Optimizing LTL Freight Shipping With A Transportation Management System (TMS)

Third-party logistics providers offering less-than-truckload (LTL) freight and shipping options are subject to several challenges. From insufficient consolidation to poor pricing and cost management to unsatisfying transit time variability, shippers become bogged down by the weight of these burdens. But the right transportation management system (TMS) can change that.

Implementing a TMS solution can automate documentation creation, provide effective route planning, fill trailers to the safe maximum weight, and enhance all aspects of the operation. With such newfound efficiency, companies can stay ahead of the always-advancing competitive curve, exceed client expectations, and overcome obstacles with relative ease and speed.

The world is only set to become increasingly digitized. Still, with a high-quality transportation management system, 3PL LTL and other shippers, won’t need to worry about being kicked to the side.

Understanding LTL Freight Shipping

Less-than-truckload shipping is a transportation type used when the shipment’s size or weight doesn’t require a full truckload. In this industry, multiple customer shipments are consolidated into one truckload, spreading the cost and sharing the space for more efficient fuel and resource usage. 

Unlike FTL (full truckload) shipping, which fills whole trucks, LTL shipments are smaller quantities and use only a fraction of trailer space. So, shippers with smaller volumes share transportation costs with another shipper, benefitting from lower prices, competitive rates and boosted flexibility.

Despite the benefits of LTL freight services, a few common challenges create significant pain points unless sufficient systems are in place.

Common LTL Freight Logistics Challenges

Difficulties exist in all industries. However, those in the less-than-truckload sector are particularly grueling, covering everything from competitive pricing, and cost management to communication, compliance, visibility to transit time variability, and insufficient consolidation. Discovering the details of each challenge ensures leaders are ready to manage them, proactively preventing profit-losing downtimes in the future.

• Insufficient consolidation — Consolidation is the bread and butter of the less-than-truckload freight logistics. It’s the ticket to effective route planning, optimally utilizing trailer space, and adequately planning loads. Insufficient consolidation leads to improper routing, poor LTL shipment load planning, and nonsensical trailer space utilization. Ultimately, these factors can reduce provider reputation, damage present client relationships, reduce cash flow, cause resource loss, and cause many more unfortunate happenings.
• Pricing and cost management — Controlling costs and managing the pricing side of LTL shipping presents a considerable challenge for business leaders. Everything from weight to accessorial charges to distance to shipment dimensions contributes to the pricing of a particular order. Providers work tirelessly to provide accurate prices to their customers. Still, they fail to offer a consistent scale without the proper technological installations, as cost management is a near-impossible task. 
• Transit time variability — Customers don’t want unreliable shipping times, especially since providers like Amazon provide exceptionally speedy and dependable shipping dates. However, variability in LTL freight shipping is a common occurrence. The “hub-and-spoke” business model is crucial to this type of shipping, meaning shipments can pass through several legs and get transloaded a few times at terminals before hitting their final-mile delivery section. And the more complex a provider’s network, the more opportunities for missed pick-ups and delays. Thus, delivery days or times in less-than-truckload shipping aren’t typically guaranteed.
• Communication and visibility — Real-time shipment tracking is a must-have, but it’s incredibly challenging for LTL shippers. There’s very little visibility and minimal communication during the LTL lifecycle, creating difficulties in tracking and managing shipments. Whether it’s adverse conditions, capacity issues, or limited technological infrastructure, this part of the industry is plagued with visibility tribulations.
• Compliance — Non-compliance with regulations can bring about hefty fines, lengthy delays, and considerable reputational damage for LTL freight shipping providers. However, standards are constantly changing, meaning leaders must spend a significant portion of their working lives remaining abreast of evolving regulatory additions or adaptations. Plus, professionals must ensure documentation, such as bills of lading, shipping labels, and customs forms, are completed accurately, presenting even more challenges.

The Role of a Transportation Management System (TMS) in Optimizing LTL Freight

Sometimes called a transportation management solution or transportation management software, a TMS provides LTL freight shippers with the technologies they need to plan, execute, and optimize the movement of goods. Whether ingoing or outgoing, the system ensures proper documentation is available, the shipment is compliant, and loads are effectively managed. 

