Choosing the right transportation management system (TMS) can feel overwhelming if you haven’t worked with one before. Yet for shippers, understanding transportation management software is critical—because the right solution can reduce freight costs, improve visibility, and streamline your entire supply chain. If you’ve been tasked with evaluating TMS solutions, you’ll likely encounter a set of common terms that are central to the world of transportation management. To help you cut through the noise, here’s a breakdown of key concepts that every shipper should understand.
Transportation Management System (TMS)
At its core, a TMS is the backbone of modern shipping operations.
A TMS centralizes critical functions such as:
- Freight rate visibility
- Load planning and optimization
- Execution of shipments
- Real-time tracking and reporting
While many companies still rely on spreadsheets, phone calls, and emails to manage freight, these outdated methods can’t keep pace with today’s demand for speed, accuracy, and transparency. A modern TMS platform empowers shippers to manage logistics more efficiently, reduce manual work, and improve service performance.
System Integration
A strong transportation management system doesn’t operate in isolation—it integrates with other platforms like ERPs (Oracle, SAP) or APIs. Integration ensures that order and shipment data flows seamlessly across your business.
For shippers, integration means:
- Eliminating manual order entry
- Avoiding duplicate updates in multiple systems
- Enabling real-time, data-driven decision-making
When your ERP updates an order, that change automatically reflects in your TMS, saving time and reducing costly errors.
Software as a Service (SaaS)
Most transportation management software today is delivered via a SaaS model—meaning it’s cloud-based, subscription-driven, and doesn’t require on-premise installation.
Benefits of SaaS-based TMS platforms include:
- Lower IT and infrastructure costs
- Faster implementation and scalability
- Automatic updates and security patches
This model is particularly beneficial for shippers looking to modernize quickly without heavy upfront investment.
Managed TMS Solutions
For shippers that want both technology and logistics expertise, a managed TMS solution combines the power of software with outsourced operational support.
This option is valuable for companies managing multiple transportation providers or high-volume networks. With a managed solution, shippers gain:
- Greater visibility into freight operations
- Streamlined tendering and routing guide compliance
- Time savings by outsourcing repetitive tasks
Freight Marketplace
A freight marketplace is often seen as a simplified entry point into transportation technology.
It allows shippers to:
- Compare live rates from vetted carriers
- Book and track shipments in one place
While not as robust as a full TMS, freight marketplaces provide cost visibility and basic tracking for shippers who want a lightweight solution.
EDI (Electronic Data Interchange)
EDI allows companies to electronically exchange key shipping documents with carriers—like tenders, invoices, and status updates.
For shippers, EDI helps:
- Reduce manual data entry
- Minimize errors
- Save time on repetitive communication with carriers
API (Application Programming Interface)
An API integration enables two systems to share information instantly, much like EDI—but with more flexibility and speed.
For shippers, APIs can deliver:
- Real-time updates on shipment status
- Seamless integration with existing business applications
- Faster communication with carriers and customers
Optimization
One of the most powerful benefits of a TMS is freight optimization. Optimization tools automatically consolidate loads, build efficient routes, and recommend the most cost-effective carriers.
For shippers, optimization translates into:
- Lower transportation spend
- Fewer empty miles
- Improved on-time delivery
Bringing It All Together
Whether you’re new to transportation management systems or evaluating your next upgrade, understanding these terms will help you make informed decisions. A TMS is more than just software—it’s a strategic tool that enables shippers to cut costs, boost visibility, and deliver better service to customers.
Ready to see how modern transportation management software can simplify your freight operations?
Request a demo of MySpot for Shippers and discover how our platform helps shippers stay competitive in today’s logistics market.