Take a moment to think about what a transportation management solutions company does. Transportation management companies oversee through the use of a TMS the tendering of shipments, invoicing, negotiations with carriers, and much more. Their roles are almost immune to the changing expectations of the industry. By definition, transportation management companies are third parties, so they must roll with the proverbial punches and give their clients, shippers like your company, the ability to deliver a better product at a faster pace and without any delay or added cost. Let’s take a closer look at some of the top ways a transportation management company increases available freight capacity to benefit shippers and supply chain partners.
Why Are Shippers Struggling to Secure Available Capacity?
Shippers continue to struggle in securing available capacity across all modes. While freight consolidation and deconsolidation programs have helped shippers tap into the value of additional modes beyond their mode of preference, capacity remains tight. Meanwhile, expectations for increased demand in e-commerce will only push the boundaries of the system further from its current state. Besides, other shippers expanded their private fleets to handle increased demand, but guess what happened?
Demand continued to grow. Increasing the number of trucks on the road was great for last year, but it still will not meet the needs for this year. Thus shippers that did invest in their private fleets will face the same decision, partner with a transportation management company, or continue investing in buying more trucks. It is also important to note that while the crunch of today may not be as severe as 2018, it still represents a need to increase capacity further in the future.
The Essential Guide to Third Party Logistics
Partnering with a Transportation Management Company Expands Available Vendor Selections
Establishing a partnership with a third-party, such as a transportation management company that offers both services and technology, is nothing new. In 2013, Bridget McCrea of Logistics Management noted that the increased demand for TMS platforms was growing at double-digit rates. The rationale is simple. Implementing TMS lowered freight rates.
Meanwhile, implementation also offered significant advantages, such as improvements and efficiencies of order tendering and more. Now, shippers in need of more capacity could turn to their TMS to secure more capacity, but a problem has started to form. With the proliferation of TMS platforms, carriers grew wise to the fact that they were losing money.
Since shippers were no longer working directly with carriers, carriers were effectively stuck with paying the middleman, and that was unacceptable. Over the last two years, carriers have increased their rates by at least 4% annually, and 2019 is shaping up to set records for growth in e-commerce once again. At the current pace, a much stronger spike in carrier rates will arise within the next three years. This looming fact will force many shippers to reevaluate their existing TMS partnerships. They face the prospect of throwing out older, outdated systems. They will look to take advantage of robust platforms that add more than just a simple TMS, such as value-added services, including freight invoice auditing, after-hours scheduling, inbound logistics management, and more.
Additional Benefits of a Transportation Management Company Partnership in Securing and Managing Freight Capacity.
The benefits of working with a transportation management company are simple and include:
- Access to more capacity.
- Increased vendor base.
- Improved recordkeeping process—and, therefore, better compliance with regulations.
- Less hassle than handling operations manually.
- Lower freight spend.
- Easily tender shipments, reducing errors.
- Empower you with analytics to improve.
- Make your freight more attractive.
- Better service and rates through corporate/volume buying power of third parties.
Now, we could sit here and list at least 5,000 benefits, but those are the most significant and most essential ways partnerships build competitive advantage and enable business continuity. Yet, it is still imperative for shippers to understand how to recognize a successful, ready-to-partner logistics partner. e.
Expand Your Capabilities by Choosing the Right Partner Now
Making a tactical shift in freight management can be hard. Instead of trying to assess and review software vendors based on a few recommendations or even random reviews, look for those that have taken the initiative. Look for those that put information into the public sphere and seek to educate possible clients—such as the use of a blog that reveals what may happen and how to avoid the pitfalls. Of course, it’s also best to look for an easy-to-integrate, end-to-end TMS-included partnership that will continue to help your business grow for years to com