What is transportation management?

Transportation management is the discipline of planning, executing, and optimizing how freight moves across road, rail, ocean, air, and parcel for both inbound and outbound flows, so you can keep promises on cost, service, risk, and sustainability.

As networks grow more complex, transportation has become a customer experience and resilience lever within logistics, not just a freight cost line item.

Logistics teams are navigating cost volatility, frequent disruptions, and growing pressure to measure and reduce emissions, often across complex, global networks.

At the same time, customer expectations have shifted. Fast, reliable delivery and real-time updates are no longer perks; they're the baseline. Services once reserved for high-value B2B shipments or premium parcels are now expected across e-commerce and beyond.

In this environment, transportation is no longer just a cost to manage. It’s a lever for balancing cost, service, and resilience, and for differentiating on customer experience. When it’s managed well, teams can meet expectations without sacrificing margins or flexibility.

Definition

Put simply, transportation management is how freight moves through your supply chain, from the first order signal to final delivery. It sits within the broader field of supply chain management.

Key stakeholders in transportation management

In most organizations, transportation management is shared across shippers, carriers, third-party logistics providers (3PLs), and freight forwarders, all coordinating to move orders from origin to final delivery.

Four core areas of transportation management

Activities usually span four areas:

• Planning and optimization: Deciding when to ship, from which location, by which mode and route, and how to build loads that balance cost, capacity, lead times, and service levels.
• Booking and execution: Tendering loads, confirming bookings, and managing dock appointments and documentation as part of daily operations.
• Tracking and visibility: Monitoring shipments across all modes, updating milestones, and managing exceptions to maintain visibility and accurate delivery estimates.
• Settlement, compliance, and audit: Finalizing documentation, ensuring regulatory compliance, and auditing freight bills to verify charges against contracts and events.

Transportation management is foundational anywhere freight has to move reliably, from replenishing plants and distribution centers to serving customers across a network.

In complex supply chains, that work is distributed across systems and sites: ERP and order management, WMS and TMS platforms, carrier and 3PL portals, finance tools, and the facilities where freight is picked up, staged, or delivered.

When exceptions hit, like a border delay that jeopardizes a delivery window, teams need to see what’s affected and decide fast. At scale, it’s hard to manage this through email and spreadsheets without a system that coordinates decisions across teams and partners.

What a TMS does

A transportation management system (TMS) is the digital nerve center for transportation planning, freight management, and, in many cases, global trade management. It helps planners turn shipment plans into real-world movements, keep operations on track when conditions change, and ensure that deliveries are completed, documented, and settled accurately.

Three phases of most TMS solutions

Most TMS platforms group their capabilities into three main phases:

• Plan: Build efficient shipment plans based on order data, available inventory, and transportation capacity. This includes optimizing modes, routes, and loads.
• Execute: Tender loads, confirm bookings, manage appointments, and monitor shipments as they move across the network.
• Settle: Finalize documentation, manage customs and trade compliance, run freight audit and payment, and capture performance data for continuous improvement.

Compared with spreadsheets and carrier portals, a TMS standardizes planning, execution, visibility, and settlement in one place, with integrations to ERP/WMS/OMS and carrier or 3PL systems.

When transportation is well managed, the benefits show up across the business: better service, lower costs, and fewer surprises for customers and internal teams. Common outcomes include:

• Better service and OTIF performance: Clear plans, carrier accountability, real-time shipment tracking, and transportation visibility make it easier to hit promised delivery windows and keep customers informed.
• Lower and more predictable freight costs: Better routing, consolidation, and carrier selection help reduce linehaul, accessorials, detention, and demurrage.
• Stronger risk and disruption management: With visibility into orders, shipments, and exceptions, planners can respond faster to delays, capacity crunches, and route changes instead of reacting after the fact.
• Improved use of working capital: Coordination between orders, inventory, warehouses, and transport reduces in-transit stock and last-minute premium freight.
• Clearer sustainability signals: When transport data is structured and consistent, it becomes easier to track emissions by lane or order, compare modes, and choose options that reduce the carbon impact of freight.

Taken together, these outcomes are why many organizations now treat TMS as core logistics infrastructure, not a “nice to have” shipping tool.

Multiple market research firms estimate the global TMS market could more than double by 2030, making it one of the fastest-growing areas of supply chain software.*

Several forces are driving this growth. On the demand side, expectations have shifted toward predictability and transparency. Real-time tracking and accurate ETAs are now table stakes, and research on delivery preferences suggests many customers value reliability over raw speed. This shift is often described as the “Amazon effect.” Meeting it at scale is difficult with spreadsheets, emails, and disconnected carrier portals.

