Managed transportation is the process of outsourcing transportation and logistics processes to third-party service providers. This allows shippers to partner with logistics service providers to plan, execute, and manage all aspects of transportation.
Before a business can identify whether managed transportation is right for them, they need to understand the intricacies of the process. Below is an MT glossary that outlines key managed transportation terms every shipper should know.
Managed Transportation (MT): The process of shippers outsourcing aspects of their operations to third-party logistics service providers.
Transportation Management System (TMS): Software used to manage transportation of freight, with features and functionality varying from tool to tool.
Yard Management System (YMS): Software that streamlines the process of controlling trucks, trailers, or containers at a warehouse or distribution center.
Third-Party Logistics vs. Managed Transportation (3PL vs. MT): 3PLs provide a range of services including warehousing and fulfillment. Managed transportation is a specialized model focused on planning, executing, and optimizing transportation operations.
Co-Managed: Anything that is jointly managed by two or more parties.
Control Tower: A control tower in logistics is a system that provides real-time visibility and management of your supply chain.
Transportation Autonomy: Systems that are able to operate on their own without human intervention or oversight. Usually AI powered.
PaaS (Planning as a Service): A model where shippers outsource freight planning and load optimization to a specialized team and technology platform.
OaaS (Optimization as a Service): A model where shippers outsource freight optimization workflows to a specialized team and technology platform.
Freight Audit: The process of examining your freight bills to verify that invoices match contracted rates and identify overcharges.
Carrier Management: The process of selecting, monitoring, and optimizing your carrier network to ensure optimal carrier performance. Often utilizes carrier scorecards.
Network Optimization: The process of organizing and optimizing transportation routes and resources across carriers and vendors.
Forward-Deployed Engineer (FDE): An engineer that works directly within customer environments and with core product engineers.
Smart Inbox: A ShipperGuide AI feature that processes inbound emails and converts them into TMS actions without manual data entry.
Auto Tender: A TMS feature that automatically tenders shipments to carriers based on predefined rules, eliminating manual tender decisions and speeding up the booking process.
Copilot Plan: An AI agent embedded within ShipperGuide’s TMS that helps users with optimization.
Copilot Tasks: A ShipperGuide AI feature that automates bulk shipment actions.
FreightIntel AI: Loadsmart’s AI-powered analytics tool that analyzes logistics data to identify inefficiencies, benchmark performance, and deliver recommendations.
Center of Excellence (COE): Loadsmart’s dedicated team of specialists that manage freight planning workflows and optimize load plans.
Transportation Analytics: The process of collecting, processing, and analyzing logistics data, such as freight spend, order fulfillment, and carrier performance.
Visibility: The ability to track and monitor the status and location of freight moving through your supply chain.
ShipperGuide TMS: Loadsmart’s cloud-based transportation management system designed to help with procurement, planning, execution, and tracking of freight.
Opendock YMS: Loadsmart’s integrated dock scheduling and yard management system that gives facilities real-time visibility into trailers, trucks, and more.
Model-Context Protocol (MCP) Connectivity: A protocol that allows a TMS and other logistics tools to securely connect with external data sources.
Management Fee: The cost paid to have aspects of your business handled by a third-party organization.
Cost Per Mile (CPM): A metric that measures the total expense of operating a vehicle for every mile traveled.
Total Cost of Ownership (TCO): A financial estimate that calculates the direct and indirect costs of using a product or service.
Return on Investment (ROI): A metric that measures the gain or loss from an investment relative to its cost.
Savings Baseline: A reference point used to measure savings based on a baseline from the previous year.
Fixed ACV Pricing: Fixed annual contract value pricing means the value of the contract of subscription is set at a steady rate rather than fluctuating.
KPI Credit Clause: A contractual provision that mandates financial compensation when key performance indicators or service levels are not met.
Gainshare / Outcomes Kicker: Gainsharing is an incentive-based compensation that ties incentive pay to performance improvements. Similarly, outcomes kickers are incentives or bonuses designed to motivate performance.
Tender Acceptance: The formal acknowledgment by a carrier to transport a shipment under specific terms, rates, and conditions.
On-Time Performance (OTP): A metric that measures the percentage of shipments delivered within the promised time frame.
On-Time, In-Full (OTIF): A metric that measures shipment deliveries that are within the promised delivery window and that contain the complete order.
Cost Per Shipment: The average cost incurred per shipment for an organization.
Load Factor: A key performance metric that measures the utilization of available cargo space or weight capacity.
Empty Miles: The mileage accumulated while a truck is being driven with an empty container or trailer, thus not earning revenue. Generally regarded as wasted fuel and time.
Invoice Auto-Approval Rate: A rules-driven method for reviewing and authorizing supplier invoices.
Touchless Processing: Workflows that handle freight, orders, and documents without requiring manual handling of goods and paperwork.
Routing Guide: A document that outlines rules for suppliers and vendors to adhere to while shipping cargo.
Carrier Scorecard: A performance evaluation tool used to assess and measure carrier performance metrics such as on-time delivery and cost.
Spot vs. Contract: Spot refers to short-term logistics, which are used for immediate, on-demand shipping at current market rates. Contract logistics refers to long-term, negotiated agreements at fixed rates.
Accessorials: Additional fees added to a freight invoice for services performed beyond standard pickup and delivery.
Load Consolidation: The process of combining multiple smaller shipments into one larger shipment to optimize space and transportation, reducing costs.
Mode Optimization: The process of assigning shipments to the most efficient transportation method, such as FTL, LTL, rail, ocean, or air.
Intermodal: The process of using two or more modes of transportation to transport shipments.
Backhaul: The return of cargo or freight after delivering its initial goods.
Cross-Dock: The process of products from a supplier or manufacturer being directly transferred to a customer with minimal storage time.
Buying Committee: A buying committee is a group of people responsible for making decisions about what to purchase on behalf of an entire organization.
90-Day Deployment: A short-term, timed operation for quick project completion.
The difference between a TMS and managed transportation is a transportation management system can be used in-house to help streamline transportation operations, while managed transportation means outsourcing your transportation needs to a third party organization.
Planning as a Service (PaaS) means a cloud computing model that allows developers to build, deploy, and manage applications.
A carrier scorecard is a performance evaluation tool used to measure carrier performance metrics such as on-time delivery and cost.
Transportation autonomy means a system that is able to operate on its own without human intervention or oversight.
Learning transportation management vocabulary is a key component to understanding what your business is paying for and how you can improve your transportation operations. Bookmark this guide for reference as you evaluate managed transportation options.
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