Over the past three decades, TMSes have evolved beyond the management of shipments to encompass many more processes and bring shippers, intermediaries, and carriers closer together. TMSes that began their lives as relatively siloed, on-premise platforms requiring large amounts of manual data entry are now connected via API to shipper ERP systems and visibility solutions and enjoy seamless integrations with payments processors.

In the piece below, we outline the present state of the TMS industry. We identify current challenges to TMS providers, including market saturation and an emphasis on connectivity that makes meaningful product differentiation more difficult. 

We also break down TMS market segmentation by user type and customer size, and give a brief history of innovation in the space, with a focus on ERP, API, payments, and visibility integrations, which have all accelerated in the past five years.

In general, traditional TMS providers have not kept pace with the evolution of transportation company business models. It is not uncommon today to find 3PLs operating trailer pools and warehouses and brokering capacity across multiple modes. The most sophisticated transportation providers have built their own software.

In our view, new entrants to the ‘pure TMS’ space may struggle to find traction, but we’re encouraged by new startups building integration and decision layers that sit on top of primary TMSes and add value without imposing switching costs.

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