Transportation management is a top priority for the best-performing logistics service providers (LSPs) and shippers, and visibility is the key to effective performance, according to the 2024 Global Transportation Management Benchmark Survey conducted by Descartes.
Responses from more than 630 global companies show a correlation between financial performance and the strategic importance that senior management places on transportation management and related technology.
The report categorizes respondents in two ways: whether they see transportation as a “Competitive Weapon” or “Not Important,” and whether they are a “Top Performer” or “Poorer Performer” financially. The direct link between these two pairs of categories was clear — companies that place a higher strategic value on transportation generally experienced better performance and growth. For example, Competitive Weapon respondents noted their company as a Top Performer financially 3.4 times more than Not Important respondents. Conversely, the Poorer Performers were more than two times likely than the Top Performers to view transportation as Not Important.
Driving Financial Performance
For the seventh consecutive year, the report shows that LSPs and shippers prioritize technology investment as the most important way to prepare for industry and regulatory change. Moreover, three-fourths of respondents say they’re increasing IT investments in transportation management for the next two years. Gaining competitive advantage is the reason for making technology a focal point, evidenced by the fact that Competitive Weapon respondents were more focused on investing in technology (44%) than Not Important respondents (32%).
The data also indicates that more investment in technology correlates to greater financial gains. Top Performers were 2.5 times more likely than Poorer Performers to increase transportation management IT investment by 5% or more over the next two years. By contrast, Poorer Performers (40%) preferred to focus on cutting costs more than Top Performers (30%), revealing a pattern of potential missed opportunities that could contribute to the substandard financial performance of the companies at the bottom of the rankings.
When asked about technology adoption strategy, most respondents self-identified as “Fast Followers” (39%). Most Top Performers, however, were more proactive, with 59% categorized as “Early Adopters” while only 8% of Poorer Performers fit into this category. Most Poorer Performers saw themselves as “Middle of the Pack.” These numbers strongly suggest that a drive to use (or expand the use of) the latest TM technologies contributes to the success of the leading companies.
Visibility Remains Top Priority
In the report, real-time transportation visibility (42%) was cited as the top must-have capability for effective transportation management — for the seventh year.
The second most important transportation-management capability was order management (38%), followed by fleet routing and execution (36%), performance management dashboards (36%), parcel shipping and label generation (32%), carrier sourcing (31%) and procurement/contract management (30%). Most of those capabilities saw a drop in response rate from 2023 except for parcel shipping and label generation, which doubled to 32% in 2024, and fleet routing, which increased from 24% to 36%.
Visibility was also the most popular priority for transportation IT investment, and was selected as the capability to deliver the greatest value in the next two years (36%), followed by order management (35%) and fleet routing (29%). Fleet routing is growing in importance, moving up five positions from last year, and was the top transportation management capability for value selected by Competitive Weapon respondents (39%), compared to only about a quarter of Not Important respondents (27%). Meanwhile, as a capability to deliver the greatest value, carrier sourcing moved down the IT investment list for the third year in a row, ranking at number 10 and selected by only 20% of companies.
Drilling down to specific solutions for shipment visibility, real-time GPS/electronic logging device tracking (52%) and carrier and broker shipment status portals (51%) were the top options selected. Ranked third, spreadsheets and emails (37%) are still used by more than a third of respondents. Since visibility is considered the most important TM capability, this statistic highlights significant untapped potential for more LSPs and shippers to leverage advanced tracking solutions more fully across their networks as a competitive advantage.
In terms of real-time visibility, the transportation mode that respondents believe needs the most improvement is truckload (47%), followed by less-than-truckload (40%) — the same top modes for the last six years. Parcel, ocean and private/dedicated fleets were tied for a distant third place at 22%.
Supply chain unpredictability over the last several years has contributed to the clearly recognized need for visibility. Uncertainty permeated the supply chain in 2023 due to disruptions from geopolitical conflicts such as the Russia-Ukraine and Israel-Hamas wars, and repeated attacks on vessels in the Red Sea by Yemen’s Houthi rebels. Other unexpected events, such as low Panama Canal water levels and the more recent Baltimore Key Bridge collapse, have only added to the volatile supply chain environment.
With this instability in mind, the industry is at an inflection point. The report data shows that while Poorer Performers are more focused on cost-cutting, the industry’s Top Performers continue to increase investments in transportation management technology, making aggressive moves to achieve competitiveness and success.
Mike Hane is director, product marketing – TMS at Descartes.