Businesses can rely on the platform for unparalleled visibility in day-to-day operations, trade compliance data, and documentation. This increases the likelihood of shipments arriving on time, regardless of destination locations and of the innate complexities seen in less-than-truckload consolidation.

Transportation management systems are the backbone of the modern LTL freight world, giving professionals the technological power to optimize almost every facet of their operations.

Key Features of TMS for LTL Freight Shipping

Transportation management systems come with seemingly endless lists of features. However, LTL freight shippers will benefit most from the six below:

#1 Remote Access

The most critical feature of transportation management systems for LTL carriers and freight shipping providers is that it gives them the much-needed power of on-the-go knowledge. Remote access allows businesses to know how, when, and where their freight is handled through real-time system access, offering shippers peace of mind through the availability of important information.

Enhanced visibility promotes accountability, too. Boasting consistent, to-the-minute shipment updates, TMSs reduce the time needed to pinpoint issue sources. Leaders know when and where their chains become tangled, helping them rectify the problem quickly and seamlessly.

#2 Load Optimization

Every logistics provider understands the importance of load optimization. However, it becomes even more crucial in the less-than-truckload shipping world. Since no singular shipment fills an entire trailer, professionals must expertly coordinate a plethora of shipments into one truck, multiplying the complexity of the operation. 

Many years ago, this tricky process was an extensive, manual procedure. However, transportation management systems allow LTL freight shipping companies to harness the power of its technology for this purpose, streamlining and accelerating the ordeal.

A TMS has the tools to optimize every load by regulatory requirements and vehicle specifics. Input the truck’s dimensions, save them for later dates, and automatically assign the day’s shipments. Depending on the particular TMS, the load planner may have a 3D feature, allowing professionals to see cargo distributions onscreen.

#3 Route Planning

Route planning is just as vital as load optimization for LTL freight shippers. They may be able to fill a truck, but how it gets to its many destinations is the next most significant hurdle. And yet again, the tools TMS solutions provide can automate the process. 

The best TMSs come with built-in mileage and routing features that consider all aspects of the truck’s journey and automatically produce the most cost-effective, fuel-efficient route, improving operations from the bottom line.

#4 Integration

Creators of transportation management systems understand the cruciality of their products and their ability to work synergistically with current systems. Connectivity across a wide range of platforms is the name of the game in today’s LTL freight shipping world, so TMSs come with innovative features that allow for precisely that.

Whether businesses have a warehouse or order management systems, they can rest easy knowing that their new implementation will slip seamlessly into their workflows. There’s no place for information silos in 2024, and TMS solutions ensure companies can say goodbye to them once and for all.

#5 Payment and Audit

Freight bills can be incredibly complex, mainly where less-than-truckload freight is concerned. Thankfully, transportation management systems remove the headaches from the process. 

Various tools within the accounting features of the program automate invoicing and payments, completing duties like correct application of LTL shipping rates, invoice validation, discrepancy reconciliation, and so much more. By automating the process, companies can ensure they comply with auditing needs, save time, and decrease errors throughout the supply chain.

#6 Reporting and Analytics

Alongside the real-time tracking feature mentioned earlier, TMS software provides real-time analytics and a variety of custom reports for professionals to generate. Generally speaking, businesses use them to monitor predetermined performance indicators to make informed decisions that improve intrinsic workflows and boost profit margins.

That said, such reports are also critical for compliance with various industry standards. By taking advantage of the included analytics, less-than-truckload shippers can stay more appropriately aligned with the regulations set by policymakers.

Addressing LTL Freight Challenges Through TMS Implementation

The features discussed above work in unison to optimize the less-than-truckload freight shipping operations, addressing the challenges mentioned in a previous section as it does so.

Following proper implementation, transportation management software for LTL service providers makes capturing and analyzing data from across the business a breeze. Generating comprehensive reports becomes a non-issue, giving profound insights into potential opportunities for further optimization and value-adding decisions.

