Cut down Freight Costs with a Smart TMS Logistics Solution
FEB 12, 2025
Imagine you’ve prepared your budget and accounted for every expense. Yet, freight bills arrive each month and send your projections into disarray. The rising fuel cost, the unpredictability of carrier rates, and the complexities of managing special cargo can feel overwhelming. Do you know that as these expenses mount, they eat away at your profit margins?
How can freight costs impact your business financially?
When fuel prices increase, transportation costs naturally follow, impacting long-distance and local freight shipments. The volatility of fuel prices complicates budgeting and forecasting, making it difficult for you to plan effectively. Poor route optimization leads to unnecessary delays, increased travel time, and higher fuel consumption, all of which inflate freight costs.
Larger shipments generally incur higher costs due to increased fuel and labour requirements. Special types of goods, such as fragile, hazardous, or perishable items, incur higher charges due to the need for careful handling, packaging, and insurance. Even seasonality can drive up freight charges during peak periods when demand for transportation exceeds available capacity.
High freight costs erode profit margins, as businesses must either absorb the costs or pass them onto customers, which can hurt competitiveness. A custom logistics transportation management system can help maintain financial stability in these industries. By effectively managing freight expenses, your business can safeguard its bottom line.
What is a Logistics TMS?
So what is a logistics TMS, after all? A transportation management software for freight cost efficiency is a software solution that facilitates the management of goods transported. No matter how you are shipping, whether by truck, plane, or ship, you can optimize transportation management with logistics TMS from start to finish. It's like the brain of your logistics operation that allows you to track and manage every aspect of getting goods from point A to point B.
By integrating TMS with supply chain management (SCM) systems, you can manage everything from inventory to delivery. With automated freight and trade compliance documentation, TMS reduces the heavy lifting for your team. Route optimization software for logistics optimizes delivery routes and load capacities to provide end-to-end visibility of your daily transportation operations.
How does a Logistics TMS work?
The TMS for reducing logistics expenses, works as a powerhouse database packed with all the crucial details about carriers, shipments, and delivery processes. The software solution possesses pricing data, travel time, weight limits, and vehicle space — everything you need to plan, execute, and optimize deliveries. Because of its adaptability, you can dictate how deep the system should dive into carrier info.
A transportation management software for freight cost efficiency isn’t a standalone system and can be integrated with other software like Enterprise Resource Planning (ERP) and Warehouse Management Systems (WMS). This system trio works harmoniously to keep the entire supply chain running smoothly.
Here’s how TMS, ERP, and WMS work together:
a) ERP: It handles the big-picture stuff like order management, invoicing, and inventory control. It tracks what customers order and organizes the financial side of things.
b) WMS: Acting as the warehouse’s brain, it manages all the inventory-related tasks like picking items off shelves, packing them for shipment, or organizing the warehouse layout.
c) TMS: Regarding the transportation aspects of your supply chain, TMS handles the minute details of shipping and receiving like an engine that powers delivery optimization.
Cost-effective benefits of having a smart Logistics TMS
As sustainability becomes a key focus for consumers and regulators alike, a logistics TMS can play a key role in reducing costs and environmental impact. Let’s explore the prime benefits of having a smart logistics TMS that contributes to a more efficient, environmentally friendly supply chain.
1) Route Optimization
Route optimization software for logistics can identify the most efficient routes for freight shipments by analyzing traffic patterns, weather conditions, road tolls, and delivery time windows. A logistics TMS for reducing logistics expenses minimises the distance travelled by selecting shorter and less congested routes. Reducing the time spent on the road improves delivery schedules and reduces overtime costs.
2) Carrier Selection & Negotiation
Selecting the best carrier based on price, performance, and reliability is essential for freight cost reduction. However, TMS platforms provide a data-driven approach to carrier selection, allowing you to access multiple carriers and compare their rates. Many TMS platforms offer tools that allow businesses to negotiate rates directly with carriers.
3) Data-Driven Decision Making
Logistics TMS can analyze routes and carrier usage to minimize empty miles, where trucks drive without cargo. It would guide you in reducing fuel wastage and boosting capacity usage. Logistics TMS can analyze past data to identify the best shipment days and times, avoiding peak traffic hours and reducing delays.
4) Real-time Tracking & Monitoring
Logistics TMS offers you and your customer complete visibility into the status of shipments. By tracking shipments in real-time, you can avoid detention fees as you plan for delays or unexpected traffic and adjust schedules proactively. You can avoid delays or reroute shipments with access to live updates to prevent penalties.
5) Environment friendliness
Recently, there has been an increasing demand for sustainable logistics software development services, both for regulatory reasons and consumer preference. A logistics management system can reduce your carbon footprint by not operating in congested areas. TMS also maximizes the use of available space in transportation and ensures the trucks and containers are fully loaded.
6) Freight Auditing & Payment
For companies that depend on transportation, such as retail and e-commerce, freight expenses represent a significant portion of costs. The software can automate the freight auditing process and ensure you only have to pay for what you own. To identify discrepancies, TMS systems can cross-check invoices against contracts, rates, and shipment data. If a carrier overcharges or miscalculates, the TMS flags it for review before processing payment.
