A global pandemic, surging e-commerce, modal shifts: Have TMS platforms risen to the challenge?
Faced with unprecedented demands and unforeseen challenges, transportation management systems have struggled to keep shipper supply chains fluid and functioning. In a world of unrelenting e-commerce growth and rapidly shifting shipper needs, change can’t happen fast enough.
Gary Frantz is a contributing editor for DC Velocity and its sister publication CSCMP's Supply Chain Quarterly, and a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
Pat Martin, a long-time executive with less-than-truckload carrier Estes Express Lines, remembers a not-so-distant past when the spring meant trucks full of barbeque grills descending on Home Depot locations nationwide and delivering pallets of grills to the stores. Consumers would then walk the aisles, pick their favorite, cart the box out to their car or truck, and take it home.
“Today a lot of that is changing,” says Martin, who is Estes’ corporate vice president of sales. “We still [move] a ton of grills the old way, but now, with e-commerce, it’s also drop-ship from vendors. There is more LTL and more final mile. It’s trickier and requires a lot more work—and a lot more visibility and connectivity.”
Shippers want to know now exactly where that shipment is, when it’s being delivered, and, “if there is a hiccup, when and how that’s going to be fixed,” he says, adding that they want tech solutions that are agile, can quickly spin up and go live, are easy to use, and can link up quickly with new apps as supply chain technology evolves.
“They want to be able to plan better, move faster, and make better decisions with data that is fresh and accurate today—not from two or three days or a week ago,” he notes. “And that’s putting pressure on carriers and their technology platforms to step up and deliver far more than just the shipment.”
It’s a confluence of market dynamics and shipper demands that is changing the landscape of what a transportation management system (TMS) is; how it’s bought, built, and deployed; how it operates; and how it evolves. The strategic TMS decisions shippers and carriers make today are based on a myriad of market factors and modal and information needs. “One size fits all/does all” no longer works.
And in today’s venture-capital–fueled market, new players taking innovative approaches and delivering effective new apps and tools are forcing traditional platforms to adapt as never before. They have to be able to collaborate and connect with emerging new apps and tools, and compete in a transportation technology landscape ripe for innovation—and disruption.
A PREMIUM ON AGILITY
In this market, “vendors are feeling the pressure to become more nimble in how they evolve, how they look at architecture,” observes Tom Curee, senior vice president of strategy and innovation for third-party logistics service provider (3PL) Kingsgate Logistics, whose brokerage operations manage over $100 million in freight spend annually.
In his view, a 3PL has to be equally nimble, agile, and strategic, able to quickly and seamlessly incorporate new tools as they reach the market and prove their value. His company has taken a blended approach to the TMS challenge, building out for its shippers a proprietary TMS for clients to tender their freight and Kingsgate to manage it.
On the carrier side, Curee’s strategy was to go outside and collaborate with multiple providers, stitching them together for carrier planning and execution. Kingsgate has partnered with three best-of-breed tech players to deploy a carrier portal providing planning and execution tools, rate benchmarking, and lane capacity analytics, respectively, using Trucker Tools’ Smart Capacity offering,DAT’s Ratecast product, and FreightWaves’ Sonar service. Application programming interfaces (APIs) then link the shipper platform and carrier portal so his team has a total view of the process.
Curee says the platform lets the carrier automate the process of matching loads to available trucks, plan out a week or more’s worth of multiple loads in preferred lanes, and use one-click booking, automated tracking, and digital document tendering. It also helps his team and his carriers identify and resolve capacity issues, reward Kingsgate’s best carriers with quality loads, and ensure it’s securing the most accurate, real-time market pricing. Importantly, Kingsgate also has kept in place traditional phone and email communications to support managing more complex or challenging loads—and keeping that personal touch between trucker and broker intact where needed.
A “360 VIEW OF THE SHIPMENT”
Recognizing this trend, many TMS developers are building out “more robust API engines, allowing users to bring more tools into their TMS, not just what was built by the vendor,” Curee notes. He sees this as a fundamental shift—and a positive for the industry—that is driving wider and faster adoption of new technologies, particularly in specific areas like visibility, freight matching, and optimization.
Another evolution has been the increasing affordability of TMS platforms, how they are coming into the market, and the channels they are using to engage customers and accelerate growth. “In the last few years, a TMS has become affordable for every shipper,” notes Estes’ Martin. He cites as examples cloud-based TMS offerings from providers like Kuebix and My Carrier. “You can get up and running very quickly, in some cases 10 minutes. And it’s free to the shipper. The carrier is paying for it.”
For Estes, the platforms provide another digital channel to engage the customer that helps reduce cost of service and is more efficient, shipper-responsive, and cost-predictable. The TMS provider earns a transaction fee from the carrier based on how many shipments are booked and moving through the system. “These fully built APIs let you digitize many activities, like tendering, creating bills of lading, and tracking electronically,” Martin notes.