On the operations side, logistics teams are also navigating volatile costs, frequent disruptions, and growing pressure to measure and reduce emissions across complex, multi-party networks. Those pressures make transportation harder to run with manual tools and disconnected partner systems.

In response, many organizations are moving away from spreadsheets and siloed point tools toward connected execution that can keep pace with today’s service expectations and network complexity.

*Sources: Grand View Research and MarketsandMarkets

Global supply chains use a mix of modes (road, rail, ocean, air), each with different tradeoffs on cost, capacity, and speed. Once shipments span multiple modes, handoffs and paperwork add complexity fast.

Multimodal moves freight across two or more modes under a single contract, with one operator accountable end to end. Intermodal moves freight in the same container across multiple modes (often rail and truck), with handoffs between carriers along the way. In both cases, service depends on clean handoffs, accurate status updates, and aligned documentation across partners.

A Transportation Management System (TMS) helps teams manage this by coordinating plans and updates in one place and keeping handoffs and documentation aligned across modes and partners.

Carrier selection is more than finding someone with capacity today. Planners balance price, performance, and risk—often at lane level—so they can meet service commitments without overspending.

Typical carrier selection and rate management criteria include:

• Contracted rates, fuel costs, and surcharges for each lane and mode
• Lane coverage and modal options (for example, FTL vs LTL, rail vs truck)
• Performance history such as OTIF, dwell times, and damage rates
• Capacity and responsiveness, including tender acceptance rates

A TMS centralizes this data and supports automated rate shopping, so planners can quickly compare options and choose the lowest landed cost that still meets service and lead-time commitments.

Cost and service: Same problem, different angles

The goal isn’t simply to cut spend; it’s to reduce waste and variability while protecting customer experience.

Common strategies include:

Mode and route optimization - Compare modes and routings lane by lane, shifting from air to ocean or rail where feasible and avoiding congested routes while protecting delivery promises.

Consolidation and smarter load planning - Pool compatible orders into full loads, combine volume across nearby sites, and improve cube and weight utilization to reduce cost per unit and emissions.

Dynamic carrier allocation - Use live performance, price, and capacity data to select carriers and re-tender loads when conditions change, with rules that prioritize service or cost depending on context.

A TMS helps teams test and scale these moves while keeping a clear line of sight to OTIF, cost, and customer impact.

Real-time visibility is now a baseline expectation for many logistics teams and, increasingly, for customers as well.

A modern TMS pulls shipment status and event data from carriers and tracking sources to keep ETAs current and flag shipments at risk across modes and partners.

This real-time view answers the basic questions without constant check-in emails and calls: Has the shipment left? Where is it now? Will it arrive on time? It also flags exceptions early, so teams can investigate and act before customers feel the impact.

From visibility to action

The most effective setups go a step further. They marry a control-tower style view with embedded workflows so planners can immediately replan routes, reallocate inventory, switch modes, or trigger customer notifications in the same place they see the issue.

One example is Flex, a global electronics manufacturer with a highly complex network of suppliers and products. Flex uses Kinaxis control tower capabilities to connect operational signals with optimized order planning and scenario analysis. This helps teams evaluate tradeoffs quickly and coordinate the right response across the network.

Even with a solid TMS, transportation teams still have to navigate volatility and complexity.

• Capacity shortages and rate spikes: When networks tighten, teams need dynamic allocation and fast re-planning to protect cost and service.
• Disruptions from weather, strikes, or geopolitical events: Teams need early warning, multi-leg visibility, and the ability to reroute or rebook quickly.
• Fragmented systems and data silos: Multiple ERPs, WMS, OMS, and partner portals make it hard to maintain a single view of orders and shipments.
• Compliance and documentation risk: Evolving trade rules and manual paperwork increase delay risk and exposure to fines.

A well-integrated order management and transportation management solution can’t prevent volatility, but it can help teams respond with more confidence and less manual effort.

Transportation is a major contributor to supply chain emissions, especially for companies with global or time-sensitive networks. That makes it a key lever in sustainability and ESG strategies.

Transportation management supports sustainability by:

• Tracking emissions - Attaching emissions estimates or measurements to shipments, lanes, customers, or products so teams can see where emissions are concentrated.
• Supporting greener mode and route choices - Comparing options on cost, service, and carbon, such as shifting volume from air to ocean or rail, or consolidating shipments to cut empty miles and partial loads.

