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.
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?
Managed transportation is a service in which a transportation provider comprehensively plans, organizes, and oversees all or a significant portion of a shipper’s transportation needs.
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.
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.
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.
An ideal managed transportation arrangement 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. The transportation provider will 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.
A managed transportation solution may also require a provider to take a deeper look at a company's technological integration needs and any roadblocks keeping the shipper from operating at optimal efficiency. For example, a lack of real-time visibility and tracking technologies might hinder a company's ability to make data-backed decisions quickly, ultimately slowing their supply chain as a whole.
It is the provider’s job to arrange and oversee both logistics services and technological integrations, ensuring their smooth operation day-to-day. They'll work with the shipper’s team to facilitate any training, technology go-live, or change management necessary to implement the new solution.
Once the provider is actively managing their portion of the shipper’s transportation 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 service agreement allows shippers to hand off the management of their transportation services to their provider, freeing up time, resources, and budget.
By effectively outsourcing the entirety of their transportation supply chain, shippers can focus on their core competencies instead of staying bogged down by supply chain management tasks.
But some of these benefits can also be achieved in varying degrees through other types of logistics services.
This can make it difficult to suss out what differentiates managed transportation and what its potential benefits are to interested shippers.
In general, managed transportation is a service, while the entities it is often confused with — like freight brokers, freight forwarders, and 3PLs — are service models.
Each service model is the framework within which logistics services, like managed transportation, are delivered.
What's the Difference Between Freight Brokerage and Managed Transportation?
A freight brokerage is a type of transportation provider that 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 an element of the services included in a managed transportation solution, or a stand-alone solution outside of managed transportation. Freight brokers only arrange transport, while a managed transportation solution encompasses comprehensive transportation management and optimization.
What's the Difference Between a Freight Forwarder and Managed Transportation?
A freight forwarder is a type of transportation provider that arranges the transport of goods internationally, typically using multiple modes of transportation (ocean vessels, aircraft, rail, 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.
Freight forwarders may offer some services that overlap with managed transportation — usually those pertaining to planning and tracking shipments — but they typically don't offer managed transportation as a service.
A freight forwarder's purview, while somewhat broader than a freight broker's, is still focused on moving specific shipments, not handling total supply chain outsourcing and management.
What's the Difference Between Third-Party Logistics Providers (3PLs) and Managed Transportation?
A third-party logistics providers (3PL) is a type of logistics provider that handles a wide range of 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.
In general, 3PLs offer a broader slate of services than managed transportation providers — a slate that may well include managed transportation services.
There are companies that specialize in managed transportation solutions, and at first glance, they may seem quite similar to 3PLs. However, 3PLs offer many services that include non-transportation solutions, like warehousing, and do not specialize in managed transportation exclusively.
Customer Profiles That Benefit Most from Managed Transportation
Across industries, managed transportation is a strong solution when complexity, cost pressures, or growth start to outpace a shipper's internal bandwidth. Managed transportation is especially beneficial for customers with freight profiles that include:
- Annual volume: 3,000+ shipments per year (truckload, less-than-truckload (LTL), or combined)
- Lane diversity: Dozens to hundreds of active lanes
- Service mix: Multiple modes/service needs under one shipper profile
- Geography: Regional or national networks, especially coast-to-coast or cross-border
- Cost sensitivity: Transportation is a Top 3 or Top 5 operating expense
Ultimately, the ideal customer for managed transportation isn’t defined by industry or revenue alone, but by the intersection of freight volume, network complexity, service expectations, and organizational bandwidth.
When Managed Transportation Is Not a Fit
For balance's sake (and to help you make the most informed choice for your supply chain), it's worth noting when managed transportation services are usually not an ideal fit:
- Very low shipment volumes
- Single-lane or single-carrier operations
- Highly static networks with minimal change
- Shippers seeking only rate shopping, without operational oversight
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 relationship 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 any 3PL or managed transportation provider they're considering.
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.
