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TMS Software: TMS for Freight versus TMS for Parcel

Gaining the control and visibility necessary to ensure cost-effective transportation and on-time delivery: this is the goal of any enterprise shipping goods from point A to point B. TMS software, either for freight or parcel, do just that – and more. The days of manual logistics planning and execution, which made both capabilities virtually impossible, are behind us. The modern logistics landscape now offers state-of-the-art technology that streamlines shipment planning and execution, tracks delivery movements to meet the strenuous demands of customers and saves companies thousands of dollars.

However, before you replace your existing logistics solution and invest in TMS software, it’s important to understand the distinctions in the new solutions available. Once you sort through the details, you’ll have a more complete picture of the technology you need to manage your end-to-end shipping operations – and even scale your shipping volumes in the years to come without adding additional resources.

So, let’s discuss one of the most popular logistics technologies available in the market today: TMS (Transportation Management System) software. This next-gen technology has forever changed how the world’s largest manufacturers, retailers, and logistics providers interact with carriers to improve customer service and increase profits per shipment. But will it make a difference in your business?

What is TMS Software?

get the ebook: critical capabilities of a tms for parcel shippingIn general, TMS software gives shippers visibility and control over shipment processes, from carrier procurement to carrier invoice reconciliation. The AI-powered software offers tools to improve shipment delivery performance while minimizing costs. But the scale, capabilities, and benefits vary from one TMS provider to another. So, what distinctions should you make before diving into further research?

First, understand that not all shipments are the same, and what you’re shipping will make all of the difference in terms of which TMS works best for your company. Are you shipping freight? Or are you shipping parcels? And if you’re shipping both: what percentage of your total shipping volume does each represent? While not all systems specialize in a single type of shipment, you always want to invest in a TMS (or any type of expensive technology!) that caters to your exact business needs – which means it’s time to talk about a TMS for freight shipping versus a TMS for parcel shipping.

TMS for Freight Shipping versus TMS for Parcel Shipping

Freight shipping versus parcel shipping — you might think the difference is obvious: the size and weight of the shipment. And while you’re right, there are underlying considerations that size and weight bring to the surface when choosing TMS software. The system’s access to specific carrier services, for example, will make a major difference in which TMS works for your shipping needs.

Simply put, a TMS for freight shipping is necessary when the shipments:

  • Consist of whole pallets, truckloads, or large shipping containers — essentially any large quantity of goods.
  • Are moved by one or more cargo transportation modes, including trucks, cargo planes, trains, or ships.
  • Arrive in ports, large warehouses, or assembly facilities.

Freight shipping is typically used by commercial shippers that are operating in the middle of the supply chain and are delivering thousands of shipment components to one distribution facility. Freight shipping also has a more stringent tendering process, where the shippers must consider factors such as point-to-point charges or per-mile cost models early in the carrier selection process.

TMS for parcel shipping, on the other hand, usually takes place within these parameters:

  • Shipments are individual, box-sized parcels up to 150 pounds.
  • Shipments are part of an omnichannel distribution model, where multiple delivery locations and stringent delivery times require different carrier services.
  • Shipment destination and ETA are dictated by the consumer.

Parcel shipping is typically used by retailers or businesses​ that operate toward the end of the supply chain.  These companies often ship to separate geographic locations, and accurate time of delivery is a top priority.​ While the shipment itself might be physically easier to handle, stringent delivery times can make parcel shipping a complex venture.​ A TMS for parcel shipping adds value by providing rigorous control over – and visibility into – each delivery movement from the warehouse to the final destination, ensuring on-time delivery is achieved.

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While advancements such as 3D printing in manufacturing are blurring the lines between freight and parcel shipping​, the transportation modes, delivery service requirements, and pricing are usually different.  Therefore, it’s vital to identify your shipment requirements before selecting a TMS.

Learn more about what differentiates one TMS provider from another and download our checklist: Choose the Right TMS for parcel shipping.