Transportation management systems have traditionally been used to slash freight costs. But shippers are now finding the software can do much more than that.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
For decades, transportation management system (TMS) software has been an effective tool for helping shippers and third-party logistics service providers (3PLs) cut freight costs, plan routes, and select and manage carriers. But these days, many companies are discovering new uses for their TMS applications. They're turning to the software to handle a wide variety of tasks, such as managing capacity in a constrained market and making cost/service tradeoffs, all with the end goal of improving customer service.
As for what's behind the trend, it's partly because the economic sands keep shifting under the users' feet. Changing economic conditions can alter a company's concerns and priorities from year to year, said Frank McGuigan, CEO of Frisco, Texas-based 3PL Transplace.
Sephora sees the beauty in TMS
When a company buys or leases a TMS, it's usually because it's looking to slash freight costs. But for some, it's all about the service improvements. That was the case with French cosmetics retailer Sephora, which turned to a TMS to boost service levels as measured by on-time deliveries at its DCs and stores.
As a player in the fickle and fast-changing fashion market, Sephora, a subsidiary of the luxury products conglomerate LVMH Moët Hennessy Louis Vuitton, must keep its store shelves stocked with the very latest goods, from skin care to makeup to hair products. To do that, company relies on a smooth flow of goods into and through its own DCs and on to its more than 700 retail locations, according to report released in January by Dedham, Mass.-based ARC Advisory Group. Delays in the delivery of merchandise could cost the company sales and jeopardize customer loyalty, according to the paper, "Using a Transportation Management System to Drive Service Excellence." The report was written by ARC on behalf of MercuryGate International Inc., a Cary, N.C.-based TMS vendor.
A big factor in avoiding such delays is selecting the right carriers—ones that can be relied on to deliver merchandise to the retailer's DCs on time for outbound shipment to stores. But that requires the shipper to monitor and track the performance of all the carriers it uses. As Sephora's volumes grew, that process became increasingly difficult to manage. With little prospect of relief in sight, the company decided its best option was to automate the process.
Today, Sephora uses the MercuryGate cloud-based TMS to manage inbound shipments from suppliers all over the world. Among other benefits, the system provides full visibility into carriers' on-time performance records, which helps the team pick the best carriers for specific lanes. In addition to streamlining the carrier selection process, the TMS "is saving the company thousands of dollars by selecting carriers that are more efficient and provide greater value," according to the ARC paper. The net result is an improvement in customer service by ensuring that Sephora's brands are always on store shelves when promised, ARC said.
For example, in 2017, the shipper community's top priority was timely delivery, as suppliers sought to avoid penalties levied by Wal-Mart Stores Inc. as part of its "on time in full" delivery requirement, McGuigan said. But in 2018, one of the most capacity-constrained markets in years, companies are more worried about ensuring that their freight moves under contract, rather than via a carrier found through the spot market, where rates can soar to unpredictable levels, he said.
That trend means that TMS users are shifting their focus from metrics like on-time delivery to ones like primary tender acceptance, which is a measure of how often shippers are able to book loads with their intended carrier. "Otherwise, you'll be looking on the spot market, where the service level is not as managed because you're not used to doing business with them or because you've gone through a broker," McGuigan said. At a time when companies are struggling to meet rising service demands, that's a risk few shippers are willing to take.
TMS BALANCES COMPETING DEMANDS
When it comes to ways users are leveraging their TMS to boost service, there's more to the story than simply securing contract capacity. A number are also using their TMS to make cost/service tradeoffs. One market segment that has proved particularly adept at that is the third-party logistics community.
Today's 3PLs often find themselves caught between the conflicting transportation needs of different customers. To solve that conflict, they're increasingly likely to use a TMS to prioritize the variables that matter most to each client, instead of simply picking the lowest-cost option on the market, said Duncan Hopwood, director of engineering at Redstone Logistics, an Overland Park, Kan.-based 3PL that uses a TMS platform from Shelton, Conn.-based software vendor 3Gtms Inc. "If all you're offering is a rate play [to compare and minimize costs], you're not creating any value for the customer. You also need to provide planning and process automation" that offers the flexibility required to balance partners' needs, Hopwood said.
For one client, Redstone used its TMS to balance two competing demands—reducing labor costs and improving trucking efficiency—by tweaking the truck loading schedule to match the company's warehouse labor capacity, he said. While that may not have optimized the route from a purely transportation perspective, the strategy allowed the customer to avoid expensive overtime shifts, he said. "We adjusted the dates based on the availability [of goods]," he said. "So now the warehouse crew doesn't have to run overtime to match some crazy transportation plan that says they have to ship everything by Monday."
In another example, Redstone used its TMS to balance a customer's demand for low freight costs with its stipulation that it avoid working with a certain carrier partner. "When you use a rate engine, you can select the least-cost provider," Hopwood said. "But say some customer never wants to see Carrier XYZ? We can 'de-conflict that' and keep the customer's business by choosing a different carrier, even if it's slightly more expensive."
In a third example, Redstone used its TMS for balancing the demand for an efficient route with the need to minimize dwell time. With the aid of its TMS, the 3PL identified certain warehouses that frequently have long delays—even when a driver has an appointment—with the end goal of positioning those facilities as the last stop on the route, where they wouldn't disrupt other deliveries.
The ability to make these kinds of tradeoffs is becoming more critical as customers at every stage of the supply chain increasingly expect a seamless, near-perfect experience, said Karen Sage, chief marketing officer of Cary, N.C.-based TMS vendor MercuryGate International Inc. Providing that level of service can be a headache and a half, she acknowledges, but the rewards of meeting—or exceeding—service expectations can be great. "Customer service is one area in which shippers must meet a high bar that has been set, but if they excel beyond the expected minimum, it presents an opportunity to leverage it as a competitive differentiator," Sage said.
MANAGING THE LAST MILE
These days, TMS are even playing a role—albeit an indirect one—in ensuring that the all-important last-mile delivery is executed to plan, according to one consultant. In a June 21 research brief, "TMS and the Current State of Last-Mile Deliveries," ARC Advisory Group analyst Chris Cunnane argued that even if shippers don't actually use their own TMS to manage these moves, the software can nonetheless contribute to the process by keeping things on track during the run-up to the last mile.
"One of the most overlooked aspects of last-mile delivery is the journey to get there," Cunnane wrote in the brief, which was prepared by ARC on behalf of MercuryGate. "Last mile is a small component of the overall supply chain strategy. Technologies like a transportation management system have proven effective in managing the first and middle miles, which are a critical part of ensuring effective and efficient last-mile deliveries."
TMS technology helps make that happen by bridging the visibility gap on both inbound and outbound shipments. Without such tools, many companies have only a murky picture of their inventory as it moves between suppliers, warehouses, stores, and customers, according to ARC.
EXPANDING SPHERE OF INFLUENCE
The role of a TMS in supporting last-mile delivery is just one example of how the well-established software tool is expanding its sphere of influence throughout the supply chain. As TMS software touches more and more aspects of the modern retail ecosystem, it will play an increasingly essential role in monitoring and managing transportation operations.
"A TMS gives you visibility into how your freight is going to move, and it lets you measure deviations," said Transplace's McGuigan. "Without that system, you'll have your CFO knocking on your door 45 days later, asking why your freight costs went up, and you won't have an answer."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”