To say that freight shippers have a lot on their plates would be an understatement. The constant juggle of schedules, carriers, regulations, costs, and timelines can be overwhelming — not to mention a drain on valuable resources that could be better spent on core business priorities.
These challenges aren’t new, but they are getting more complex by the day.
In a world increasingly driven by instant (or near-instant) gratification, shippers who want to stay competitive must seek out new ways to stay nimble, responsive, and profitable.
A managed transportation solution can offer shippers these competitive advantages when executed by an experienced provider.
Managed transportation is a service in which a specialized transportation provider steps in to take on the responsibility of planning, organizing, and overseeing a shipper’s transportation needs.
In essence, a managed transportation solution acts as an extension of a shipper’s in-house team, alleviating the day-to-day logistical burdens and providing cost savings through better negotiation power and route optimization.
Anderson Trucking Service (ATS) has helped shippers optimize their supply chains for decades. Our experience allows us to provide a behind-the-curtain look at how managed transportation works, what makes it different from other types of transportation services, and how it can benefit your business.
Ready to learn more about how managed transportation can transform a shipping supply chain for the better? Let’s dive in!
- What is managed transportation?
- How is managed transportation different?
- How does managed transportation work?
- How can managed transportation benefit shippers?
What is Managed Transportation?
Managed transportation is a service in which a transportation provider comprehensively plans, organizes, and oversees all or a portion of a shipper’s transportation needs.
Typically, managed transportation providers will leverage industry knowledge, technology, and a data-driven process to find best-fit solutions for customers that will optimize time, budget, and overall operational efficiencies.
A managed transportation provider can effectively act as an extension of a shipper’s in-house operations, alleviating the burden of transportation logistics from the shipper’s internal team and working proactively to streamline supply chains.
For example, a national food distributor may seek out a managed transportation provider to handle its transportation needs across the lower 48 states.
That provider would use all the tools at its disposal — including route planning technology, buying/negotiating power, and its network of trusted carriers — to deliver the most efficient and effective solution possible.
Managed transportation can focus strictly on truck-based shipping or branch out into multi-modal and international shipping depending on the customer’s needs.
In an ideal managed transportation arrangement, the partnership is mutually beneficial for the shipper and the provider. The provider secures a customer for a long-term service relationship, while the shipper receives all the benefits a streamlined supply chain can offer.
How Does Managed Transportation Work?
A managed transportation solution starts with a deep understanding of a shipper’s operations, needs, and challenges.
This applies not only to logistical needs, but also to technological integration needs or roadblocks keeping the shipper from operating at optimal efficiency.
The transportation provider will then take time to build a custom solution that supports the shipper’s goals and is optimized for quality, cost savings, and operational efficiencies.
Depending on the shipper’s unique needs as well as the provider’s service capabilities and network, the custom-managed transportation solution could include a variety of transportation services, like truckload shipping, heavy haul trucking, less-than-truckload (LTL) shipping, etc.
It is the provider’s job to arrange and oversee these various services, ensuring their smooth operation day-to-day.
It’s also the provider’s responsibility to work with the shipper’s team to facilitate any training, technical go-live, or change management necessary to implement the new solution.
Once the provider is actively managing their portion of the shipper’s supply chain, they will handle any issues or inefficiencies on the shipper’s behalf. They will also continue to seek out new opportunities to create efficiencies and improve their service.
How is Managed Transportation Different?
At its core, a managed transportation partnership allows shippers to hand off the management of their transportation services to their provider, freeing up time, resources, and budget.
These efficiencies empower shippers to focus on their core competencies rather than stay bogged down by supply chain management tasks.
But managed transportation — both as a service and a business model for transportation providers — does have some overlap with other services and models.
This can make it difficult to suss out what differentiates managed transportation and what its potential benefits are to interested shippers.
Here’s a quick overview of other common business models in the transportation industry and their relationship to managed transportation.
Freight Brokerages
A freight broker acts like a middleman between shippers and carriers. Brokerages don't own any trucks (assets) or warehouses; instead, they connect shipments with trucking companies that can move those goods.
Freight brokering may be part of the services included in a managed transportation solution.
What’s the Difference Between a Freight Broker and Managed Transportation? |
| A freight broker only arranges transport. A managed transportation solution handles the complete management and optimization of the transportation process. |
Freight Forwarders
A freight forwarder arranges the transport of goods internationally, typically using multiple modes of transportation (ocean vessels, aircraft, and trucks).
