Transportation markets are constantly evolving and presenting new challenges and opportunities for the companies that depend on these networks. Whether a company is using truckload, less-than-truckload (LTL), intermodal, ocean, air, parcel or all of the above, there’s always a need to optimize those operations, reduce costs, improve efficiencies and enhance customer service.
The current transportation market is complicated, to put it mildly. Rising fuel costs, labor shortages, trade disputes, the threat of double-digit tariff increases and geopolitical tensions are all adding to the chaos. At the same time, changing customer expectations—namely, demand for faster and faster delivery times—increased competition and a focus on sustainability are all driving shippers to rethink their transportation strategies.
Through it all, one technology tool has stood the test of time and more than proven itself as a “must-have” tool: the transportation management system (TMS). Even as companies work to embed autonomous vehicles, robotics, artificial intelligence (AI), machine learning (ML) and other advanced technologies into their fulfillment operations, TMS takes over once shipments leave the warehouse and/or yard and then helps shepherd those goods to their final destinations.
And, most TMS platforms are now being injected with AI, ML, and other advanced technologies, making them that much more powerful, versatile, and relevant. In other words, most of the TMSs on the market today are definitely not the same ones that hit the market in the early-1990s. Along with AI and ML, today’s platforms are also equipped with advanced analytics, real-time shipment monitoring capabilities and even blockchain technology that helps reduce the risk of fraud and errors.
Tackling tough challenges head-on
What happens when you take customers who want their shipments faster than ever with a persistent warehouse and logistics labor shortage? It may sound like a recipe for disaster, but the truth is companies have been expertly using more technology, automation, data, and insights to achieve supply chain balance while meeting their customers’ evolving needs. The road hasn’t been easy, but TMS ranks pretty high up on the list of solutions that organizations depend on to help them tackle some of their toughest fulfillment challenges.
Take the labor shortage, for example. According to a recent Descartes survey that involved 1,000 supply chain and logistics professionals in Europe and North America, 37% of them experienced significant workforce shortages in 2024, with 61% reporting that transportation operations suffered the most as a result of those shortages. To get around these roadblocks,companies are deploying more automated real-time shipment tracking, back-office automation, advanced analytics and current-generation TMS solutions.
Technology implications
Greatest TMS value in the next two years
- Visibility (37%) and order management (36%) were the top two choices by a 7%+ margin. They were the same top choices in 2023.
- Fleet routing (29%) jumped into third place this years just ahead of performance management (27%) and carrier sourcing (27%).
- Competitive weapon selected eet routing (39%) vs. not important (27%).
- Poorer performers selected order management (36%) and carrier sourcing (30%) much more than top performers (28% and 19% respectively).
Greatest TMS investment in the next two years
- For the 7th year, visibility is the top investment overall (36%) and closely followed by order management (35%) which is number 2 for the second year in a row.
- Fleet routing (29%) jumped into the third spot. carrier sourcing (20%) continued its decline the last three years to number 10.
- Competitive weapon selected eet routing (35%) compared to not important at 29% while not important chose order management (39%) compared to33% for competitive weapon.
Where will you make your greater transportation IT investments in the next two years? (select three)
In fact, Descartes says 23% of companies have already partially deployed TMS and warehouse management systems (WMS), 16% have fully deployed these solutions and 21% are planning to make the move in the near future. Asked what’s driving their TMS investments, companies cited the need for faster delivery times (47%), cost reduction (40%), customer service (39%) and corporate growth (38%) as the key reasons they’re either implementing new TMS or expanding the use of their current systems.
With 2025 expected to bring even more uncertainty and unpredictability for both the transportation and labor markets, Brock Johns, director analyst in Gartner, Inc.’s logistics and technology team, credits the transportation market’s cyclical nature with creating at least some of the challenges that shippers are dealing with right now. “When you look at rates and capacity, they pretty much always fluctuate up and down,” Johns points out. “It’s always been that way.”
