When considering different pieces of transport software for freight brokers (also known as a TMS or a transportation management system), it’s critical to consider ROI.
As a business owner, even if you’re just starting out, you understand the importance of ROI — you don’t casually or lightly signup for ongoing costs unless you’re clear on how that’s going to pay off for your business, both in the short-term and the long-term.
This is a very different calculation compared to what a consumer is going to look at. When a consumer is considering the purchase of a gaming computer, they know that they’re pouring money into a hole, for all intents and purposes — their ROI comes in the form of fun times with friends.
Businesses do not have these luxuries, and freight brokers especially need to be enormously considerate of ROI as brokerages are generally run on razor-thin margins that can’t make up for large disruptions or reductions in cash flow.
So, what is the ROI on a TMS? How can it help you save money and make money?
Time is money, and nowhere is that more true than in the freight brokerage business.
One of the most time-consuming portions of the job is matching loads to carriers.
Now, for most freight brokerages, there’s a limited number of carriers that you have a contract with, which means the amount of profit you’re going to make on any given load is directly controlled by the carriers you have access to.
If there’s a carrier available and willing to take the load cheaper than everyone else (while still maintaining the quality that your clients expect), you want to know about it — but that may take time (which means employee hours) to find, and who knows, by the time you work everything out, that carrier might have already taken on another load.
Speed is of the essence, which is where a quality TMS comes in. If your TMS allows you to see all the available carriers for a particular lane, if you can do so from within a single portal, if you’re able to look at what’s available on popular load boards at the same time…
Well, you’re starting to see the value, I expect — any TMS that’s worth purchasing is going to have these features. It is going to decrease the amount of time it takes you to find the right carrier for the load and lane in question while increasing your options.
Over time, this can really add up. If you increase your profits by even a small amount on even half your jobs, you make a big impression in the revenue you’re bringing in month over month.
But there are other reasons to invest in a TMS…
What I’ve written here may seem like almost too much to believe, but it’s the truth — a quality TMS simply revolutionizes how freight brokers do business.
Many brokers deal with large numbers of LTL loads — that’s a lot of moving parts to keep track of, and this generally means you need a part-time or full-time dispatcher.
Now, TMSs aren’t artificial intelligences — they’re not going to eliminate the role of a dispatcher any time soon.
However, they can make your dispatcher much more efficient by automatically dispatching LTL loads — or a solid TMS may just help you grow your business to the point where you can afford to bring on a dispatcher in the first place.
TMSs also provide a return in ways you might not consider — by reducing the need for a large portion of your data entry, not only are you saving time and money by not having to pay someone to enter data (or having to enter that data yourself), but you also eliminate one of the major sources of errors. Data entry is repetitive and monotonous, and it’s simple for errors to creep in. Eliminating data entry means you can worry a lot less about some silly mistake costing you a great deal of money.
Many TMSs also auto-generate paperwork, again, reducing the amount of time you or your staff need to spend on repetitive tasks and reducing the opportunity for errors.
All told, this makes a huge difference — you can save a great deal of time, reduce staffing, increase efficiency, and increase profit margins.
Who wouldn’t want that?
Load board integrations, customer portals, rate sharing — it’s all in a day’s work for a quality TMS.
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