Catching Up on Transportation Management Systems

As I wrote back in October 2018, when it comes to Transportation Management Systems (TMS), “there is always something new to talk about. The scope and capabilities of transportation management systems, as well as the vendor landscape, have changed significantly over the years, and the systems continue to evolve. The same is true for the transportation market and the types of challenges and opportunities that shippers and third-party logistics providers face.”

In the past two weeks, there have been two notable acquisitions related to transportation management systems. 

First, FreightWise announced that it has acquired Kuebix. Financial terms were not disclosed, but it was certainly nowhere near the $200 million Trimble reportedly paid for the company when it acquired Kuebix in January 2020 (see my commentary at the time). Things didn’t go as planned, with Trimble ultimately deciding to shut down Kuebix late last year and acquiring Transporeon in December 2022. This left the Kuebix platform and its customers in limbo over the past year.

This acquisition by FreightWise, therefore, is a win-win for both FreightWise and Kuebix customers and employees. As highlighted in the press release:

By continuing to offer Kuebix as part of FreightWise’s transportation management portfolio, FreightWise can provide greater value through customized supply chain services tailored to each customer. FreightWise is committed to continued investment in the Kuebix product suite. This provides stability and continuity for existing Kuebix customers who can continue to rely on the TMS platform with confidence.

The small and midsize business (SMB) market is a sweet spot for both FreightWise and Kuebix. While having a TMS is a must for companies to effectively manage and scale their transportation operations, it is not enough, especially for many SMB companies. Transportation executives also need to ask: 

Do we have the resources internally to effectively use and manage a TMS? One of the main reasons why TMS solutions sometimes fail to provide sustained value is when a power user leaves the company and there isn’t someone (or ideally, a team) with the requisite skills and experience to fill the void.

Do we have the skills and discipline to keep the TMS tuned? Since your operations change over time, you need to continuously fine tune the TMS, otherwise the quality of the output will degrade.

Simply put, companies also have to invest in people and training. And they have to invest in driving continuous improvement in their operations. When viewed from this more holistic perspective, some companies decide to leverage external partners to scale and stretch their transportation management capabilities as needed. This is what continues to fuel demand for managed transportation services — the logistics equivalent of cloud computing and a key focus area for FreightWise — that enables companies to tap resources and technology as required to address their evolving needs.

The other TMS-related news this month was MercuryGate’s announcement that it is acquiring International Trade Systems (ITS), “the leading SaaS provider of cross border customs clearance capabilities.” Here are some details from the press release:

Founded in 1989, ITS has exclusively focused on providing advanced customs and trade compliance capabilities for the international trade community. More than 200 customers and 5,000 users including customs brokers, importers and freight forwarders leverage ITS software to improve efficiencies, drive automation, leverage data for actionable intelligence, control costs, reduce the risk of non-compliance despite almost daily changes in trade requirements and increase customer satisfaction. The acquisition will add more than 40 subject matter experts collectively bringing several hundred years of custom compliance experience.

Although MercuryGate says that this acquisition creates the “Industry’s First TMS With Built-In, End-To-End Global Trade Management Capabilities,” the reality is that the merging of transportation management and global trade management has been happening for many years. SAP and Oracle, for example, launched their own GTM solutions many years ago, and they are well integrated with their respective TMS solutions. e2open (acquired Amber Road in 2019) and Descartes (acquired QuestaWeb, Customs Info, and Visual Compliance) also have GTM and TMS solutions.   

In the late 90s and early 2000s, there were many best-of-breed GTM vendors, including Vastera, ClearCross, TradePoint, Management Dynamics, Nextlinx, and Arzoon. They were all ultimately acquired by vendors with broader solution footprints, especially those with TMS solutions. Add ITS to the list now.

The bottom line is that whether you’re a shipper or logistics service provider, if you’re managing cross-border shipments, a TMS (as traditionally defined) is not enough. You also need GTM capabilities to automate customs and regulatory compliance activities, especially as customs agencies around the world make electronic filing mandatory. 

What lies ahead for Transportation Management Systems in 2024? Hard to say for sure, except that we’ll see continued innovation, more acquisitions and partnerships, and there will always be something new to talk about.