The rapid growth of e-commerce has drastically increased demand for quick and efficient transportation solutions. More than ever, customers expect fast delivery, real-time tracking, and reduced costs, which puts businesses under significant pressure. That is when transportation management systems come into play.
The global TMS market was valued at $12.14 billion in 2023 and is expected to reach $28.6 billion by 2032, confirming a strong demand for solutions that reduce transportation costs, optimize logistics, and enhance customer service. Transportation management systems help businesses make data-driven decisions and thrive in today’s logistics landscape.
So what is a TMS? What functions does it perform? How much does a transportation management system cost? Our article covers these and many other questions you might have.
What is a transportation management system
TMS is software used to organize the movement of goods. Think of it as a smart assistant that helps you get your products from one place to another in the most efficient way.
So what does a transportation management system do? The main tasks of these smart instruments involve planning the best routes and transportation methods, booking carriers and transport services, and tracking shipments in real time. They are also used to calculate the cheapest ways to transport goods and take care of paperwork.
The transportation management system market is extremely broad, led by the logistics and transportation sectors, healthcare, automotive, and retail industries. Their average annual growth rate of 6.86% reflects the increasing demand for route optimization, streamlined transportation, timely deliveries, and improved inventory management.
This software is also used by manufacturers, shippers, retailers, supply chain managers, and freight service providers that arrange transportation and shipment. Thus, transportation management systems can be used by anyone involved in the movement of goods.
There are plenty of ready-made TMSs that can solve the main tasks of planning, tracking, and delivering goods on time. However, more and more businesses choose custom transportation management systems as they offer a wide range of benefits that off-the-shelf solutions don’t have. Here are the main reasons you should consider developing a custom TMS:
- Meeting your business needs. The capabilities of ready-made TMSs are quite limited, and they can’t suit all types of operations, transportation methods, and documentation. Custom transportation management systems, on the contrary, allow tailoring functionality to specific services, processes, and documents.
- Adding specific features. Off-the-shelf tools come with a standard set of features, and adding new ones may be expensive, time-consuming, or impossible. Custom TMSs solve this problem, allowing you to expand and scale when you need and want.
- Integrating with existing systems. Custom TMS software can seamlessly integrate with CRM tools, warehouse management systems, and other instruments that your company is already using. This minimizes the risk of errors or duplicated data, optimizes processes, and ensures access to real-time updates.
- Advanced user experience. Tailored software can make the experience of your employees, partners, and users much better by offering role-specific dashboards, simplified navigation, mobile accessibility, and other advanced features.
A custom transportation management software solution that aligns with your business goals and seamlessly blends with existing software becomes a powerful instrument for sustainable growth and scalability.
Benefits of a transportation management system
TMSs offer businesses a wide range of advantages, improving route planning, carrier selection, and overall efficiency. In the following paragraphs, we’ll explore the key benefits of transportation management systems to help you make a decision.
Cost reduction
A transportation management solution offers both businesses and end users a significant advantage: substantial cost savings. By comparing carrier rates, it helps find the most affordable option. It also replaces phone calls with digital booking, as well as automates a variety of administrative processes like auditing and order scheduling, which eventually reduces costs.
In addition, this software can reduce storage costs as well as expenses on vehicle wear and fuel consumption.
Improved operational efficiency
One of the biggest advantages of an advanced transportation management system compared to an off-the-shelf product is improved efficiency, which leads to faster deliveries, reduced operational costs, and a smoother workflow.
A custom TMS can improve efficiency by automating manual tasks, providing real-time analytics, and integrating with existing systems and software. It also helps better utilize resources, reducing idle time and underused transport.
Improved customer satisfaction
Nowadays, customers expect fast delivery and adherence to the promised schedule. The industry is rather broad, and customers will switch to another carrier without hesitation if their needs are not met. That is when transportation management systems can be of great help. They are capable of identifying and addressing problems right from the start, avoiding delays and customer frustration.
