Published April 05, 2023

Managed Transportation – What it is and Why You Need It

It’s essential to understand the benefits of partnering with a Managed Transportation Services provider.

Many shippers turn to Managed Transportation solutions to outsource their logistics activities and partner with experts to navigate the continuously changing market. Outsourcing is a great option for shippers looking to increase their flexibility and scale quickly without the burden of high fixed costs.

As shippers look to fortify their supply chain’s and implement forward-looking network strategies, partnering with a Managed Transportation provider not only introduces an agile operating framework but impacts the bottom line.

So for those not already in the know, what is Managed Transportation all about and how can it help you plan for the unexpected?

What is Managed Transportation?

Managed Transportation refers to a third-party logistics (3PL) service that provides end-to-end management of a company’s supply chain and transportation operations. These services typically include a dedicated operations team that completes the procurement, planning, optimization, execution, and reporting on the movement of goods across a shipper’s network of transportation. In addition to increasing flexibility, the goal of a Managed Transportation partnership is to increase operational efficiency, reduce costs, and introduce a continuous improvement framework that evolves with the needs of both the market and shipper.

In a Managed Transportation partnership, the provider will execute all day-to-day tasks on behalf of the shipper, which typically include routing guide management, shipment tendering & tracking, and exception management, etc. By removing these from a shipper’s daily responsibilities, they are able to focus their time and resources on other aspects of their business.

Managed Transportation services are flexible in the sense that they allow you to collaborate and design a plan that works best for your business. Some additional services that a Managed Transportation solution will provide, include:

  • Market Forecasting & Actionable Insights
  • Bid Management & Procurement Services
  • Order Optimization & Consolidation
  • Mode Optimization & Contract/Spot Lane Selection
  • End-to-End Shipment Execution & Management
  • Freight Audit & Payment
  • KPI Management
  • Reporting & Analytics
  • Continuous Improvement
  • Administrative Management & Carrier Oversight

The Benefits of Managed Transportation Services

Partnering with a provider that will be your single point of contact for many, if not all, of your logistics needs can come with many benefits. Typically, a shipper will have a small internal team that works closely with a dedicated team from the Managed Transportation provider.

The Managed Transportation team will then take care of the day-to-day operations, carrier management, and ongoing network measurement & analysis, allowing the shipper’s team to have the time needed to focus on their big picture transportation strategy.

A few additional benefits of outsourcing to a Managed Transportation partner:

More Time to Spend on Your Business

Shippers tend to wear a lot of hats. And whatever hat they’re wearing, it’s taking time away from time spent on growing their business. Partnering with a Managed Transportation provider earns back some of that time. And it doesn’t just save time; it can ultimately save money.

Imagine the time spent sourcing the best rate to get your product from A to B. Having a carrier network already in place that can provide you with capacity at a great rate, and someone else finding the capacity for you, may be a simple way to improve your ROI.

More Money to Invest in Your Business

If time is money, saving time means saving money that could be invested in your business. Since your transportation services will be managed more efficiently, this should translate into cost savings. Many benefits come from taking advantage of your provider’s carrier network and other services.

For example, with having a Managed Transportation partner you should receive increased access to capacity - providers can source capacity that might not be available to you otherwise. Providers have developed relationships with many quality carriers and are typically able to negotiate better on your behalf.

Access to Supply Chain Transportation Technology

Many MT providers can give you access to a platform where you are able to plan and execute the entire shipping process, including proper documentation and ensuring that the shipment is compliant. With the additional technology added to your operations, you already have all of your data in one place. This means your Managed Transportation provider is better positioned to analyze and produce advanced reporting on your shipments to create a customized, and effective shipping strategy.

Now that you understand what managed transportation is and the associated benefits, how do you go about choosing the right partner?

Choosing the Right Managed Transportation Company

The pandemic and post-COVID era have introduced some new challenges to transportation management. Challenges that could indirectly impact shippers and make it all the more important to work with a Managed Transportation provider.

Here are a few things to look for when looking at when considering different companies.

First, make a list that includes what you need from a service provider. And of the services and benefits mentioned above, which one is the most important to you? What’s your budget? This information will help narrow your search.

A few other things to consider include the following:

  • Your freight volume and frequency by lanes
  • Most common shipping modes
  • Special delivery and product handling requirements
  • If you plan to scale, determine if the provider is in a position to scale with you

Finally, check their references to ensure they have the ability to do what they say they can do. Keep in mind that your customer’s expectations are high. Make sure your partner is capable of fulfilling those expectations.

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