He says Kuebix, for example, has gone out to all the major LTL (less-than-truckload) carriers and built common APIs for dispatching, imaging, tendering bills of lading, and tracking. To complement these platforms, Estes also is investing in strategic technology upgrades of its own. It recently launched a new tracking API for shippers and is working on a pickup API.
“We’re moving to more of a ‘push’ environment, giving them the latest status as soon as available,” says Martin, noting that this includes updated live delivery ETAs and notifications that tell the shipper how many stops away the truck is from delivery. “We are doing all we can to give that customer a 360-degree view of the shipment,” he emphasizes.
E-COMM–DRIVEN CHANGES
Bart De Muynck, vice president, transportation technology research at Gartner, notes the enormous impact e-commerce has had on the evolution of the TMS. That’s because “virtually every industry now has e-commerce shipments, whereas before it was mainly retailers.”
TMS platforms, De Muynck says, were initially created to solve for the larger first- and middle-mile movements, primarily with full-truckload and LTL freight. And while that is still an important segment, solutions are expanding to cover international and last mile as well as the exponential growth in parcel shipping.
He identifies three distinct market needs: last-mile delivery solutions, for shippers with complex last-mile requirements covering a multitude of delivery options; multicarrier parcel management, for shippers with high reliance on parcel shipping and dealing with the likes of UPS, FedEx,DHL, and regional parcel carriers; and vehicle-routing solutions, for shippers mainly using private fleets or contractors to deliver their e-commerce shipments.
“This landscape is de facto complex, and often there is no one way to skin the cat,” De Muynck says. “Most companies therefore might choose a mix of all these solutions.” He cites as well an important distinction: “It is not as much [about] functions or tools, but rather being more user-friendly, intuitive, easier and faster to implement, and easier to support,” he says, adding that TMS platforms need to serve as hubs that connect “networks of carriers, visibility partners, digital freight [marketplaces], and others.”
“IT NEEDS TO BE MORE GOOGLE-LIKE”
What is the No. 1 problem a TMS has to solve for today? “Visibility across the supply chain—all modes, all players. Integration, real-time data access, and system availability,” says Stephanie Silvestre, senior vice president of supply chain for Southern Glazer’s Wine & Spirits, a family-owned company and the nation’s largest distributor of beverage alcohol.
“There is definitely a need for TMS providers to become [more of] a neutral, all-comers connectivity hub,” she adds. Silvestre manages global supply chain operations that are multimodal, and roughly 50/50 domestic and international. The company is the 57th largest importer in the U.S.
She also cites the challenge of integrating service providers, shippers, and suppliers—and their data—into TMS platforms. “One of our biggest holdups is we don’t have all the information coming into our TMS from them, so the TMS can’t optimize and do what it was designed to do,” she explains. “Sometimes, TMS platforms can make that integration very cumbersome … it needs to be more Google-like.”
Another challenge is the sheer volume of data available and deciding what is “must have” versus “nice to have.” “We have to pick the 10 or 15 data points that really matter,” she emphasizes. “You can’t show up at [the carrier’s] doorstep and ask for 100 things; you will never get them. Ask for what they realistically can provide and what you need; then set up measures to hold them to it.”
She agrees that the world has changed with respect to the demands and expectations of e-commerce, how sensitive supply chains are to breakdowns, and how that impacts supporting technology—and the economy. It’s also brought to the forefront a fundamental question every company has to ask: Is managing freight a core competency of my company? “You have to figure out what you are, what your real strengths are before you answer that question. I see a lot of companies struggle with that,” she’s observes.
It really comes down to what is the vision for your company, Silvestre says. For Southern Glazer’s, the answer was to outsource its needs for TMS technology, which led it to expand an existing relationship with Ryder.
FOCUS ON THE LONG GAME
Managing supply chains with multiple product locations, carriers and modes, and ship-to locations is challenging in itself, but some in the technology world are making it more complex than it needs to be, says Satish Jindel, founder and chief executive officer of ShipMatrix, which provides freight data analytics and management services.
Particularly when it comes to parcel, Jindel, who was on the founding management team of Roadway Package System, which today is FedEx Ground, believes some providers are misleading their clients by “telling them we can optimize your costs by picking the right carrier for every package and trying to play the carrier rate game package by package. That’s insane,” he says.
“That in my mind is completely irrelevant and unproductive, and can create difficulties for the shipper.” Parcel transit times don’t change every day for every package, he notes. The focus should be on meeting volume criteria with a carrier—which ensures the shipper doesn’t miss out on discounts or rebates.
At the end of the day, Jindel says, shippers will get the best deal and service performance by making and keeping volume commitments to carriers. Truck lines as well have to live up to their shipper promises of capacity at a predictable cost—regardless of the market.
“That leads to partnerships where both have skin in the game, and both benefit—the carrier with predictable, plannable volumes, and the shipper with reliable capacity, rates, and service,” Jindel says.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
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.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."