What is a Transportation Management System and How to Build It: Step-by-Step Guide

According to Descartes’ Study, companies implementing a transportation management system can save between 5% and 15% of freight costs. The numbers look impressive. But how is this possible? In this guide, we will look closely at service providers, features, benefits, implementation tips, and trends of TMS development.

A Transportation Management System does exactly what its name says: it is used to optimize processes related to planning, tracking, and executing the movement of goods. It allows for efficiently managing different carriers, transportation modes, and types of shipments within one solution, serving as the operational backbone. 

Key capabilities of a TMS system include: 

• quote management 
• rate management
• shipment tracking (also, in real time)
• document management
• freight settlement

Businesses can quickly compare carriers and select the best-fit one, manage and optimize costs, keeping delivery performance at a high level. They minimize the chances of disruptions even for the most complex orders or during seasonal spikes in demand.

Identify Specific Features: Start your selection process by writing down inefficiencies you want to eliminate. Think of transportation functionalities you need to complete this (e.g., quick rate reception, shipment management and dispatching, or invoicing).

Assess Your Network: Audit your current capabilities, available network of carriers, and business challenges you are facing. You will use the information to assess available products or custom TMS functionality that fits in with your particular needs.  

Research Reputation: Go through lists of reputed TMS vendors on independent review platforms. Read client reviews and use cases, focusing on those provided by similar logistics businesses.

Check References: Request references. Discuss product performance or provided services with them to verify the service provider’s claims. 

Industry Alignment: Prioritize a provider with proven experience in your domain or niche; it can help you avoid common pitfalls.

Integration Capabilities: Check if the TMS functionality can be easily integrated with your warehousing, planning, and accounting software, ensuring automated data exchange. 

Scalability & Customization: Match TMS’s scalability and customization complexity with your operational needs and growth plans. 

Security & Compliance: Modern TMS solutions provide enhanced data security and role-based access control. Still, it is worth examining whether the selected TMS is compliant with regulations applicable in your region.

User Experience: Check if the TMS offers a clear user interface and provides guidance/training to ensure a minimum time required for adoption.

Total Cost of Ownership (TCO): Estimate all costs that may and will most likely occur after the purchase. The costs can include subscription fees, initial setup, integration, customization, maintenance, upgrades, and employee training.

ROI Potential: Evaluate potential savings from the TMS implementation, which can be optimized resource use, increased efficiency, sales growth stemming from higher customer satisfaction, and more.

Post-Purchase Support: Evaluate cost factors of TMS software support, response time and communication channels, and available updates.

IT Craft is renowned for its business-oriented approach, which is the backbone of its logistics and transportation software development services. This provider combines commitment to engineering quality, expertise in the logistics domain, and a strong focus on value, building top-notch TMS solutions for complex transportation scenarios. 

With 25 years of technological experience under its belt, IT Craft can efficiently work on TMS projects for different businesses, including solutions for early-stage startups, modernization of enterprise-level transportation systems, integration of carrier APIs, optimizing long-term maintenance costs for cloud TMS solutions, and more.

Services & expertise: custom TMS solutions development, TMS consulting, digital transformation, legacy TMS software modernization, third-party integrations, API development, TMS software maintenance and cloud optimization. 

Technology stack: Laravel, Symfony, Spring, .NET, Django, Node.js, React, Angular, Redux, Next.js, TypeScript, Kotlin, Swift, React Native, Flutter, Ionic, Xamarin/.NET MAUI, AWS, Azure, GCP, Digital Ocean, Terraform, Kubernetes.

Team size: 330+ experts. 

Transportation Management System Development for MyCarrier

MyCarrier had a vision of a TMS solution that could simplify the management and tracking of less-than-truck shipments, which it also expanded to truckload shipment management.

The IT Craft team helped this US startup build an MVP from scratch on time and soon started on its transformation to ensure the same high-level performance and feature expansion under skyrocketing user interest.

Results: 

• Timely delivery of a high-quality platform for shipment management. 
• An award-winning software in its category.

Read Case Study

Custom CRM system development for eLaundry

eLaundry is a NYC business striving to provide its customers with exceptional services. The system started as a custom CRM for managing on-demand laundry services and later focused specifically on business clients.

A custom-built CRM plays a key role in accurate order execution. The TMS functionality is responsible for optimizing order delivery costs. It transmits the best routes and schedules for pickups and deliveries to the driver app.

Results: 

• Adding transportation functionality as part of finalization works.
• Ensuring tight coordination across 10 departments.

Read Case Study

Twelvedevs is an established TMS development and consulting company with a large portfolio of projects delivered to many logistics and manufacturing businesses worldwide. Its expertise encompasses real-time communication, transportation control, and integration with logistics workflows among others.

The company emphasizes a custom approach to each client’s technological needs, offering flexible engagement models and scaling resources immediately based on evolving TMS requirements. It ensures a quick project kickoff and workflow transparency. 