TMS software also boosts user experience by offering real-time tracking, streamlining payments, and providing information about estimated delivery and route changes.
Better visibility
TMSs are capable of tracking, monitoring, and analyzing transportation processes in real time, from the moment of placing the order to the final delivery. They help identify delays and route changes and provide real-time updates on shipment status and location. Such transparency gives companies access to key information about shipment status, performance, and supply chain.
Data-driven decision-making
On-demand transportation management systems collect information from GPS trackers, carriers, and other sources, helping businesses have the latest updates to make timely and informed decisions.
This software can analyze weather conditions and traffic patterns to suggest efficient routes and delivery times. It may also break down the expenses and provide detailed cost tracking for each delivery. As a result, businesses can monitor key performance indicators, make timely changes, and build efficient transportation strategies.
5 steps to build a transportation management system
Now that you know the definition, importance, and advantages of custom TMS software, it is the right time to discuss how to build a transportation management system from scratch in 5 steps.
Step 1: Define your business needs and objectives
Before initializing the transportation management application development process, you should clearly define the problems you want to solve. Do you want to reduce delivery times, expand to new locations, or cut costs? Knowing the main problems and tasks will lead to clearer business objectives: cost efficiency, improved customer service, compliance with international laws, etc.
You should also determine who will use the TMS and what features they need. A profound understanding of your needs, goals, and users ensures a smooth development process and long-term efficiency. If you struggle with finding the answers, conduct market research to understand the competition and customer needs.
Step 2: Choose the right software development partner
As discussed, ready-made transportation management solutions might not cover all your business needs. This is when custom software created by experienced developers comes into play. When choosing the right software developer, make sure the company has a strong technical background, relevant experience, a broad talent pool, and positive customer reviews.
Step 3: Determine the essential features of your TMS
At this stage, you need to decide what features of transportation management systems your business needs. They come in a huge variety and require a different share of time and resources, so the choice may have a big impact on the budget and final product. Here are some of the most common TMS features worth implementing:
- Route and load optimization. A TMS considers road conditions, weather forecasts, delivery dates, and other factors to find the shortest and fastest ways to move goods. It also helps plan how to effectively load the shipment to fit everything and optimize costs.
- Freight and carrier management. These features involve choosing the best carrier based on the provided services, price, and reviews. With these features, businesses can also choose the optimal way of delivering goods: by plane, ship, railway, or truck.
- Real-time shipment tracking. This is crucial for managing deliveries and quickly responding to problems. Modern TMSs use GPS to track shipments, send alerts, and provide customers with regular updates.
- Multi-modal transportation support. This means combining different types of transport to move goods smoothly from one transport type to another.
- AI-powered demand forecasting. This uses artificial intelligence to predict the volume of goods to be transported or the number of vehicles to be involved. This results in accurate planning and inventory management.
- Analytics performance dashboards. They supply businesses with key information on deliveries, expenses, routes, and customer feedback. Advanced dashboards contribute to more informed and fast decision-making.
- Documentation management. This TMS feature aims to store shipping-related documents conveniently, reducing paperwork and providing quick access for all users.
- Communication tools. They involve all participants in the process. With the help of this feature, business owners, managers, drivers, and customers can get timely updates and alerts to quickly resolve any arising issues.
- Freight audit and payment processing. This is used to compare invoices, track expenses, pay on time, and conduct other financial operations quickly and transparently.
- Integration with ERP and other systems. This feature makes sure that the new software works smoothly with existing programs and that the data flow is not interrupted.
Step 4: Develop, integrate, and test
During this stage, engineers develop the custom transportation management software according to your requirements. Make sure the timelines and expected results are mutually agreed upon. To avoid misunderstandings, break the process into milestones if needed and regularly communicate with delivery and project managers.
Make sure that the development team offers quality assurance services to test the TMS before launching. Your involvement in the testing process is crucial in order to make sure that the product meets your goals and integrates with other systems.