As reporting frameworks and regulations expand, this level of visibility helps organizations demonstrate progress and link routing decisions to broader ESG and climate targets, rather than treating emissions as an after-the-fact report.

The right KPIs make it easier to spot issues early, benchmark performance, and track the impact of changes. A TMS helps standardize definitions and capture these metrics automatically from shipment and order data.

Common transportation KPIs include:

• Service: OTIF/on-time delivery
• Cost: Cost per shipment (or cost per tonne-kilometer)
• Carrier performance: Tender acceptance rate
• Reliability: Exception rate and time to resolution
• Sustainability: Emissions per shipment (or per lane)

Over time, these measures support more informed negotiations with carriers, better routing decisions, and continuous improvement across the network.

Transportation planning is strongest when it doesn’t happen in isolation. Integrated platforms connect TMS with demand and supply planning, inventory, and order management on a shared data model, so transportation stays aligned with order promises and production plans. That allows teams to:

• Plan transportation using current demand and inventory, not static snapshots
• See the impact of transport decisions on service, cost, and inventory in one place
• Use actual lead times and exceptions to improve planning assumptions over time

From integration to end-to-end supply chain orchestration

Supply chain orchestration brings planning and execution into the same decision loop, from demand and supply through logistics, so inventory and capacity decisions stay connected to order commitments as conditions change. Instead of optimizing each function in isolation, orchestration helps teams balance service, cost control, resilience, and sustainability.

Done well, it keeps transportation decisions linked to the order journey, so when plans change, teams can adjust quickly without losing the thread.

Real-time visibility is now a baseline expectation for many logistics teams and, increasingly, for customers as well.

A modern TMS pulls shipment status and event data from carriers and tracking sources to keep ETAs current and flag shipments at risk across modes and partners.

This real-time view answers the basic questions without constant check-in emails and calls: Has the shipment left? Where is it now? Will it arrive on time? It also flags exceptions early, so teams can investigate and act before customers feel the impact.

From visibility to action

The most effective setups go a step further. They marry a control-tower style view with embedded workflows so planners can immediately replan routes, reallocate inventory, switch modes, or trigger customer notifications in the same place they see the issue.

One example is Flex, a global electronics manufacturer with a highly complex network of suppliers and products. Flex uses Kinaxis control tower capabilities to connect operational signals with optimized order planning and scenario analysis. This helps teams evaluate tradeoffs quickly and coordinate the right response across the network.

• Transportation management vs. logistics: what’s the difference?
  → Logistics is the broader umbrella: storing, handling, and moving goods, including warehousing, inventory, and distribution. Transportation management is the piece focused on how freight moves between nodes—planning shipments, selecting carriers and modes, tracking execution, and settling costs and documentation.
• Is a TMS part of an ERP?
  → Usually, no. A TMS is typically a specialized system that integrates with ERP, WMS, and order management, rather than replacing them. Some ERP suites include transportation capabilities, but many organizations use a connected TMS layer for planning, execution, visibility, and settlement workflows.
• Transportation management examples: what does it look like day to day?
  → Day to day, it includes building loads, selecting modes and carriers, tendering shipments, scheduling dock appointments, tracking milestones and exceptions, and auditing freight invoices. In practice, it’s the work of protecting service commitments when conditions change, without losing control of cost and risk.
• Inbound vs. outbound transportation management: what’s the difference?
  → Inbound transportation covers supplier-to-plant or supplier-to-DC moves, with a focus on supply continuity, lead-time reliability, and cost control. Outbound transportation covers DC-to-customer or DC-to-retailer moves and is typically more service-driven, since it directly affects promised delivery windows and customer experience. Most networks need both to run off consistent data, rules, and shared visibility.
• How is a TMS different from a WMS or ERP?
  → ERP is the system of record for orders, finance, and master data. WMS runs warehouse operations (receiving, putaway, picking, packing). TMS runs transportation planning and execution—loads, tenders, tracking, and freight audit/payment—and connects shipment movements back to orders and inventory.
• How does a TMS help with cross-border logistics and trade compliance?
  → A TMS helps by keeping documentation, milestones, and exceptions consistent across partners, and by coordinating workflow steps when border events or compliance checks intervene. In many enterprise stacks, transportation execution integrates with trade compliance screening and export documentation through connected global trade management capabilities.