Shippers decipher differentiation in crowded TMS market, May 10, 2018

by Eric Johnson, Senior Technology Editor

Innovations in the global transportation management system space are happening around the fringes, incorporating things like in-app messaging, better user interfaces, or applying AI layers to existing optimization tools.

Shippers have long had a litany of transportation management systems (TMS) from which to choose, but have often struggled to decipher in crowded market.
In this corner of the supply chain management software space, every bit of incremental value added can matter to shippers. That’s especially important in a sector where there is huge motivation to switch from an existing system to a new one, or to invest in a system for the first time.

Gartner estimates there are more than 1,000 TMS vendors globally, with about 20 to 30 percent having international capability. Those TMS offerings are generally provided by software vendors or third-party logistics (3Pls) with a proprietary software system.

According to Gartner, about 60 percent of new investments in TMS from large shippers are companies looking to replace their existing systems, while the other 40 percent are investing in their first TMS. In the small and medium segments, the number of first-time buyers is in the 80 to 85 percent range.

Shippers – ‘satisfied, but not happy’ with transportation tech

“Shippers overall are satisfied, but not happy” with their TMS, said Bart De Muynck, transportation technology vice president at Gartner. “The more complex the implementation, no one’s really happy. But there’s a difference between satisfaction and the value it brings to an organization.”

Some of the “grass is greener” sentiment from existing TMS users can be traced to perceived innovation from the litany of established and start-up providers in the market. Although that innovation can be hard to come by in a sector that’s now more than three decades old and in its fourth wave of technical evolution, and much of the innovation comes in small increments.

Those advances sometimes take the form of broader multimodal capabilities (like the ability to plan and execute shipments across international and domestic modes), or a more intuitive user interface, or the use of artificial intelligence. Sometimes they’re as simple as providing a new way for parties associated with an international shipment to communicate.

Case in point, the international transportation management software provider Haven on Thursday added a new feature in its system designed to migrate internal and external discussions on shipment management from email to instant messaging.

The feature, called In-App Messaging and Notifications, is an attempt to parlay the growing comfort people have with real-time messaging solutions like Google Hangouts, Slack, and HipChat into a more productive solution for those associated with execution across consignees, beneficial cargo owners, 3Pls, ports, and carriers.

Haven’s TMS), which the company unveiled in the first half of 2017, is used predominantly by commodities shippers, food shippers, and metals traders, companies whose products are low margin and who gain significantly by reducing the cost of logistics management per shipment. The system is specifically designed to allow shippers to wean themselves off the use of freight forwarders while also reducing the number of in-house logistics staff.

“Email wasn’t designed to be a filing system of record and unfortunately it has become just that for many large businesses,” the company said in a statement. “This causes huge and costly problems, discrepancies, and inefficiencies, especially in the world of global shipping where accuracy is key and mistakes are costly.”

One of the unique elements of the messaging tool is its ability to connect parties across enterprises – like email does – but in a real-time way that most companies only have internally. Users can organize conversations around phases of trade, from submitting shipping instructions to managing customs clearance with multiple participants like shippers, suppliers, customer, banks, and customs brokers in a single collaborative place.

The tool also provides a way to store documents, data, and conversations associated with a particular shipment in a single, searchable place.

“Managing shipments with email was a slow and outdated process that caused us countless problems on a daily basis,” Dan Dwyer, chief executive officer of Rothfos, the largest supplier of coffee beans in North America, said in statement about the company’s use of the messaging tool.

Outside parties are granted permission to join message channels, and can be cordoned off from discussions not relevant to them.

Haven told the that the feature was developed after it saw that “collaboration and transparency continued to be challenges. Based on early beta successes this feature saves at least two hours per shipment.”

Cloud Logistics’ Activity Stream – users can connect via embedded social media

The idea of building in-application real-time messaging capability is relatively new in the TMS market. Cloud Logistics, a domestic TMS provider, has given users the ability to connect via an embedded social media channel it calls the Logistics Activity Stream.

In-network collaboration tools are just one of the ways TMS providers are tinkering around the edges.

“On the international side, I’m not seeing anything too foundation,” said De Muynck. “It’s more on the periphery – things like partnerships, or around procurement portals that partner with the TMS and are integrated inside the TMS.”

De Muynck said it’s natural to see more innovation in the domestic TMS market owing to the nature of freight spend for most shippers. According to Gartner research, around 70 percent of freight spend for the average shipper is over the road, 10 percent ocean, 10 percent parcel, and the rest split between air and other modes. The spend divide between domestic and international is even more pronounced from a shipment perspective, with fewer international shipments on the same amount of spend.

The biggest conceptual innovation that De Muynck has tracked is the two-pronged approach newer entrants like – Kuebix have introduced to build their networks. Kuebix essentially offers two different TMS products to different categories of shippers: a free “light” version to small and medium shippers and an enterprise version to larger ones. The free version, which now has more than 10,000 customers, according to Kuebix, helps the software company build its network. That network, both in terms of connections to carriers and brokers and the data gleaned from shippers’ use of the free version, enriches the paid product sold to enterprise customers.

Kuebix also has an interesting sales channel partnership with the less-than-truckload carrier Estes Express Lines, which essentially sells shippers on the collaborative opportunities of using the system (though Kuebix’s platform is carrier-neutral).

De Muynck said the arrangement is unique because it is typically shippers driving carriers to use their TMS platform, whereas in this scenario Estes is compelling its shippers to use a common platform.

Freeware is not necessarily an innovation in and of itself, but it points to how TMS providers are seeking new ways to build out their networks. That positions the network itself as the point of innovation.

Another innovation area – artificial intelligence

Artificial intelligence (AI) is another area where TMS providers are trying to innovate. AI has already been integrated into routing solutions developed by the likes of Quintiq and Paragon, but De Muynck said it is starting to be incorporated into optimization engines.

For instance, JOA Software, which has long been known for the robustness of its optimization engine, said at its user conference last week that its new Luminate platform allows it to layer newer technology like AI on top of its existing framework. That makes providing additional capabilities around AI less intrusive from a development standpoint, which helps keep things more consistent for existing customers not yet ready to jump into the next-generation technology pool. Although empowering the existing optimization with Al can significantly reduce the time it takes for a user to run an optimization, sometimes from an hour down to minutes.

AI also is starting to be incorporated more often in turning transactional data into decision-making data around procurement and planning, an international TMS provider told the JOC.

Matt Tillman, CEO and founder of Haven, said he sees global TMS primarily as a tool to reshape how shippers think about financing in a context broader than just logistics. He said that while logistics practitioners tend to think of their function in a discrete way, they ought to think more like a chief financial officer would, especially around the cost of capital.

“All trade is financed,” he said. “Everyone is paying finance or insurance, and at any one of these firms, the CFO would always pay $100 more in transportation costs if it lowered the amount of inventory they needed to finance, or the reduced the number of days they needed to finance a trade. We’re working almost exclusively with CFOs.”

Tillman noted that that managing global trade has moved beyond a human scale, and that automation of repetitive processes needs to almost be a given.

“Most of the time, a shipper with a lot of volume who wants to bring things in-house has to scale their operations team linearly. And there’s lots of churn,” Tillman said. “Our pitch is ‘bring it in house, but you don’t have to scale your internal team linearly.”‘

Tillman said the average time a Haven customer spends managing a shipment drops from 8 hours to 40 minutes after using the system.

“It’s pretty simple to understand what people in logistics want,” he said. “They want out of PDF­ spreadsheet hell.”

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