A transportation management system (TMS) reduces logistics costs by automating freight operations, eliminating billing errors, and giving shippers the data they need to make smarter decisions about carriers, modes, and routes. For mid-market and enterprise shippers handling complex freight across multiple modes, TMS software typically delivers 5 to 15% in freight savings, with the biggest gains coming from areas most teams don't have time to manage manually.

Here are ten specific ways a TMS drives those savings, and what to look for if you're evaluating one.

1. Automating Manual Freight Processes

Every minute your team spends copying shipment details between systems, emailing carriers for quotes, or manually building BOLs is a minute they're not spending on work that actually reduces costs. A TMS automates the repetitive operational tasks that eat up 10 to 20 hours per week at most shipping operations: load tendering, carrier communication, document generation, and status updates.

The cost savings here are twofold. First, there's the direct labor reduction. Second, and often more significant, automation eliminates the manual errors that create downstream costs. A miskeyed weight on a bill of lading can trigger a reclassification fee. A missed pickup window can result in a truck order not used (TONU) charge. These aren't hypothetical problems. They're line items that show up on freight invoices every week at companies still running manual processes.

2. Smarter Route Planning and Mode Selection

Route optimization in a TMS goes beyond just finding the shortest path between two points. A good TMS evaluates the full picture: transit time requirements, carrier availability, fuel costs, and whether the shipment even needs to move by truck at all.

Mode selection is where many shippers leave money on the table. A shipment that defaults to FTL because "that's how we've always done it" might cost 30% less as an intermodal move with an extra day of transit time. A TMS surfaces these alternatives automatically, so your team can make informed tradeoff decisions instead of defaulting to habit.

For shippers with regional distribution networks, route optimization also reduces deadhead miles, where a truck runs empty between loads. Every deadhead mile is pure cost with zero revenue attached.

3. Real-Time Visibility and Proactive Exception Management

Real-time visibility isn't just a nice dashboard to look at. It's a cost control tool. When you can see that a shipment is running behind schedule before it misses its delivery appointment, you can intervene. That might mean rerouting, contacting the receiver to reschedule, or arranging a backup carrier.

Without visibility, exceptions become surprises. Surprises become expedited freight charges, detention fees, missed delivery windows, and retailer chargebacks. A TMS with real-time tracking and event-driven alerts turns reactive firefighting into proactive management, and proactive management is almost always cheaper.

How Does Load Optimization Save Money?

4. Load Optimization and Consolidation

Load optimization is one of the highest-impact cost levers in transportation. The math is straightforward: if you're shipping a truck at 60% capacity, you're paying for 40% air. A TMS analyzes order dimensions, weights, and stackability to build loads that maximize cube utilization.

For shippers with multiple orders heading to the same region, order consolidation compounds the savings. Instead of sending three partial shipments on three separate trucks, a TMS can combine them into a single, fuller load. This reduces the number of shipments (and invoices) while lowering cost per unit shipped.

The practical challenge is that load optimization requires accurate item master data: dimensions, weights, and stacking rules for every SKU. A TMS that integrates with your ERP or WMS pulls this data automatically, which is the difference between theoretical optimization and optimization that actually happens on the dock.

5. Automated Freight Audit and Invoice Reconciliation

Carrier invoices contain errors more often than most shippers realize. Industry estimates put the error rate somewhere between 3% and 10% of freight invoices, and the errors almost always favor the carrier. Common issues include incorrect freight class, duplicate charges, accessorial fees that weren't part of the contract, and fuel surcharges calculated on the wrong base rate.

A TMS with automated freight audit capabilities matches every invoice line item against the contracted rate, the actual shipment details, and the accessorial schedule. Discrepancies get flagged before payment, not discovered (if ever) months later during a manual review.

At scale, this adds up fast. A shipper spending $20 million annually on freight who recovers even 3% through audit catches is saving $600,000 per year, often from errors that were previously invisible.

What Should You Look for in TMS Carrier Management?

6. Data-Driven Carrier Management

Your carrier relationships are only as good as the data behind them. A TMS tracks carrier performance across the metrics that matter: on-time pickup rate, on-time delivery rate, tender acceptance rate, claims ratio, and invoice accuracy.

This data serves two purposes. First, it informs carrier selection on individual shipments. Instead of defaulting to whoever is "primary" on a lane, the TMS can route freight to the carrier with the best combination of cost and performance. Second, it strengthens your position in carrier negotiations. Walking into a rate review with six months of scorecard data showing a carrier's 85% on-time rate gives you concrete grounds for rate adjustments, or for shifting volume to a better-performing alternative.

