Managing transportation can become complicated when a business handles multiple orders, carriers, vehicles, routes, and deliveries. A Transportation Management System (TMS) helps businesses manage these activities from one central platform. From planning transport orders to tracking shipments and managing freight costs, a TMS can make transportation operations more organised and efficient.
In this guide, we explain what a transportation management system is, how it works, its key features, requirements, and why it is important for logistics and supply chain operations.
What Is a Transportation Management System?
A Transportation Management System (TMS) is software designed to help businesses plan, manage, execute, and monitor transportation activities.
A TMS can connect different parts of the transportation process, including:
- Transport planning
- Route management
- Carrier management
- Transport order management
- Freight management
- Shipment tracking
- Delivery management
- Cost and invoice management
- Reporting and analytics
Instead of managing transportation information across spreadsheets, emails, phone calls, and separate systems, businesses can use a TMS to bring important information together in one place. For companies operating in logistics, distribution, manufacturing, retail, and e-commerce, a TMS can provide better visibility and control over daily transport operations.
How Does a Transport Management System Work?
A transport management system normally follows the transportation process from the initial order to final delivery. A typical process looks like this:
Transport Order → Planning → Carrier Selection → Route Optimization → Shipment Tracking → Delivery → Reporting
First, transport orders are created or imported into the system. The TMS then helps planners organize shipments based on factors such as delivery locations, vehicle capacity, schedules, costs, and carrier availability. The system can also help select suitable transport providers and create optimized routes. During transportation, users can track shipment progress and monitor delivery status. After delivery, businesses can use reports and data to analyze costs, performance, and operational efficiency.
Key Transportation Management System Features (Core Functions)
The exact features depend on the software provider, but a modern TMS commonly includes several important functions of a transportation management system in logistics.
1. Transport Planning
Transport planning helps businesses organize shipments and assign them to suitable vehicles or carriers. Planners can consider delivery dates, locations, capacity, and other operational requirements when creating transport plans.
2. Transport Order Management
A transport order management system helps businesses create, manage, and monitor transportation orders. Instead of handling orders manually, users can keep order information in a centralized system and follow each order through its transportation lifecycle.
3. Route Optimization
Route optimization can help planners find more efficient routes based on delivery locations, schedules, vehicle capacity, and other constraints. Better planning can help reduce unnecessary mileage and improve delivery efficiency.
4. Carrier Management
A TMS can help businesses manage relationships with carriers and transport providers.
Users may be able to compare carriers, assign shipments, monitor performance, and maintain important carrier information in one system.
5. Shipment Tracking
Shipment tracking provides visibility into the progress of deliveries. Depending on the TMS and available integrations, businesses may receive information about shipment status, estimated delivery times, and potential delays.
6. Freight Cost Management (TMS Freight System)
Transportation costs can represent a significant part of logistics expenses. A TMS freight system can help businesses calculate, compare, monitor, and analyze freight costs across carriers and shipping lanes. This can make it easier to identify expensive routes, carriers, or transportation processes — whether goods move by road, rail, sea, or air shipping.
7. Reporting and Analytics
Transportation data can help businesses understand how their operations are performing.
Reports may cover areas such as:
- Transportation costs
- Delivery performance
- Carrier performance
- Route efficiency
- Shipment volumes
- On-time deliveries
These insights can support better operational and business decisions.
Transportation Management System Requirements
Before choosing or developing a TMS, businesses should understand their operational requirements. Common transportation management system requirements include:
- Transport order management
- Route and load planning
- Carrier management
- Shipment tracking
- Freight cost management
- Reporting and analytics
- User and access management
- Integration with business software
- Mobile accessibility
- Data security
Integration is particularly important for businesses that already use ERP, warehouse management, accounting, e-commerce, or fleet systems. A good TMS should fit into the existing technology environment rather than creating another isolated system.
What Is a TMS in Logistics?
A TMS in logistics is used to manage and optimize the movement of goods from one location to another. For example, a logistics company may use a TMS to manage transport orders, assign carriers, plan routes, track shipments, and analyze transportation costs. This makes a TMS an important part of modern logistics operations — and, in shipping specifically, a TMS system in shipping performs a similar role: coordinating carriers, containers, and freight documentation so goods move smoothly from origin to destination port or final delivery point.
TMS in Supply Chain Management
Transportation is an important part of the overall supply chain. Products need to move efficiently between suppliers, warehouses, distribution centers, businesses, and customers. A TMS can connect transportation activities with broader supply chain processes. When integrated with systems such as ERP and warehouse management software, a TMS can provide better visibility across different stages of the supply chain. This can help businesses make transportation decisions based on accurate and up-to-date operational information.
Benefits of a Transportation Management System
Implementing a TMS can provide several potential benefits.
Better Visibility
Businesses can get a clearer view of shipments, transport orders, carriers, and deliveries.
Improved Efficiency
Automated workflows and better planning can reduce repetitive manual work.
Better Cost Control
Transportation data can help businesses identify unnecessary costs and improve freight planning.
Faster Decision-Making
Centralized information allows transport teams to make decisions using current operational data.
Improved Delivery Management
Better planning and tracking can help businesses manage delivery schedules and respond to potential delays.
Scalable Operations
A digital transportation system can help businesses manage increasing shipment volumes without relying entirely on manual processes.
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Transportation Management System vs. Manual Transportation Planning
Traditional transportation management often depends on spreadsheets, emails, phone calls, and separate tools. As shipment volumes increase, this approach can become difficult to manage. A TMS brings transportation information and workflows into a centralised platform. This can reduce manual processes and give planners better visibility into daily operations. The right solution depends on the size, complexity, and requirements of each business.
Transportation Management System Development
Some businesses choose to purchase an existing TMS, while others may require customised transportation management system development. A customised system can be designed around specific business processes, integrations, workflows, and reporting requirements. However, development requires careful planning. Businesses should first define their transportation processes, users, integrations, data requirements, security needs, and future scalability.
Why Is a TMS Important for Modern Businesses?
Transportation is no longer simply about moving goods from one point to another. Businesses need to manage costs, delivery expectations, carrier relationships, operational data, and customer requirements at the same time. A modern logistics TMS system provides a centralized way to manage these activities. For businesses operating across the Netherlands and wider European markets, efficient transportation management can be particularly valuable when operations involve multiple carriers, delivery locations, and cross-border shipments.
Frequently Asked Questions
What is a transportation management system? A transportation management system (TMS) is software that helps businesses plan, execute, track, and optimise the movement of goods, from transport order creation through carrier selection, routing, and delivery.
What is a transport management system used for? It is used to centralise transportation activities — including order management, route planning, carrier management, freight cost tracking, and reporting — that would otherwise be handled manually across spreadsheets and separate tools.
How does a transport management system work? It generally follows the flow: transport order → planning → carrier selection → route optimisation → shipment tracking → delivery → reporting, helping planners make decisions using centralised, up-to-date data at each stage.
Final Thoughts
A Transportation Management System (TMS) helps businesses manage transportation from planning and transport orders to shipment tracking, delivery, and reporting. The right TMS can improve visibility, simplify transportation processes, support cost control, and help logistics teams make better decisions. When evaluating a TMS, businesses should focus on their specific requirements, including transport order management, route planning, carrier management, shipment tracking, freight management, integrations, reporting, and scalability.