How a Cloud-Based Transport Management System Reduces Shipping Costs

September 27, 2022

Transportation costs can account for 30 to 50 percent of a supply chain’s total expenses.

Reducing shipping costs in a supply chain is not about cutting corners or staff, however. To take advantage of hidden opportunities in efficiency and cost control, transportation management teams need access to a cloud-based transport management system (TMS system)

 

Costly decision-making in supply chain logistics usually happens because of two things: human error and legacy systems.

  • A spreadsheet may work if a transportation management team only has a few preferred carriers in its network. But the transportation market can be so volatile that larger carrier networks often serve shippers better. Spreadsheets also are not integrated with other supply chain systems such as enterprise resource planning (ERP) systems or internet of things (IoT) monitoring devices. This lack of system connectivity can result in a loss of revenue for even small carrier networks.

  • A dedicated server can become obsolete even before it is installed. Dedicated servers and software are also expensive to maintain. Additionally, once a human error in data entry or coding has been introduced, it is hard to isolate and eliminate. Shippers of any size then become burdened with the growing problem of technology debt.

 

The only way to reduce shipping costs while solving the resource-draining twin problem of human error and legacy systems is for shippers to invest in a cloud-based TMS system.

  • Get up and running faster with a cloud-based transport management system

  • Reduce fuel costs and carbon emissions

  • Reduce errors though automation

  • More efficient freight sourcing

  • Save time and money by automating freight settlement

  • Reduce demurrage and detention fees

 

Get up and running faster with a cloud-based transport management system

Upgrading any process or system can be a major undertaking. Shippers will have to factor in a substantial amount of downtime and overtime if they want to upgrade a legacy system.

A cost-saving alternative is migrating all logistics data to a software as a service (SaaS)-based TMS in the cloud. Shippers experience a return on investment (ROI) with this type of system immediately since they can be live in just a few weeks. Embedded instances of machine learning (ML) and (AI) start streamlining processes as soon as data has been uploaded to the system. Shippers also do not have to worry about loss of productivity from scheduled downtime due to the cloud’s microservices architecture.

The best TMS software providers can collaborate with transportation management teams and other stakeholders through the entire process, from planning and implementation to process improvement and training. Given the vendor, the migration process can happen within 30 to 60 days. The more responsibilities the vendor takes on—from uploading data to using APIs to integrate systems—the faster and easier the process is for the entire project team.

 

Reduce fuel costs

Shippers cannot control fuel prices, which can spike at any time for any reason. But they can control fuel costs. Strategies for reducing fuel costs include:

  • Load planning and optimization. Loaded cargo can then be optimized for easier delivery and more flexible and accurate pickup and delivery times. The result is less wasted fuel due to trucker idling at the warehouse, terminal, or railyard. Shippers can also reduce fuel costs by optimizing for fewer deadhead miles.

  • Route optimization. An optimized route is not necessarily the shortest route between two points. Route planners must consider the cargo itself and the equipment being used. Other considerations include road conditions such as construction, weather, heavy traffic, and traffic lights.

  • Transportation mode. A cloud-based TMS system allows for seamless movement between truck and rail which can save time, reduce transport costs and conserve fuel, helping shippers to build more cost-effective and sustainable supply chains.

 

Reduce errors though automation

Repetitive, manual tasks can lead to errors and loss of productivity in supply chain logistics. A cloud-based TMS system has machine learning (ML) and artificial intelligence (AI) embedded in every instance. It can streamline and automate 95 percent of transportation management processes because the system starts learning the minute it receives any data.

The insights lead to substantial cost efficiencies in load planning, routing, weight distribution, scheduling, rail shipping, and preferred carrier selection. And by using a microservices architecture, errors can also be easily isolated and eliminated as part of the continuous process improvement development cycle of a robust TMS system in the cloud.

 

More efficient freight sourcing

Freight sourcing is now a continuous process as well as an annual one. Transportation management teams must manage both short and long-term contracts while trying to get 100 percent acceptance of tenders when carrier capacity is scarce.

Digitizing the freight sourcing process leads to better procurement management regardless of shipping cycles. Shippers can maintain far more contracts than with other systems, including spreadsheets. Also, transportation management teams no longer have to call or email carriers. Given the right request for quote (RFQ) tool, transportation management teams can better manage annual freight RFPs, short-term RFQs, and the spot rate market.

 

Save time and money by automating freight settlement

A single shipment of freight can generate multiple invoices. Accounting departments then must verify the accuracy of each one and catch any discrepancies. The traditional freight settlement process is labor intensive that drains resources and drives up transportation costs.

With autopay, shippers and carriers have pre-negotiated rates, including some accessorial charges. So, a carrier can receive payment upon delivery instead of months later. And any charge discrepancies can then be easily negotiated during the accounts payable audit.

 

Reduce demurrage and detention fees

Demurrage and detention (D&D) fees can cut heavily into a shipper’s profit margins. Cargo needs to arrive at a destination for shippers to avoid them. This requires visibility into where freight is at all times. So freight cannot be forgotten or stuck at the warehouse, terminal, or railyard, TMS software can connect all D&D rules and government regulations with contracts and accepted tenders.

For shippers to survive and thrive in the current market, they will need cutting-edge technology in the cloud to automate processes, take advantage of hidden opportunities, and drive down shipping costs. They also need a cloud-based transportation management solution provider who can offer cutting-edge service.