Step 5: Launch, improve, and support
Once the first version is ready, gather feedback from your employees and users so that the development team can fix bugs and make the software efficient and convenient. Remember, the support stage is as important as the development one.
You can always request additional features and advanced improvements to keep up with the competition and face new challenges.
At Eastern Peak, we can help you develop a scalable, cost-efficient solution that optimizes logistics, boosts delivery performance, and supports your business growth. Looking to build a custom transportation management system?
Things to consider when building a transportation management system
Creating and implementing a transportation management system involves more than just coding and launching. It requires a comprehensive approach that includes developmental costs, scalability, compliance, accessibility, and industry trends. In the paragraphs below, we will explore these issues in detail.
Cost of development
When planning to build transportation management software, understanding the costs is crucial for long-term success. Development costs can significantly vary depending on the features and technology stack you are planning to implement. UI/UX and testing also influence the final cost, so make sure that all these expenses fit into your budget and leave room for other, no less important, operations.
We recommend starting with an MVP — a basic software version that includes only core features. The goal of an MVP is to launch with minimal resources and gather feedback for future improvements and cost efficiency.
Usually, MVP versions of transportation management systems include such features as carrier selection, route optimization, order management, and freight tracking.
Scalability
Every owner wants their business to grow and evolve. This desire comes with a need for larger volumes of data and resources. At some point, you might want to add new transportation management system features, handle more users, implement advanced technologies, or expand to new geographies.
That is when scalability takes action. It means creating a TMS structure that is capable of handling increasing workloads without losing performance quality.
Elements of a scalable transportation management system usually include cloud-based architecture, modular components, load balancing, and future-proof technologies.
Compliance
Different countries and industries have their own rules and regulations for shipping: taxes, weight limits, hazardous materials, CO₂ emissions, data privacy, and so on. Failing to comply may result in delays, penalties, and even loss of licenses.
That is why you should ensure that all the laws, regulations, and industry standards are accurately followed even during the transportation management software development stage.
User experience and accessibility
When building a TMS, remember that it should be easy to use by all types of users — from managers to drivers and customers. The interface should be intuitive and clear and have convenient dashboards for quick access to major instruments. There must be customization features like localization, filters, personalized notifications, and an opportunity to share the data with other users.
Consider adding keyboard shortcuts, voice commands, audio prompts, and colorblind modes to improve accessibility. Optimizing the software for smartphones and tablets is also a great idea.
Future-proofing and latest technologies
To keep up with transportation market challenges and satisfy customers, businesses need to adapt to a constantly changing industry by implementing advanced technologies in their TMS.
For example, the Internet of Things, or IoT, brings significant benefits to transportation management systems, improving visibility and decision-making. GPS sensors, for instance, provide location data and real-time logs to minimize the risks of fines.
Machine learning and AI are often implemented in automated transportation management systems, significantly boosting analytical and predictive capabilities. They can compare different scenarios, evaluate carriers, optimize routes, and complete hundreds of other tasks with minimal interference.
Level up your operations with transportation management solutions
The transportation industry is evolving side-by-side with technologies, and using the opportunities that TMSs provide can significantly improve your operations and offer a better user experience. Developing a custom transportation management system can give your business a competitive advantage, leaving room for scalability and expansion.
At Eastern Peak, we understand how demanding the market is and the challenges your business faces. We are ready to help you with your TMS software development and create a tool that will face the challenges of the modern market. Let’s schedule a call and make the first step toward your growth and profitability.
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About the author:
Alexey Shalimov, CEO at Eastern Peak
As CEO at Eastern Peak, a professional software consulting and development company, Alexey ensures top quality and cost-effective services to clients from all over the world. Alexey is also a founder and technology evangelist at several technology companies. Previously, as a CEO of the Gett (GetTaxi) technology company, Alexey was in charge of developing the revolutionary Gett service from ground up and deploying the operation across the globe from New York to London and Tel Aviv.