That said, TMS truly comes into its own when preventing the difficulty of insufficient consolidation. Its automation allows professionals to rapidly and accurately fill trailers with appropriate shipments, even when picked up at different points.

Benefits of Optimizing LTL Freight Shipping with TMS

Beyond its ability to address the challenges mentioned earlier, TMS offers several benefits, including:

Improved Operational Efficiency

Efficiency is the answer to longevity, but freight operations are complex processes. So, how can the LTL industry and freight services providers overcome the complexities and offer seamlessness within their operations? By using a transportation management system to:

• Track shipping lifecycles;
• Optimize routes based on fuel efficiency;
• Plan loads to utilize trailer space effectively; 
• Reduce human error through label and documentation automation;
• Improve resource allocation and planning.

Less-than-truckload freight shippers who firmly rely on a high-quality, integrated TMS are more likely to reap overall efficiency-improving benefits.

Enhanced Visibility and Tracking

LTL freight class shippers need complete transparency with their clients in this day and age. As such, they require all information at their fingertips — a near-impossible feat without the technological prowess of transportation management systems. 

Providing to-the-minute tracking updates to clients is one of the primary ways to exceed expectations in 2024 and beyond. TMS uses the ever-advancing Internet of Things to monitor trucks at all times, offering perfect visibility to users and their customers.

Beyond automatic shipping notifications, less-than-truckload shippers can use the information to track shipments, detect delays and communicate transit times and durations to suppliers. Ultimately, this keeps accountability and reliability high, a must-have for LTL freight shipping providers.

Cost Savings and Effective Resource Utilization

Using a TMS as an LTL freight shipper brings excellent cost savings into an otherwise expensive process. System users can reduce shipping costs, administration expenses, and inventory charges as the integrated platform decreases paper usage, automates cost calculation, and uses resources effectively.

Through complex algorithms, the platform generates the best (i.e., most cost-effective) routes for drivers to take and fills each truck to maximum capacity. Saving money and utilizing resources properly in freight movement allows businesses to improve processes in other areas.

Improved Informed Decision-Making

Transportation management systems also give business leaders extensive opportunities to make split-second decisions that will benefit the company in the short- and long-term. Choices need no longer be made without access to in-depth analytics. TMS integration bridges gaps to offer a complete picture of the company before finalizing a decision. That way, leaders can be assured they are making a valuable addition. 

Today’s competition for special services is exceptionally fierce. Thus, only those who can stay adequately ahead of the curve will remain afloat, boosting the necessity of transportation management systems.

How to Implement a Transportation Management System

Implementing a transportation management system is essential for proper uptake, decreased resistance, and meeting goals. Companies should heed the following steps when integrating a new TMS:

#1 Define Goals

As mentioned above, TMSs can benefit LTL freight shipping businesses in many ways, including automated invoices, improved communications, route optimization, enhanced visibility, efficiency optimization, and more. However, the only way to reap such rewards is by understanding how the system will integrate into an existing process. 

Thus, companies should ask themselves the following questions:

• What does success look like after implementation?
• What achievements are desired?

Businesses should have a clear picture of what their operations look like post-implementation. This proves much easier with a strategic business plan in place. It helps leaders figure out the potential ROI of the transportation management system.

#2 Find the Best TMS

TMS options are plentiful, but they aren’t all the same. Since there isn’t a one-size-fits-all solution, the wrong TMS can result in lost resources, money, and time. So, choosing the perfect one is essential. To do that, consider the following:

• Interface — It should be easy to use. After all, everybody throughout the business needs to use the system, so an unnecessarily complex design can sully the implementation. The interface should be intuitive and streamlined, with sensical processes and workflows.
• Flexibility — Business needs change. Thus, any TMS should be easy to modify based on ever-evolving requirements. As mentioned previously, one size does not fit all.
• Updates — Transportation management systems must keep up with quick industry changes. Therefore, companies should consider how often the platform updates and its updating processing. Cloud-based provisions are usually the best, offering more frequent and accessible system updates than those housed on servers.
• Integration — Businesses should consider how the new system will integrate with current ones. For best results, they need to work synergistically. 
• Accessibility — Whether the TMS is cloud- or server-based affects how easily users can access the information remotely. As the IoT becomes more apparent, having a transportation management system in the cloud will be crucial for successful integration.