Case studies of successful Logistics TMS implementation
Implementing a Transportation Management System (TMS) has helped numerous companies optimize supply chain efficiency, reduce freight costs, and attain long-term sustainability and growth.
1) Luster Products
Luster Products, a well-known manufacturer of personal care items, significantly improved its freight management by implementing a transportation management system. This move streamlined their logistics operations, resulting in a remarkable 20% reduction in freight expenses. By optimizing carrier selection with logistics TMS and proper shipment planning, the company achieved a 60% decrease in retail penalties and reduced the number of providers by 25%.
2) Cavender's
Cavender's, a family-owned western wear brand spread across 90 locations, faced rising parcel shipping costs and inefficient inbound freight management. They negotiated a new parcel carrier contract and implemented a TMS to manage inbound, less-than-truckload (LTL) shipments. This collaboration enhanced their transportation control and led to a 14% annual reduction in parcel spending and a 16.7% decrease in LTL costs.
3) MD Logistics
MD Logistics took a strategic approach to optimize transportation management with logistics TMS by upgrading to agile TMS and integrating it with its Warehouse Management System. Optimizing carrier selection with logistics TMS helped the company automate freight pricing, streamline carrier selection, and efficiently manage critical tasks like invoice auditing and claim filing. MD logistics benefitted greatly from the reduced freight costs and a more agile, responsive supply chain.
Choosing the Right Logistics TMS Solution for Your Business
Choosing a transportation management system is a crucial choice for supply chain professionals. Here are a few things to keep in mind while selecting a smart TMS solution that best fits your supply chain requirements:
1) Cost-Effectiveness: Maximizing Your ROI
Finding the best logistics TMS that’s cost-effective and offers a solid return on investment is necessary. Prices can vary significantly based on features, functionality, and the scale of your operations. Be sure to look at the upfront costs and recurring fees for maintenance and training. Doing this homework will help you align with your budget and operational goals.
2) Career Network: Professional Connections
A strong network provides access to insights and experiences from others who have navigated similar challenges in logistics management. Engaging with industry peers, attending conferences, and participating in forums can reveal valuable information about various logistics solutions and their real-world applications.
3) User-Friendliness: Simplifying Management
The best logistics TMS should be intuitive and easy to navigate—nobody wants to waste time figuring out how to use a complex system! Look for a platform that offers customization to suit your specific needs and consists of built-in tools for managing shipments, planning routes, and analyzing data.
4) Integration: Optimizing Your Workflow
Your custom logistics transportation management system should seamlessly connect with your existing systems, like your enterprise resource planning (ERP) or warehouse management systems (WMS). It’s beneficial if your TMS can connect with your carriers and logistics providers for accurate real-time tracking and automated shipment planning.
5) Scalability: Future-Proofing Logistics
Since your business may change with increasing shipment volume, you must expand your operations. A scalable TMS can effortlessly handle growing shipments and more complex logistics, including multi-modal transport and global shipping. It acts like a sturdy foundation supporting additional layers as you build your logistics operations.
Future implications for Logistics transport management system
Customers expect deliveries in less than 2 days, and they crave real-time updates throughout the shipping process. This rising demand pushes companies to rethink their supply chains, often by investing in advanced transportation management systems. As mentioned below, many companies are integrating their transportation and global trade management systems with cutting-edge technologies to enhance visibility and customer service.
1) Adaptive Intelligence
Adaptive intelligence combines AI/ML and big data analytics to adjust logistics operations based on real-time conditions dynamically. You can plan capacity, flag at-risk shipments, and suggest alternate delivery routes during peak traffic.
2) Cold Chain Management
By leveraging advanced automation, AI-driven analytics, and IoT-enabled monitoring, cold chain logistics can guarantee product quality, reduce waste, and meet strict compliance standards in the pharmaceutical and food distribution industries.
3) Blockchain Technology
With blockchain, you can facilitate real-time tracking of shipments and ensure the authenticity of goods. With blockchain applications like intelligent track and trace, you can enjoy greater transparency and traceability throughout your supply chain.
4) Digital Assistants
AI-powered digital assistants streamline logistics operations by automating communication, scheduling, and decision-making. Known popularly as chatbots, they provide immediate and conversational responses about shipment status.
5) IoT Fleet Monitoring
By using interconnected devices and sensors, you can gain real-time visibility into your fleets to track driving conditions, routes, and vehicle health. With IoT, companies can ensure on-time deliveries, reduce operational costs, and improve overall supply chain transparency.
Streamline Freight management with a custom Logistics TMS
Want to optimize your freight management and cut unnecessary costs? Webelight Solutions Pvt. Ltd. can ensure your logistics are scalable, transparent, and cost-effective. What makes our team stand out is its holistic approach to logistics. Our advanced logistics solutions can streamline your supply chain operations and save you money in the long run.
We offer various logistics software development services, from efficient inventory management to seamless final-mile delivery, ensuring your products are shipped and meticulously handled at every stage. With scalable, transparent solutions and a proven track record of successful software implementation, you’re not just moving goods—you’re moving your business forward!
