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Survey: TMS becoming 'must have' technology in the freight market

Jan. 17, 2018
About 91% of motor carriers operating 20 trucks or more use TMS today, up from 62% in 2005.

A survey conducted by InMotion Global, Inc., finds that transportation management system (TMS) software is becoming a key technology tool now deployed by a majority large fleets, freight brokers, third party logistics (3PL) companies, and shippers.

Yet that poll also discerned that small fleets and owner-operators remain reluctant to adopt TMS.

Only 33% of motor carriers operating under 10 trucks are using TMS, the poll found, while just 17% of those using under five trucks deployed such technology.

The lowest adoption rate for TMS software is among single truck owner-operators, with only 7% of those polled saying they used it to manage their one-truck business, noted Tim Higham, InMotion’s president and CEO.

That compares to 91% of trucking companies operating 20 trucks or more that now use TMS, he added.

“Owner-operators are the only ones not interested in TMS. And, frankly, even an operator with two trucks can get away without using it,” Higham explained in an interview with Fleet Owner.

“But once you get to three or four trucks and above, you have to have it. When you are managing 2.5 to 3 loads per truck per week, 12 to 15 loads a month, and are getting paid net 30 days, you need to know who you’ve billed, who you haven’t billed, who is slow to pay, etc.,” he stressed. “That enables you to be more efficient and more importantly more profitable. In the end that gives you better margins.”

Interestingly, those brokers and carriers polled who reported new/active Federal Motor Carrier Safety Administration (FMCSA) applications also have the highest overall adoption rate of TMS software at 72%, InMotion found.

That’s a combination of both new brokers and new carriers with over five power units, the firm said, but not including single-truck operators, the company added.

InMotion, which makes the AscendTMS software system, conducted similar surveys in 2015 and in 2005 and data from those polls show that TMS adoption rates have climbed quickly in trucking, though not as fast as in other segments of the freight business.

In 2015, 89% of common and contract carriers with over 20 trucks in service used TMS, while 31% those operating under 10 trucks used it and only 16% of those with five trucks or less deploying TMS. In 2005, the numbers were 62%, 21%, and 7% respectively, InMotion said.

Other data gleaned from the firm’s survey includes:

  • Some 86% of brokers with over 10 employees now use some sort of TMS software compared to 77% in 2015. About 68% of brokers with fewer than 10 employees use TMS, compared to 56% in 2015. Only 41% of brokers use TMS if they employ less than five people.
  • Freight brokers and 3PLs that reported the most technology adoption were the ones with lowest costs and highest overall revenues per employee. They also showed the highest customer retention by a statistically relevant 16% percentage points when compared to those not using TMS software.
  • About 64% of LTL shippers with an annual freight spend of over $500,000 are now using web-based LTL rating and booking platforms, compared to 27% in 2015.
  • The average LTL shipper reported using 2.4 different web-based platforms to “rate shop,” with 94% reporting that they always choose the lowest cost LTL platform and the lowest-cost motor carrier for each shipment.
  • About 28% of TL shippers that tender 20 or more loads per week said they use some type of TMS software. Those that tender under 20 TL shipments per week appear to rely on one primary asset-based carrier or one local freight broker to manage their freight.
  • The breakpoint for shippers to use TMS in the TL segment is approximately 40 loads per week or about 160 to 180 loads per month. InMotion’s poll found that just over 51% of TL shippers adopted some form of TMS technology as their TL shipment volumes grew to this level.

“There is a lot of opportunity in truckload because it is still so fragmented; only 4% to 5% of the market is made up of big motor carriers,” noted Higham.

He added that more of the big shippers now want electronic data interchange (EDI) and/or application programming interface (API) connections with their motor carriers. “They no longer want faxes and emails to get updates on where their freight is,” Higham stressed. “The moment they tender a load, they want to see updates.”

Overall, 61% of logistics professionals polled by InMotion this year, irrespective of size, are using some form of TMS software to manage their logistics operations. That compares to just 15%, irrespective of company size, who were using some form of dedicated TMS technology back in 2005.

“Over 12 years, our surveys have shown show us that companies that resist TMS are the most likely to go out of business, and those that embrace it are the most likely to thrive,” Higham noted. “Today's logistics professionals have more technology choices than ever if they intend to remain relevant. There are no excuses.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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