Platforms like Owlery centralize this carrier performance data alongside rate benchmarking, so shippers can see both cost and service quality in the same view when making carrier decisions.

7. Freight Benchmarking and Rate Intelligence

Knowing whether you're paying a fair rate on a lane requires market context. A TMS with rate benchmarking capabilities compares your contracted and spot rates against current market conditions, so you can identify lanes where you're overpaying and lanes where your rates are competitive.

This intelligence is especially valuable during freight procurement events like RFPs and mini-bids. Instead of negotiating blind, you enter the process knowing which lanes have the most room for improvement and what rates the market will support. The result is tighter contracts and fewer surprises when spot market conditions shift.

8. Reducing Accessorial and Surcharge Costs

Accessorial charges are the hidden cost driver in freight. Detention, liftgate service, inside delivery, limited access fees, residential surcharges: these add up quickly, and they're often charged inconsistently or incorrectly.

A TMS helps control accessorial costs in two ways. First, it validates accessorial charges against contracted terms at the invoice level. If your contract says detention doesn't start until two hours and the carrier bills at 90 minutes, the system catches it. Second, it gives you data to address the root causes. If you're paying $15,000 a month in detention at a specific facility, that's a signal to investigate dock scheduling, appointment management, or receiver processes, not just pay the invoices.

How Does a TMS Improve Inventory and Shipping Coordination?

9. Better Shipment Timing and Inventory Coordination

Transportation doesn't operate in isolation. When shipments arrive late, warehouses scramble. When they arrive early without appointments, trucks sit and detention charges pile up. A TMS that connects to your order management and warehouse systems can coordinate shipment timing with receiving capacity, production schedules, and customer delivery windows.

For shippers managing inbound freight, this coordination reduces unplanned storage costs and keeps receiving docks running efficiently. For outbound, it means orders ship in the right sequence to meet delivery commitments without defaulting to expensive expedited moves.

The broader point is that transportation costs don't just live in the freight invoice. They show up in warehouse overtime, expedite premiums, missed delivery penalties, and inventory carrying costs. A TMS that treats shipping as part of the larger supply chain, not a standalone function, captures savings that siloed tools miss.

10. Continuous Reporting and Cost Accountability

You can't reduce costs you can't see. A TMS provides ongoing visibility into freight spend by carrier, mode, lane, facility, customer, and business unit. This isn't a quarterly report someone has to build manually. It's live data your team can act on.

Freight KPI dashboards track cost per mile, cost per pound, budget versus actual spend, and transportation spend as a percentage of revenue. When costs drift, you see it in real time, not at the end of the quarter when it's too late to course-correct.

This reporting also creates internal accountability. When every shipment's cost is tracked and allocated to the right cost center, conversations about logistics spending shift from "freight costs went up" to "freight costs on our Southeast LTL lanes increased 12% because of carrier X's rate adjustment," which is a conversation you can actually do something about.

Getting Started with TMS Cost Reduction

Not every TMS delivers on all ten of these areas equally. Some excel at planning but fall short on audit. Others handle visibility well but lack benchmarking. When evaluating TMS options, prioritize the areas where your operation is bleeding the most money today. For most shippers, that means starting with freight audit, carrier management, and operational automation.

Frequently Asked Questions

How much can a TMS save on logistics costs?

Most shippers see freight cost reductions of 5 to 15% after implementing a TMS. The savings come from a combination of rate optimization, invoice error recovery, load consolidation, and reduced manual labor. The exact number depends on your current spend, carrier mix, and how manual your existing processes are.

How long does it take to see ROI from TMS software?

Many shippers begin seeing measurable savings within the first 30 to 90 days, particularly from automated freight audit and rate compliance. Broader optimization gains like improved carrier mix and load consolidation typically build over three to six months as the system accumulates data on your shipping patterns.

Can a TMS help with both inbound and outbound freight?

Yes. A TMS manages freight across both inbound and outbound operations, including carrier selection, load tendering, tracking, and invoice audit. For shippers who manage inbound collect programs or vendor compliance, a TMS adds visibility and cost control to freight that often goes unmanaged.

What's the difference between a TMS and a freight broker?

A TMS is software you use to manage your own freight operations: planning, execution, tracking, and payment. A freight broker is a third party that arranges transportation on your behalf. Some shippers use both, with the TMS handling core operations and brokers covering overflow or specialized lanes.

Do I need a large shipping volume to benefit from a TMS?

Not necessarily, though the ROI scales with volume. Shippers spending $5 million or more annually on freight typically see strong returns. That said, mid-market shippers with complex operations (multiple modes, temperature requirements, retail compliance) often benefit disproportionately because their complexity creates more opportunities for optimization.