The Difference Between TMS and MTS

Capacity is tight - especially on long hauls - and this is causing frustration for shippers in

every industry. Regardless of the method a shipper uses to manage freight, they often have to resort to their second and third carrier choice which leads to increased freight costs and sometimes longer transit times. Because route optimization becomes limited by capacity issues, shippers may not be able to achieve the return on their TMS software investment quite as quickly.

"An MIT study shows that if your primary carrier on a lane rejects a tender, the shipper can expect to pay 15 percent more when they default to their number two carrier on a lane. The deeper a shipper goes into the route guide, the more they can expect to pay. And clearly in a tight market, a higher tender rejection rate should be expected," says Steve Banker, a contributor for Forbes, the popular business and investment publication¹.

Current TMS buyers may start looking at other options like managed transportation services (MTS). With managed services, a shipper contracts a third-party logistics provider (3PL) to execute moves on a shipper's behalf. The shipper ends up seeing some freight savings in this scenario, but not nearly as much as if they managed their own transportation with TMS software. The difference between a TMS and MTS is service.

If you have an in-house logistics planner or shipping manager, you may already be happy with the level of service they provide and in that case you would just need software to help them do their jobs effectively. To avoid the pitfalls of slow ROI, choose a transportation management system that reduces the demand on your IT resources and takes a minimal amount of time to setup and train.

Do you currently use a TMS? Which one? Or, do you prefer to have a 3PL manage your moves? This is a hot topic. Join the conversation.

1. Banker, Steve. "Transportation Management and the Dangers of ROI Research", Forbes. September 4, 2014. (available: http://www.forbes.com/sites/stevebanker/2014/09/16/transportation-management-and-the-dangers-of-roi-research/)