What is Managed Transportation Services & Its Benefits?

Definition of Managed Transportation Services Solution:

Managed Transportation Services Solutions (Managed TMS) involve shippers outsourcing their freight and logistics processes to a third party logistics (3PL) provider.

Third party logistics companies offering this service are often called logistics service providers (LSP’s).

Functions managed by 3PL’s in a Managed TMS solution:

  • Sourcing & Procurement
  • Freight Carrier Optimization
  • Planning & Execution
  • Freight Audit & Pay

By partnering with a professional logistics service provider organization, shippers improve their logistics and supply chains through increased operational efficiencies, lower logistics network and organizational costs, improved order-to-cash cycle and improved communication with all supply chain stakeholders.

The graphic below outlines the steps within a managed transportation service solution:

Managed Freight Functions

While many shippers are hesitant to commit to outsourcing non-core competencies, the stats indicate it is an increasingly common practice because of the extensive list of benefits it provides companies. In fact, 90% of Fortune 500 companies engage with a third-party logistics providers (3PL’s) to help manage their logistics and supply chains.

A managed transportation service solution is a fully transparent strategic relationship where the 3PL charges a service fee for their work. The carrier rates and agreements are negotiation on the shipper’s behalf and are a pass-through expense.

Additional articles of interest:

  • Complete Guide to Managed Transportation and Transportation Management System
  • Best Managed Transportation Companies
  • Cost of Managed Transportation Services
  • Transportation Management System (TMS): Functionality, Benefit & Implementation Guide)
  • Best Transportation Management Systems
  • Comparison between Freight Broker and Managed Transportation Services

To learn more about Intek Freight & Logistics and the logistics industry, we invite you to visit our website and subscribe to our weekly blogs.

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