Services & expertise: software architecture and system design, application modernization, R&D as a Service, AI & ML development, software project rescue, custom web development, staff augmentation, technology consulting. 

Technology stack: React, React Native, Angular, Nest.js, Node.js, PostgreSQL, Redis, AS2, GraphQL, AWS, Jest, BPMN, EDI, JavaScript, PHP, Vuex, Vue2, OpenAI, Pinecone, Amazon Bedrock, Oktell, gRPC, Docker, Kafka, Camunda. 

Team size: 70+ experts. 

Top clients: Atlas, CYRIAN, Roomle, Newcross, Keen Construction and Concreting.

DreamzTech has been selected for its strong specialization in logistics and transportation software development. The company has 15+ years of expertise in delivering solutions used by 3PLs, carriers, and freight forwarders for routing, dispatch, billing, tracking, and more, with Fortune 500 brands among the clients.

Apart from end-to-end development capabilities, DreamzTech offers customizable product suites. These have been produced to help clients optimize development and automation expenses. It holds ISO 9001:2015 and SOC 2 Type II certifications, ensuring high security on client projects.

Services & expertise: transportation management system development, fleet and maintenance management, field and workforce service management, smart warehouse and asset automation, conversational AI for logistics.

Technology stack: Node.js, .NET Core, React, Angular, Flutter, React Native, AWS, Azure, GCP, TensorFlow, LangChain, Microsoft Fabric, Power BI, Tableau, Samsara, Geotab, SAP, Oracle NetSuite, Microsoft Dynamics, DAT, Truckstop. 

Team size: 450+ experts. 

Top clients: AccelTMS, NAQEL Express, Close Brothers, FLSmidth, DHL.

COAX Soft creates custom TMS software that supports unique transportation needs and workflows. It focuses on implementing the best-fit solutions for each client’s specific project goals. Reducing transportation costs, improving planning, ensuring seamless data flow are among some of many of those goals.

The firm’s programmers are recognized as active problem solvers who can efficiently incorporate provided feedback into the next sprints using agile methodologies. COAX Soft’s ISO:9001 and ISO/IEC:27001 certifications can be an asset for businesses operating in regulated domains.  

Services & expertise: custom TMS development, transportation software development consulting, TMS mobile apps, cloud-based TMS development services, scaling and integrations, legacy TMS updates.

Technology stack: React, Redux, Vite, Webflow, Node.js, Ruby on Rails, Flask, FAST API, Next.js, Meteor.js, React Native, AWS, GCP, DigitalOcean, Oracle Cloud, Terraform, Docker, Algolia, Anthropic, ElevenLabs, PyTorch, LangChain. 

Team size: 100+ experts.

Top clients: Fortay.ai, Krytter, Location Live, Proteineer, GrandBus.

WEZOM is an industry veteran that is capable of building logistics and transportation solutions for advanced business needs, such as real-time shipment tracking, delivery optimization, automated operations, and beyond, while also ensuring seamless integrations with clients’ existing software systems. 

The company offers a strong engineering pool and open communication, which allow it to adapt quickly to clients’ evolving requirements. WEZOM can work on different types of projects, including product delivery from scratch, optimization, modernization, cloud migration, and more.

Services & expertise: transportation management system development, fleet management, warehouse management solutions, IT consulting, third-party integrations, web & mobile development, AWS & cloud development.

Tech stack: React, TypeScript, Ant Design, Laravel, Spring, Node.js, Python, Flutter, Swift, Kotlin, GraphQL, PostgreSQL, MySQL, .NET, Docker, AWS, Azure. 

Team size: 275+ experts.

Top clients: Schwarz Logistics, John Deere UA, SafeRoute AI, EasyLoad, Gamma TMS. 

Businesses across all sectors are increasingly adopting fully digital TMS solutions. 

A robust transportation management system provides a real-time overview of inbound and outgoing freight movement. While shippers and carriers are the main user groups, the list is wider. It includes:

TMS users vary based on their occupation. Based on the specific end-use segments, they are:

There are no limits in transportation methods. Every business conveying goods by land, sea, or air benefits from a transportation management system. Advanced systems enable users to combine different transports within one delivery.

A good TMS filters out and automates routine operations—a mainstay of the shipping and handling business.

The transportation management system usually works with data pulled through other supply chain and logistics modules, e.g., WMS, order management, or procurement system. 

The TMS will automatically handle planning and execution for numerous tasks in the overall freight movement workflow. Depending on specific business needs, a TMS can include such fundamental aspects as:

Like any other business software, a TMS cuts down dramatically on the need for continual inquiry emails or phone calls between in-house departments and external contractors.

It eliminates potential bottlenecks or delays, providing:

A well-implemented transportation management system means that orders are shipped faster and more efficiently. The results are lower overheads and improved client relationships at both supply chain ends.