#3 Get Staff On Side

Some employees may be resistant to change. After all, it’s a ubiquitous part of human nature. However, leaders need to break through this resistance. Why? Staff members are the key to successful implementation. If they’re happy and willing to use the system, transitioning to new working methods won’t be difficult.

Companies should focus on clear communication and change management to get staff on the side before going live. Following the first two steps, getting people onboard should be more accessible.

#4 Prepare for Success

Intricate preparations can begin once everyone agrees that the change will help the business meet its goals. People should be excited about the new implementation, and this feeling needs to continue. To help it do so, leaders can:

• Dedicate extra resources to the project.
• Create a committee to organize and oversee implementation efforts.
• Acknowledge and create a plan for potential setbacks or challenges.
• Communicate transparently to ensure people are updated and involved at every stage.
• Assign a project manager to run the implementation.
• Meet with relevant stakeholders to talk about integrations with other systems.

#5 Create and Follow a Plan

Depending on what LTL freight shipping businesses want the system to do, implementation can take several days, weeks, or even years. Therefore, having a clear plan (and sticking to said plan) will ensure that teams keep momentum throughout the process. 

Leaders must set a realistic timeframe, alongside budgeting and action points, to guarantee they stay on track. Plus, thorough documentation is necessary to keep moving forward, regardless of the process length.

Statistical Insights into LTL Freight Shipping

Daily necessities, electronic products, medicine and chemistry, and industrial parts are just a few factors driving growth within the LTL freight shipping market between now and 2030. As the demand for such products increases, so will the sector’s expansion. Air, ocean, land, and LTL freight shipments are expected to witness significant growth in the coming years, paving the way for more providers to enter (and stay) on the scene.

However, LTL shippers can’t do it alone — they need the help of a reliable, high-quality TMS to skyrocket them to the dizzying heights of success. It’s already working its magic in several areas, with companies witnessing profound efficiency and cost improvements, as proven by the following statistics:

• TMS can reduce costs by 5% to 15%.
• TMS-provided automation saves five to ten minutes per order, reducing labor costs by 3% to 4%.
• In some cases, TMS reduces lead times by two days.

Integrating TMS with Other Freight Management Systems

A TMS is only as good as its integration capabilities. If it doesn’t work with an LTL provider’s current shipping systems, they won’t find much luck with their latest addition. 

Thankfully, most TMSs work seamlessly with other freight management platforms, ensuring unified workflows in all aspects of the business. Two of the most essential integrations are as follows:

WMS Integration for Streamlined Warehouse Operations

When integrating warehouse management systems and TMSs, the goal is to create a single source of operational truth for providers’ warehouse operators. The dashboard/platform must offer the most accurate, to-the-minute information to the entire organization. 

By combining TMSs and WMSs, LTL freight shipping companies create a one-stop-shop solution that details inventory and shipping data in one easy-to-use location, ensuring greater accuracy, better decision-making, and more effective predictions of shipping needs.

Fleet Tracking System Integration for Enhanced Shipment Visibility

Enmeshing TMS and fleet tracking systems allow businesses to make the most cost-effective decisions. With all the information they need on one screen, leaders can weigh service versus cost in real time without flipping between systems for enhanced accuracy and efficiency.

Integrating fleet tracking with TMS positively impacts ROI on optimization and automation technologies. It’s a win-win!

Future Trends in TMS for LTL Freight

Experts anticipate these future TMS trends will have a positive impact on LTL freight rates for shippers:

• The ever-advancing intelligence of IoT devices
• A more widespread uptake of real-time GPS tracking
• Automated customer service and support
• Blockchain technology for supply chain transparency
• Enhanced machine learning

Final Thoughts

LTL freight shipping companies have plenty to gain from a TMS, including improved reporting and analytics, boosted operational efficiency, ideal visibility and tracking, and effective resource utilization. With a full-spec transportation management system by their side, the sky is the limit.