DESCARTES™

A Freight Broker’s TMS Buyer’s Guide

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Today, many freight brokers have concerns about emerging technologies and where the industry is heading next. Freight and logistics brokers have always depended on the human touch, but technology is getting smarter and many brokers wonder if their efforts will get replaced by new technologies. Lately, there has been an influx of automation, consolidations, acquisitions, and quickly evolving management systems that have contributed to an atmosphere of anxiety and high competition within the industry. Despite these overwhelming trends, finding the right transportation management software (TMS) may be the single most important place for brokers to focus their attention.

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Benefits of TMS

A TMS is the part of supply chain management that concerns transportation operations and usually sits between an ERP or legacy order processing and the warehouse/distribution module. TMS is usually a Windows server or mainframe based program that provides a platform for visibility throughout the process of moving loads. Some TMS systems are Software as a Service (SaaS), or custom programmed systems that are tailored to specific needs of a brokerage. More cutting-edge systems are developing within the cloud to provide flexibility across the network and on a variety of devices.

Finding the right TMS has the potential to provide some of the following benefits for brokers:

Expand Revenues

TMS Software enables third-party logistics providers and brokers the ability to procure, plan, optimize, execute, and settle freight movements with full visibility. Ultimately, these actions help the company thrive by expanding revenues.

Increase Productivity

Brokers can be more efficient when they can respond to disruptions in real-time because TMS data supports the response. Advanced communication can help automate the process of calculating fees such as tolls, accessorial charges and more. Brokers will save time when a platform can monitor KPIs and combine billing and invoicing into one simple interface.

Win New Customers

A quality TMS will bring multiple freight boards into a single interface, allowing access to available freight options. Many TMS platforms help manage customer relationships and provide tools to succeed in growing a customer base. When all customer data is at a broker’s fingertips, it’s easier to identify what a given customer is looking for.

Prove Better Customer Service

A TMS can provide on-time performance monitoring which improves the quality of customer service. Knowing the locations and distances from the destinations also improves communication. A TMS can provide an online portal for customers to see exactly where shipments are, keeping them better informed.

A good TMS often brings a broker's most commonly used functions onto a single screen, improving visibility and streamlining daily tasks.

Are brokers using TMS?

Transportation management systems have evolved significantly since the 1980s, and are now available as standalone software packages that simplify the movement of freight. These systems finally have a proven track record and brokers who overlook the technology are missing out on huge potential increases in efficiency and cost savings.

Communicating via phone, fax, and e-mail has become a burden for brokerages of all sizes. TMS can eradicate time spent communicating with carriers, a task that can take all day in many cases. These tasks are easily automated and made less complex with the right TMS.

While TMS has been the gold standard for big brokerages, cloud-based subscription models have helped increase adoption rates among smaller firms.

In a survey by ARC Advisory Group, it was discovered that TMS solutions reduced overall freight spend by about 5% to 8%. Those same companies told ARC that freight spend would increase from 5% to 10% or more if they were forced to give up their TMS and go back to more manual processes for planning and execution. TMS adoption appears to be leveling out the playing field between larger firms and smaller brokerages.

Because of new cloud and subscription based software options, TMS adoption rates went up by 15-20% among small to mid-sized freight brokerage firms in 2017.

It’s no longer necessary to drop a ton of upfront sunk cost into starting with a SaaS-based TMS and the technology has become more attractive to smaller brokers entering the market. The smaller players have turned to technology as a way to handle the expected capacity crunch that’s coming down the pike.

TMS is the Core Technology that Enables Growth

Competition is fierce with constant pressure on brokers to add value and show improvement in spend and operations; all while capturing and retaining new customers. The right TMS platform can help a freight agent solve logistics challenges and get to the next level through efficiency and time savings.

Transportation software can harness the power of big data and synthesize it into metrics that help brokers find new insights and forecast their entire year. A proper management system streamlines operations and increases net profits by providing more control and transparency with shipments. Advanced artificial intelligence capabilities will optimize carrier selection, rating, routing and help brokers choose the most efficient and cost-effective routes for customers. Brokerages can stop wasting their time manually inputting data and shipment status, as the TMS automates these processes. The net effect is reducing overhead and increasing net profits.

Sample of How TMS Levels the Field

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One large industry broker, for example, has 13,500 employees and does $13.5 billion a year in sales. That’s $1 million per person in sales. Yet, there’s another market leader that does $1.7 billion with 2,400 employees. That’s only at $700,000 per person. Lots of small brokers are doing more than $1 million per person, and the most efficient in the field are at $3 million (or more).

