TMS Modernization Urgent, as Leaders See Future Demand Risks

A study by Manhattan Associates reveals a growing concern in the logistics sector: the majority of organizations fear their Transportation Management Systems (TMS) are not prepared to meet future demands, highlighting an urgent need for technological transformation. Without it, companies are exposed to increased operational costs and competitive disadvantages.

According to the Heading into the Future: Unlocking the Potential of Transportation Management report, the root of the problem lies in the disparity between technological capabilities and near-term market demands. The most direct data point from the study shows that nearly nine of 10 decision-makers (87%) express concern that their TMS will not be able to keep pace with the growing demand for speed, capacity, and cost efficiency expected within the next five years.

Furthermore, 47% of organizations acknowledge that over 10% of their transportation budget is already allocated to costs from forecast errors and unforeseen disruptions. The situation represents an inflection point where a failure to modernize can turn a strategic asset into an operational bottleneck.

The transportation sector is the backbone of global supply chains and operates in an environment of unprecedented complexity. Companies face a convergence of pressures that include the need to react faster to market changes, increase capacity and cost efficiency, comply with stricter sustainability regulations and obtain end-to-end visibility.

Although 78% of organizations view transportation management as critical to their success, a figure expected to rise to 86% in the coming years, their technological infrastructure shows a clear lag.

A primary operational obstacle is system fragmentation, reads the report. Thirty-seven percent of organizations report that their TMS is not fully integrated with other supply chain solutions. This disconnection is the main cause of poor operational visibility for 48% of respondents.

The consequences are direct and measurable. Half of the companies have difficulty proactively rerouting shipments during disruptions, and 49% cannot optimize dock and warehouse staff scheduling. There is broad recognition (60%) that improved visibility would enhance customer satisfaction and, ultimately, revenue. In response, demand for integration is high, especially with inventory planning systems (68%) and warehouse management systems (67%).

Forecasting accuracy is an underdeveloped capability. Although a majority of companies use predictive analytics or AI (56%) and have integrated their TMS with sales and operations planning processes (60%), key tools such as historical trend analysis (38%) and real-time demand sensing (35%) are underutilized.

These deficiencies have a direct financial impact. Nearly half (47%) of organizations allocate over 10% of their transportation budget to cover costs from these inaccuracies. Nevertheless, there is considerable optimism about the future, as 82% of those surveyed are confident that advances in planning and modeling will reduce transportation costs by at least 5% in the next five years.

The study also reveals a significant gap between the aspiration for AI and its actual adoption. While 94% of organizations claim to use AI or machine learning in some form in their transportation management, only 37% have achieved advanced integration into their TMSs. Sixty-one percent anticipate that in five years their TMS will operate with autonomous AI that requires minimal human supervision. However, 99% of companies face or expect to face obstacles to its adoption. The main barriers are a shortage of specialized talent (49%), integration difficulties (44%), and data quality issues (44%).

Finally, sustainability has become a strategic imperative. For 69% of organizations, it is a global mandate or an area of high pressure. Compliance with sustainability regulations is the top anticipated constraint that will affect performance in the next five years (42%). Although 62% already have comprehensive reports under the Corporate Sustainability Reporting Directive (CSRD), practical application is still limited. Only 34% have incorporated it into operational planning, and just 44% expect most of their transportation to be sustainably optimized in the next five years.

To face these converging pressures, organizations must migrate from legacy systems to a unified, API-first platform with native AI capabilities, reads the report. This strategy is essential to eliminate data silos, obtain necessary visibility, and leverage advanced planning technologies to build resilient, efficient, and sustainable transportation operations.

The study is based on a survey of 1,450 executives with responsibility for transportation management at companies in the Americas, the European Union, and Australia. Participants come from key sectors such as manufacturing, retail, wholesale and consumer goods, all from organizations with annual global revenues of at least US$750 million. The consensus among these leaders is that challenges will intensify by 2030 and that their systems will struggle to keep up. The risk of inaction is clear: higher operational costs, vulnerability to disruptions, and a reduced ability to adapt to customer demands.