Unlike freight brokerages, freight forwarders do more than just connect shippers and carriers. They can handle all the logistics of moving a shipment, including paperwork and customs, warehousing, and other related services.
What’s the Difference Between a Freight Forwarder and Managed Transportation? |
| Freight forwarders handle international shipments and the logistics therein, while managed transportation solutions focus more on the total management of shipment transportation within a specific region or country. |
Freight forwarders may offer some services that overlap with managed transportation — usually those pertaining to planning and tracking shipments.
That’s not to say some managed transportation companies don’t offer international services. Certain managed transportation providers do have the capabilities necessary to manage international supply chains, but they are less common than those that focus on domestic operations.
Third-Party Logistics Providers (3PLs)
Third-party logistics providers (3PLs) handle a wide range of shipping logistics services for all or a part of a company’s supply chain. This can include transportation, warehousing, picking and packing, inventory management, and other services.
What’s the Difference Between a 3PL and Managed Transportation? |
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In general, 3PLs offer a broader slate of services than managed transportation providers. While managed transportation providers specialize in the comprehensive management of shipment transportation, 3PLs also handle aspects of a company’s supply chain that are not fundamentally transportation-based, such as warehousing. In fact, many 3PLs offer managed transportation as part of their suite of services. |
A company might use a 3PL for warehousing and inventory management and rely on the same 3PL to manage all or a portion of their transportation needs. That 3PL would likely have a logistics arm and a managed transportation arm that collaborate across their teams to provide comprehensive solutions.
How Can Managed Transportation Benefit Shippers?
Shippers that seek out managed transportation solutions are often looking for ways to make their supply chain less complex, costly, and time-consuming.
A successful managed transportation solution can deliver those benefits and more. Benefits of a strong managed transportation partnership include:
- Bandwidth for core competencies. Managed transportation solutions give peace of mind to shippers who would rather not handle the logistics of arranging and managing transportation services on their own. By effectively outsourcing all or a portion of their shipping services to a trusted expert partner, shippers can concentrate on other business-critical initiatives knowing their transportation needs are in capable hands.
- Cost savings. By leveraging the expertise and network of an experienced managed transportation provider, shippers can often negotiate better rates with carriers. Managed transportation solutions also use technology to optimize routes and shipments, which can reduce overall transportation costs.
- Efficiency. A managed transportation provider will use its knowledge of the shipper’s business, its own industry expertise, and its network to find the best carriers, manage scheduling, and ensure timely deliveries. By consolidating planning, execution, and management under one transportation provider, shippers can streamline their overall transportation processes for efficiencies of time and logistics.
- Risk Management. Managed transportation providers mitigate risks through diligent planning and adherence to regulations. They handle issues such as carrier reliability, compliance with shipping laws, and contingency planning for unforeseen disruptions on behalf of the shipper, effectively buffering the shipper’s operations against risk.
- Scalability. Managed transportation solutions are designed to be scalable with a shipper’s evolving needs and goals. A managed transportation provider can adjust transportation strategies and resources in accordance with fluctuations in the market, keeping the shipper’s operations nimble and ensuring consistent service.
- Visibility. Managed transportation providers often use superior technologies, such as real-time tracking and reporting, that shippers do not have access to on their own. Shippers have better visibility into their shipments, which improves decision-making and customer service.
Of course, all the above benefits are predicated on the managed transportation solution in question being supported by a quality provider, which is why it’s crucial for shippers to thoroughly vet every potential partner.
There is no substitute for experience when it comes to managed transportation.
Look for companies with a long history of providing managed transportation solutions, a robust network of trusted carriers and brokerages, and demonstrate interest in comprehensively understanding your business.
Manage Your Network with Confidence
Managed transportation involves outsourcing the planning, execution, and optimization of a company’s transportation needs to a specialized provider, utilizing advanced technology to ensure efficient and cost-effective movement of goods.
While this may sound similar to the services provided by other types of transportation companies, managed transportation is its own type of service offering, one that specifically focuses on alleviating the burden of logistics for shippers.
Through this strategic outsourcing, shippers can reap many benefits, including cost savings, more efficient routes and transit times, lower risk, and greater bandwidth for core competencies that drive their business forward.
Now that you have a better understanding of what managed transportation is and why shippers would be interested in it, you’re probably thinking about the benefits it could have for your business.
If you’re considering a managed transportation solution in the future, check out our Transportation Provider Scorecard.
It’s a free downloadable tool that will give you a simple rubric for grading potential additions to your network. Use it to help you determine which managed transportation provider is the best fit for your evolving needs.