One could expect a big player to come along and streamline the whole dispatch process, with drivers accepting loads in a click, and interacting with an app. But, some TMS already have these features, which may help level the playing field.

If a 3PL is doing $2 million to $3 million a person, it can afford to undercut bigger companies or make larger margins from the increased productivity. Interestingly, all of those consolidations and acquisitions aren’t making the larger companies any more efficient than the smaller firms.

Identifying Your Brokerage Needs

What to Look for in a TMS

Implementing a full-featured TMS can be the low-hanging fruit of running a successful freight brokerage, and it’s important to identify the needs of the brokerage in order to make the right choice:

• Lane Rate Comparisons - Brokers are usually anxious to assign an entire day’s loads before they finish their morning coffee. With the right technology tools, brokers can know immediately whether or not they can cover a load and then move on. Knowing the range of market rates in a particular lane empowers brokers to negotiate the best rate from within that range.
• Back Office Needs - Follow-up tasks like accounting, invoicing and reporting should be cohesive and convenient. Often, it’s more convenient to have these options available from within the same TMS, but some systems integrate with legacy applications or Quickbooks.
• Reducing Transportation Disruptions - Throughout each day, brokers are attempting to optimize transportation tasks in order to reduce supply chain disruptions.
• Synchronizing Efforts - Communication and information between departments should be available across most devices, so it’s important to understand how the TMS communicates to end users across multiple platforms.
• Improved Visibility - Brokers need streamlined track and trace solutions with improved visibility and need to achieve real-time shipment visibility across multiple modes of transportation.
• Executing Time-saving Practices – Brokers need communication, notifications and alerts that save time.
• Metrics Evaluation - It’s impossible to make strategic decisions without quality reporting tools and key performance indicators. Every TMS should provide detailed reports that are customizable and provide data that’s useful to your organization.

What to Look for in a TMS

Freight broker software is way better today than it was a decade ago and there are plenty of options that can streamline operations. Most software for brokers is designed to allow users to easily enter loads, qualify carriers, dispatch drivers, invoice customers and pay carriers. Like any software, some TMS companies do this better than others, and some charge more than others. Consider these questions when selecting a TMS provider:

• How stable is the software platform and provider? It’s important to get recommendations, check references and verify the financial stability of a provider being considered. The intent should be to stay with one system for a decade or more.
• How scalable and flexible is the system? It would be wise to ask the provider if new modules can be added in future releases or whether there’s a willingness to make customizations.
• How does the TMS provider support and service? A quality software system will allow brokerages to manage carrier contracts as well as keep track of important contract details.
• Who was the TMS software originally created for? Many packages on the market today were created for carriers and fleets, while others were created for shippers, general logistics operations and warehouse personnel.
• Does the TMS provide full visibility? A great TMS should allow users to track freight brokerage shipments in real time.
• How is the software delivered? Is the software in a closed environment, or in the cloud? A cloud-based system is accessible from anywhere and allows for easier scalability.

The cost of a TMS often depends on the customizations needed and the budget of a brokerage. Choosing the right TMS can be critical for saving time, reducing hassle and providing important process documentation. It’s important to weigh these costs against the potential savings in efficiencies. Planning for a scalable future doesn’t mean it must be an expensive solution.

The Next Generation TM Solution

The next generation of transportation management software is being shaped by configuration over customization and cloud based platforms over legacy on-premise systems. When a TMS is on the cloud, data is accessible from anywhere and users have more flexibility to remain secure.

Descartes Aljex Solution

While there are a variety of options available on the market today, Descartes Aljex™ stands out as a platform with well-rounded features and functionality for brokers. The platform was built by brokers and has existed as the premier broker TMS for over twenty years. Descartes Aljex provides a dashboard of tools that helps automate daily tasks and provides full visibility throughout the entire supply chain. It’s a scalable, cloud-based TMS that hosts a sizable network of brokers, 3PLs, shippers and intermodal users who do billions of dollars in transactional revenue annually, across the North American logistics supply chain.

Descartes Aljex improves planning and decision making by defining the most efficient transport options. The TMS automates carrier rate acceptance, dispatching and EDI. Follow-up tasks like accounting, invoicing and reporting have never been easier when everything is performed from inside one cohesive system. Users make better lane pricing choices by accessing and comparing historical prices, while managing documents through an organized system of document imaging and storage.

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About Descartes

Descartes MacroPoint™ is another great tool for freight brokers. It’s AI-based capacity matching system provides freight brokers with the best ranked carriers to call, and only includes carriers who have assets available. The Descartes MacroPoint platform resides inside the Descartes Global Logistics Network™, which connects over one hundred thousand road carriers and more than four million trucking assets and drivers.

Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses.