It manages freight sourcing, planning, execution and settlement: getting carrier rates, consolidating and routing loads, choosing the mode and carrier, tendering loads, tracking shipments, and auditing and paying freight invoices.

Shippers that move their own freight, and logistics providers — including non-asset-based 3PLs — that move it for others. Gartner's 2016 research found cloud TMS growth coming mostly from small and midsize businesses.

What is the difference between a TMS and a WMS?

A TMS manages freight moving between locations — carriers, loads, routes, freight bills. A WMS manages what happens inside a warehouse — inventory, picking, packing and storage. Many companies run both, connected, so an order picked in the warehouse is already planned onto a truck.

How is a TMS deployed?

On-premises, hosted, as cloud software (SaaS), or as a managed service where the provider also runs the transport planning — the four delivery models Gartner listed in 2016.

Term

Transportation management system (TMS)

A transportation management system (TMS) is software that plans and executes the movement of freight: choosing the mode and carrier, building loads and routes, tendering them to carriers, tracking shipments, and checking and paying freight invoices. Shippers and logistics providers use one to cut freight cost and run transport from a single record.

Also called TMS, transport management system, TMS softwareUpdated 12 October 2026

What a TMS does

Gartner's 2016 research defined the category as software that "deals with the planning and execution of the physical movement of goods across the supply chain", and noted that at a minimum shippers use a TMS to manage freight sourcing, planning, execution and settlement. The four jobs map onto the life of a shipment:

Stage	What the TMS does
Sourcing	Gets rates from carriers — contracts, tenders, spot quotes — and keeps them for planning
Planning	Load consolidation, routing, mode selection and carrier selection
Execution	Tenders each load to a carrier, then tracks and traces the shipment
Settlement	Freight audit and payment: checks each invoice against the agreed rate and the delivery

The same research found the business case "driven largely by reducing freight costs", and listed the ways a TMS is delivered: on-premises, hosted, cloud or software-as-a-service, and as a managed service. It covered systems used by shippers and by non-asset-based third-party logistics providers, with cloud growth coming mostly from small and midsize businesses.

Worked example: consolidation

Suppose three orders leave the same plant for the same city on the same day — 9, 7 and 8 pallets. Shipped separately as less-than-truckload, they are quoted at USD 410, 350 and 380. Planned together, the 24 pallets fit one truck the shipper can book for USD 950.

Saving = (410 + 350 + 380) − 950 = USD 190, or 16.7% of the separate cost

The plan only works if the TMS knows the orders, the delivery windows and the truck rate on the same day — consolidation is a data problem before it is a maths problem.

TMS, WMS and YMS

A TMS runs what happens between sites. A warehouse management system (WMS) runs inventory and work inside a warehouse, and a yard management system runs the gate, the yard and the dock doors in between. The edges blur: Gartner notes yard management is often sold as a module of a WMS or a TMS.

The mistake people make

Buying a TMS to cut freight cost without the rates, order data and carrier connections it needs. A TMS can only choose between the carriers and rates loaded into it and only consolidate orders it can see in time; a system fed late, partial data plans worse than the planner it replaced.

FAQ