics professionals are facing stormy economic conditions as they head into the winter holiday peak season. Between waves of Covid pandemic variants, a tight labor market, rising inflation, and climbing interest rates, the second half of 2022 promises unpredictable market conditions for those involved in moving freight around the country.

Those variables could make it hard to keep supply chains running smoothly, but companies may find answers in a key piece of technology that serves as the hub of the transport sector—transportation management systems (TMS).

In contrast to other logistics software applications—which tend to be narrowly focused on a specific function, like warehouse or yard operations—the TMS sits at the crossroads where truckers, brokers, and shippers meet. By acting as a marketplace for those three different interests, a TMS can help each party negotiate for what it needs to keep pickups and deliveries happening on time.

To pull that off, the TMS sector has been evolving at high speed in recent years, adding new technologies and capabilities that users couldn’t have predicted just five years ago. That evolution has created a market with a vast array of options tailored to different types of users. “TMS are like shirts, there’s one for every use case,” says Tim Higham, CEO at Florida software vendor AscendTMS. “For example, if you do drayage, maybe you need a different one than if you do LTL or last-mile. The industry has lots of niches and specialties, and is trying to automate as much as possible. But there’s enough room in this business for every company offering a TMS.”

TAILORED TO FIT

That’s starting to change. The latest TMS platforms are designed with the flexibility to allow different types of customers to use the same software—a nod to the diverse array of companies operating in the transportation sector. For example, while the trucking industry includes a handful of large fleets running hundreds of tractor-trailers each, the great majority have just a few vehicles. Today, more than 90% of U.S. motor carriers operate six or fewer trucks, according to the trade group the American Trucking Associations (ATA).

To accommodate the needs of both types of users, software vendors like Ascend offer systems that allow users to turn certain software features on and off. For example, a freight broker that owns no trucks would not activate the software’s vehicle asset management screen, while a pure freight carrier that doesn’t broker out loads would not switch on the brokerage screen.

In the turbulent market of 2022, that brokerage capability has become more popular. “Sixty-seven percent of our carriers have their brokerage features turned on, and that’s a new high for us,” Higham says. The reasons vary, he says. Some users are choosing that strategy because strong freight demand is producing so many loads that they can’t handle the business with their own trucks alone, while others could be suffering from the lingering driver shortage and are unable to find anyone to operate the vehicles they do have.

“A year ago, I would have said they’re getting more loads from customers but don’t want to expand their assets because they can’t find drivers. But now, fuel is so expensive that it can be easy to lose a thousand dollars per week while operating a truck, but you still want to keep those orders,” Higham says. Either way, today’s more flexible TMS software is allowing transportation providers to cope with market changes.

MAKING CONNECTIONS

Another way that transportation management systems are evolving to meet customer needs is by integrating with suppliers of related products and services. “The typical user lives in the TMS; it’s the first thing he opens at 8:00 a.m. If it’s a small company, he’s using it evenings and weekends, too,” Higham says. “And he wants to use it without opening other windows and cutting and pasting information.”

To support that type of intense use, Ascend has built integrations with about 70 companies that provide everything from liability insurance to driver payroll services. Many other TMS vendors have added connections to digital freight brokers (DFBs) to generate loads.

Such integrations are key to helping users eliminate inefficiencies, whether they run a fleet of 10 trucks or 100, says Dominic Leo, vice president of growth at Alvys, a California-based company that offers a cloud-based TMS. Operating a trucking business encompasses a huge range of tasks, from overseeing driver compliance, insurance, and vehicle maintenance to supporting track and trace, digital invoicing, and accounts-payable capabilities, he says. 

To help fleet managers do all that within a single software platform, Alvys, like Ascend, has built integrations with a range of service providers. In Alvys’ case, those providers include businesses specializing in electronic payments (e-checks), telematics, accounting, and fuel cards as well as the factoring companies that enable speedy payments between business partners.

The best TMS platforms pull all those functions together in a simple, user-friendly interface, Leo adds. “You need an intuitive interface that allows companies to scale and supports a clear process from load creation through payment, so the TMS is not just a glorified spreadsheet.” 

A NOD TO THE LITTLE GUYS

Those new capabilities are particularly important for users in a dynamic economy, where spot rates and contract rates fluctuate widely and bargaining leverage swings quickly between carriers and shippers. Large companies often have the resources to ride out the storm, but smaller firms may struggle to stay profitable, says Leo.

The need to support small customers has not gone unnoticed by TMS vendors. “2022 is fraught with uncertainty,” says Mark Carroll, executive vice president at Transportation Insight Holding Co. (TI), a combination of the digital freight solutions specialists Transportation Insight and Nolan Transportation Group (NTG). “The freight market has always been cyclical, and now you have inflation, a hangover from Covid, and market congestion. That makes it hard to forecast and plan for customer demand. These are uncertain times within the trucking market, so we’re focusing on how not to leave small and medium-sized businesses (SMBs) orphaned.” To serve those smaller shippers and carriers, he says, TI is developing “lightweight” TMS products.

The logistics technology industry has focused for years on enterprise-level users with deeper pockets, but a TMS can benefit users of any size and help them make their operations more efficient, Carroll explains. For example, TI’s platform offers improved visibility over loads in transit, paired with exception management tools that direct users’ attention only to the problems they need to solve, such as a truck that is behind schedule.

All this comes amid a broad industry shift toward cloud-based software, which relieves users of the need to manage their own computer servers and hire IT experts to maintain them. Instead, a business needs only an internet connection.

As one measure of the growing popularity of the cloud-based delivery model, TMS developer MercuryGate International Inc. in July said it had seen 40% growth in its cloud business, bringing the number of software-as-a-service (SaaS) deployments to 2 million since the start of 2021. “Our customers tell us they need a TMS that acquires and manages data better, faster, and easier to deliver actionable insight and move freight across their entire supply chain network,” MercuryGate President and CEO Joe Juliano said in a release. “That means a modern cloud-based capability that makes connections easy, accessible, and global among their customer, vendor, and supplier network. Costs are up, and our customers need to break down silos in the supply chain, improve visibility, … and reduce cost.”

Players and partners across the logistics and transportation arena are being stressed by changes in the post-pandemic market. But thanks to a rapid response from software providers, TMS applications are rising to the challenge with improved capabilities.