A transportation management system offers broad and deep control over any cargo shipping and delivery industry phase. The main functionality covers the following activities: 

and more.

The software enables customers and managers to find the best option based on user-defined parameters. Users look through the provider’s focus, services and routes, freight type, and dimensions. Options can be prioritized according to various metrics:

• fastest time
• lowest cost
• fewest stops
• most efficient multi-drop routes
• one-click mileage calculators
• and more

TMSs can even help with contingency planning around background issues like truck driver shortages.

Any aspect of the in-transit phase of deliveries belongs here: 

• order batching and load assignment
• optimization of routes and rounds in response to changing circumstances and cost-control measures
• real-time global tracking of all land, sea, rail, or air fleets
• instant communication updates with individual drivers and handlers

A transportation management system includes a wide range of functions, such as:

• full logging procedures to track and trace every stage of an item’s journey from depot to door
• receipt processing and invoice management (carrier and customer)
• return management
• alert systems to respond to minute-by-minute incidents and delays
• integration with third-party accounting
• payroll and human resources management
• rolling vehicle maintenance and repair schedules

Analytics and reports functionality measures, reports, and provides feedback on performance evaluation. It addresses such detailed metrics as:

• on-time percentages
• costs per unit or mile
• monetary and operational productivity rates
• individual performance
• customer ratings
• supplier reliability
• quality control measures
• and more

An important note. TMS software works alongside other digital management programs in the overall supply chain. Seamless integrations and data exchange are crucial.

The best transport management systems ensure that a worker can quickly track every single delivery from start to finish. The software helps with an optimal sequencing of costs, steps, and variables.

The longer-term benefits are:

Important factors in achieving this include:

What is a transportation management system from an implementation point of view? Several types are possible:

As part of a wider suite, TMS sits between other complementary pieces of software (warehouse management system, resource planning, supplier management, etc.). Together, they comprise a full supply chain management (SCM) system, linking all facets of goods’ handling and movement.

On-premise TMS still dominates, having 57% of the market share. It runs on internal servers with indirect data exchange. The complexity and cost of a locally installed package once limited it to only large corporations. Yet, this option becomes affordable even for SBMs when they outsource logistics development.

Cloud apps grow fast, being flexible, lightweight, and cost-effective. They enable businesses to improve performance by letting users reach functionality anywhere. All departments join efforts effectively within diverse areas.

Security is high with the right team. Updates are fast and seamless.

Every TMS software needs constant integration of the newest technologies to advance its capabilities. 

Understanding the trends lets the businesses using logistics management software better adjust to evolving client expectations.

The following trends are shaping the future of transport management systems: 

Easiness is the deal breaker. While the systems grow in complexity and dynamics, they must remain intuitively clear. A TMS must take the guesswork out of the company’s processes. It must simplify operations for employees and require as little adoption time as possible. Instant support and access to documentation is crucial.

Updates and integrations must also be fast and seamless to eliminate idle time. 

Trade regulations close gaps in sustainable development and environmental protection. For instance, the Germany Supply Chain Due Diligence Act requires domestic companies to monitor human rights and compliance with environmental standards across the entire supply chain. Other countries will pass similar regulations soon. 

Transportation management systems require feature updates to support sustainability. For instance, TMSs must enable companies to calculate emissions when electing the best route and rank suppliers based on their compliance. 

AI is one of the biggest trends. Single employees can complete the tasks that will normally take days of work by an entire department with its help.

According to a McKinsey report, AI technology is valued between $17T and $26T. It lets companies control processes, predict needs, and optimize flows. 

For instance, Uber Freight has introduced Insights AI to increase the precision of estimated arrivals, respond to customers’ queries, suggest alternative routes, and more. 

The so-called Amazon effect affects logistics-related businesses. Customers can order any item online in a click and enjoy rapid delivery through the Amazon fleet. 

The effect disrupts customer habits and skyrockets competition from the retail giant, to which logistics companies must respond. 

Businesses must become equally efficient. TMS is an integral part, enabling them to deliver fast and cost-effectively.

Increased visibility is one of the key logistics trends. It has been the second top reason a company plans to invest in a new TMS or replacement. 

Companies are looking to extend real-time transportation visibility through track-and-trace features. 

A TMS helps prevent damages and losses and determine cost leaks. More importantly, the software helps determine package thefts—a growing challenge for transportation companies.

So, what is a transportation system? How does it help?

A transportation management system (TMS) covers all aspects of a company’s freight movement. It enables efficient digital processing, logging, ordering, and fine-tuning. 

Just as supply chains must continually innovate to stay in line with the competition, so will the software. Your business needs the best TMS setups with the support of day-to-day freight infrastructures.

Cloud-based transportation management systems are growing in demand. They incorporate more and more cutting-edge technologies such as AI, automated live updates, and query handling for global customers 24 hours a day.