On a positive note, Johns says capacity and rates stabilized somewhat as 2024 wound down, likely due to some looming labor strikes being averted. And even as the rate of inflation settles, the incoming presidential administration may once again shake up transportation markets with promises of new tariffs and other initiatives.
For example, if new double-digit tariffs on imports from China go into effect, they could set off an onshoring and near-shoring trend. This, in turn, may drive up demand for domestic transportation.
Improving efficiencies, automating workflows
To help their customers ride out ebbs and flows of the transportation market, TMS vendors are continuously innovating and developing new features and functionalities. They’re equipping businesses with the tools they need to optimize their supply chains, select the best carriers, reduce costs, improve customer satisfaction and operate more sustainably.
One area where Johns has been seeing activity on the TMS front lately is generative AI (GenAI), which uses AI models to learn data-related patterns and structures and generate new content based on that information. He says the use of GenAI in TMS is still in the early stages, but notes that more signs are pointed in this direction according to recent Gartner TMS market research.
“Right now, more than 80% of TMS vendors are doing some degree of GenAI pilots with their customers,” says Johns, who expects this momentum to continue as more companies realize and harness the power of GenAI. In fact, he says roughly half of all TMS vendors have already “woven GenAI use cases into their upcoming product and future product roadmaps.” Such moves on the part of vendors are usually made in response to customer demands, and GenAI is no different.
“If you look back at our latest Gartner Supply Chain Technology User Wants and Needs Study, 50% of respondents told us that GenAI was going to be highly disruptive to their supply chains,” Johns explains. “It just makes sense that we’re now seeing more vendors moving in this direction.”
Thinking even further out, Johns expects GenAI to push the industry in the direction of autonomous transportation management, which for shippers would mean “being able to do more with less” once a TMS has been put in place. For example, AI agents that are embedded into the platforms will be able to take actions, make decisions and/or automate more processes.
“This is a pretty exciting trend that software vendors are doing a lot of work on right now,” says Johns. “It also aligns well with what shippers are asking for from their TMS solutions: to improve efficiency and automate more workflows.”
The democratization of TMS
From his vantage point as systems project manager, transportation at St. Onge Co., Brandon Hamilton is also fielding a lot of requests and questions from shippers that want to know how ML and AI can enhance transportation management. They also want to know which TMS platforms are leveraging these advanced technologies and, perhaps most importantly, how they can get the most value out of the innovations.
In response, Hamilton says vendors ranging from niche-oriented best-of-breed providers all the way up to established industry leaders are taking AI and ML very seriously. They’re using it to optimize freight management, for example, hone in the shipment routing process and find the best matches between shipper and carrier—all without the need for hands-on intervention.
Just two years to three years ago these capabilities were mainly a part of larger TMS platforms; today, even smaller niche market companies can “develop those functionalities fairly easily,” Hamilton adds.
Stepping up to meet customer needs
To shippers that are buying a new TMS or replacing an existing system in 2025, Hamilton says a good first step is to figure out the primary purpose behind the new TMS before shopping around. For example, do you want a TMS to manage the route optimization for your own private or dedicated fleet? Or, are you looking for a platform to handle a large-scale, international operation? Factor in the modes that you use most, including truckload, LTL, intermodal and other options.
“Once you understand the main drivers, you can start to look at how a TMS can add value to your network,” says Hamilton. “This will help you have more in-depth conversations about the potential vendors and platforms; how to interact with them; and ensure that you’re hitting on all of the different requirements that you want to get out of your system.”
For example, Hamilton recently worked with multiple different companies that wanted an integrated TMS that they could use to manage both external carriers and a dedicated fleet.
This requires a “hybrid” TMS approach that not only provides routing guides and mode selection, but also offers private fleet management from the same platform. Hamilton says TMS vendors are responding to these requests by developing tools that “continue to impress us from an operational perspective.”
“I’ve been doing this for more than 20 years on the TMS side of things and the leaps that vendors have taken over the last 5 to 10 years have just been tremendous from a technology perspective,” says Hamilton. “Vendors are really stepping up to fulfill those shipper needs.”
