Managed Transportation Services

The Managed Transportation Market Research Study delivers current market analysis plus a five year market and technology forecast. 

Managed Transportation Services: These Arrangements Deliver Significant Freight Savings to Shippers

Managed transportation services (MTS) providers have planners in a control tower using transportation management system technology, who plan and execute loads on behalf of their shipper customers.

The primary driver of growth is the strong return on investment these solutions provide.  In a survey, ARC asked, “If you were to stop working with your managed service provider and went back to doing things the way you used to before this relationship, how much would your freight costs be raised or lowered in the following year?”   The most frequent answer was that without the managed transportation arrangement, their freight costs would rise by 12 percent or more.

The main competition to working with a managed transportation service provider is for a shipper to implement a transportation management system.  The freight savings and service improvements between these two solutions are similar.  However, shippers may perceive implementing a transportation management system as having lower risks as customer service is seen as strategic.  On the other hand, the downside of implementing a transportation management system is if key planners lead, performance can degrade significantly.  In contrast, a managed transportation service provider has a large bench of planners.

Managed Transportation Services Strategic Issues

The challenge in the managed transportation services market, as in most markets, is the global recession kicked off by the global pandemic.  However, the managed transportation market will weather the recession better than many other markets because many managed transportation relationships are based on multiyear contracts.  Nevertheless, customer charges are based on both fixed cost components and variable components

This research answers key questions, such as:

• What are the variable cost portions of managed transportation contracts?  How will the recession affect those components?
• When will the market emerge from the recession?  Will growth rates at that point resemble the historical growth in this market?
• Which high growth industries are the most attractive for suppliers to target?
• How do network effects impact this market?  Are network effects related to the amount of freight under management controlled by logistics service providers?