Parcel Shipping in TMS

When it comes to transportation management systems (TMS), there is always something new to talk about. That’s because the technology continues to evolve rapidly in response to changing market forces and customer requirements. One area of growing demand and innovation is parcel shipping, which was one of the driving forces behind 3Gtms’s recent acquisition of Pacejet. What role is parcel playing in transportation operations today? What are some of the challenges and opportunities? How will customers continue to drive innovation in TMS? Those are some of the questions I discussed with Mitch Weseley, CEO and founder of 3Gtms, and Bill Knapp, former CEO and now general manager of Pacejet, a division of 3Gtms, during a recent episode of Talking Logistics.

The changing role of parcel

Parcel shipments have always been a part of distribution operations and most TMS systems have some level of support for parcel. But with the rapid growth of ecommerce and the related explosion in package delivery, it now plays a much bigger role in distribution operations for retailers, manufacturers and logistics service providers. How does this impact TMS providers?

Mitch says it is the fastest growing part of their business. “While we’ve always had some level of support for parcel in our system, the volume and complexity have increased and our customers now need more sophisticated capabilities,” he says. “That’s why we acquired Pacejet.”

Impact on the SMB market

Bill points out that the impact of both ecommerce and the strong growth experienced by small and medium-sized businesses in recent years has created new challenges. Companies that used to ship just from their own warehouse often now have added third-party logistics providers to handle the increased volume. Bill indicates this has raised the need for multi-site, multi-carrier optimization capabilities that a TMS provides.

“Another factor is that these SMB companies often don’t have the in-house expertise to deal with these more complex requirements, so they are looking to us to guide them,” says Bill. “Essentially all companies are now having to deal with things like mode selection and shipment consolidation with multi-stop routing and pooling that are best addressed by a broader TMS platform.”

Benefits of an integrated solution

Building on Bill’s comments, I asked Mitch to elaborate on the benefits companies are seeing with an integrated approach. Mitch says, “Logistics is a business where the exception is the rule. Companies that thought they only needed a TMS for truckload or less-than-truckload now find that they need parcel capabilities too. For example, our customer with the largest average shipment size across all our accounts also does the most parcel. So even a company that does a lot of bulk shipments also does a lot of parcel shipments. Companies today have to handle a broader spectrum of requirements, and they have to do it cost effectively. These challenges have always been there, but they exist in a much bigger way now across companies of all sizes and levels of complexity.”

Integration challenges

Integration isn’t just between parcel and other modes within a TMS, however. These systems must also integrate with ERP, WMS and other enterprise applications. Bill notes that although the integration tools and middleware is much more advanced today, the number of integrations and the speed of change, especially in the cloud, make integrations more complex and challenging for companies. This makes data synchronization and translation an even bigger issue. “It’s not just the technology, but the understanding of what and how to do it that is causing customers to come to us for help,” he says.

Driving innovation

How are customers handling the current challenges while driving the next level of innovation in integrated TMS capabilities? Why are LSPs and mid-sized businesses key factors in these developments? And why is integrated technology central to new business models going forward? Mitch and Bill shared a lot of great insights and advice on these topics and more, so I encourage you to watch the full episode for all the details. Then keep the conversation going by posting your own thoughts or questions.