How To Reduce Logistics Costs With TMS and Route Optimization Software

With fuel expenses causing headaches, driver shortages increasing labor costs, rising business expenses hitting every industry and customers continuing to demand more for less, reducing logistics costs must be a top priority for every transportation operation.  

There are many ways to tackle these challenges. You could optimize warehouse productivity, implement proactive equipment maintenance strategies or even minimize facilities costs. These approaches all have merit, but the quickest and easiest way to significantly reduce logistics costs is to let technology do the heavy lifting. And two of the best systems to help you achieve this are advanced route optimization software and transportation management system (TMS). 

These technologies don’t just reduce costs—they transform how you manage your logistics. From providing end-to-end, real-time visibility to delivering strategic insights for better decision-making, they offer tangible results that can improve both your bottom line and empower you to deliver exceptional service. So, whether you’re relying entirely on third-party carriers, running your own fleet, or a mix of both, there’s measurable benefits waiting for you.  

For now, let’s dive deeper into how to reduce transportation costs with the right technology. 

How To Optimize Logistics Costs With TMS Software 

A transportation management system (TMS) is a type of software that helps companies monitor and control the movement of goods, whether by land, air, sea, or a mix of these methods.  

TMS software helps you ensure goods are delivered as efficiently as possible, while still being on time, in-full (OTIF). It does this by optimizing loads and delivery routes, streamlining carrier management, tracking shipments locally and globally, and automating tasks that used to take a lot of time, like trade compliance paperwork and freight billing. Here are six key ways you can reduce logistics costs by leveraging a TMS. 

1. Measure and Manage Your Spend 

If you’re not tracking your transportation costs down to the last detail, you’re leaving money on the table. Measurement is the first—and arguably most important—step in managing your logistics budget. After all, how can you control costs if you don’t know where they’re spiraling out of control? An effective measurement process involves more than just keeping tabs on invoices. It’s about breaking down your spend by carrier, mode, lane and even individual shipments.  

A TMS not only gives you this level of insight across your entire network, but it also provides the clarity and control you need to spot inefficiencies and implement smarter cost reduction strategies as a result. With this kind of end-to-end visibility and advanced reporting tools at your fingertips, you’re able to uncover patterns and adjust your approach—boosting efficiency and reducing costs. 

What’s more, measuring your spend doesn’t just uncover opportunities for savings—it also helps you avoid unpleasant surprises. By closely monitoring key metrics like cost-per-mile or cost-per-pallet, you can identify exceptions or emerging issues. For example, if a carrier’s rates suddenly spike, you’ll catch it early and have time to renegotiate or explore alternatives. In other words, measurement is both your early-warning system and your guide to smarter strategies. 

2. Enable Smarter Carrier Partnerships

It’s tempting to stick with the carriers you know for simplicity, but convenience often comes with hidden costs or expense creep over time.  Meanwhile, working with too many carriers can create unnecessary complexity, increasing administrative overhead and making it difficult to keep track of costs. That’s why you need a TMS solution to find the right partners for your needs without burning excessive time searching for and managing them. 

Think about it—would you overpay for a ride when a cheaper, faster option is just a tap away? That’s exactly what a TMS empowers you to avoid in logistics. It collates details on hundreds of carriers, compares rates in real time and helps you pick the most cost-effective option for every shipment. Whether you're moving freight across town or across the globe, TMS technology ensures you’re not wasting money on the wrong carrier, boosting your logistics cost optimization and driving profitability. 

Guesswork and rate fluctuations? No thanks. A TMS also analyzes past shipments, market trends and carrier performance to help you negotiate long-term contracts that actually save you money. Plus, it optimizes loads and routes so carriers can use their space efficiently—meaning lower costs for you and a more resourceful use of carrier space. You can achieve more predictable shipping expenses, fewer surprises and a logistics strategy that works in your favor. 

3. Harness the Power of Automation 

Manual processes are the silent budget-eaters of the logistics world. Whether it’s assigning carriers, planning loads, tracking shipments or handling billing, carrying out tasks manually wastes valuable time and opens the door to costly errors. Enter automation, your not-so-secret weapon for taming logistics chaos and reducing costs. 

One of the benefits of transportation management software is automating repetitive tasks, freeing up staff to focus on higher-value or profit-driving activities, while simultaneously eliminating human error. How many times has someone had to spend hours double-checking invoices, only to find an overcharge too late? With automation, your system instantly flags discrepancies, preventing overpayments and saving you serious money. No more wasted hours, no more unnecessary costs—just a smarter, more efficient operation that keeps your bottom line happy. 

How much smoother would things run if your systems could talk to each other seamlessly? If, instead of manually pulling reports, sending emails or chasing down updates, information flowed effortlessly across your departments? That’s where integrating your TMS and enterprise resource planning (ERP) system comes in. With a fully integrated TMS solution, your inventory updates in real time, finance gets accurate data instantly and customer service has the latest tracking details at their fingertips. This means fewer manual processes, reducing labor costs and minimizing errors that could lead to expensive fines or customer penalties. With automation ensuring accuracy and efficiency, your team can make faster decisions, avoid costly mistakes and keep operations running efficiently. 

4. Carry Out Strategic Freight Planning and Consolidation 

Planning freight isn’t just about getting goods from point A to point B—it’s about doing so in the most efficient, cost-effective way possible. That means looking beyond individual shipments and considering your transportation strategy holistically. It starts with consolidating shipments whenever possible. Why pay for two half-empty trucks when one well-packed truck can do the job? Let’s talk about how TMS helps with freight planning, load planning and shipment consolidation to keep your operations running smoothly and cost-effectively. 

Freight planning with a TMS is like having a logistics expert on your team 24/7. The software ensures shipments are scheduled smartly by considering delivery windows, carrier availability and the best routes. No more last-minute scrambles or unnecessary expenses—just a streamlined process that ensures you’re always making the most cost-effective moves. And let’s not forget about shipment consolidation. Instead of sending multiple smaller shipments separately, a TMS groups them into a single, cost-effective load. This means fewer journeys and lower carrier costs—ultimately reducing per-shipment costs and enabling faster, more efficient deliveries. 

What’s more, advanced TMS systems really shine in load planning, automating the process and helping you pack shipments efficiently, cutting down on empty space. This helps you lower transportation costs and create a more sustainable supply chain. Altogether, by optimizing freight scheduling, load planning and consolidation, a transport management system turns logistics from a cost burden into a competitive advantage. Why pay more when you can plan smarter? 

5. Access Performance Management and Analytics

Smart TMS software comes packed with features to track and analyze performance at every level. By monitoring key performance indicators (KPIs), you can see at-a-glance how well individual carriers and drivers are performing. The system helps identify vendors that aren’t meeting expectations so you can instead prioritize those that deliver the best results. This leads to greater efficiency and improved productivity across your entire supply chain. 

But that's not all—modern TMS software goes beyond just tracking. It offers powerful analytics and reporting features that give you deep insights into trends and operational bottlenecks. Whether it's improving OTIF rates or identifying frequent issues, these analytics-driven insights help you implement strategic cost reduction initiatives, enabling a continuous improvement cycle.  

Plus, a full TMS solution empowers you to identify potential customer service issues before they escalate. By analyzing past trends and real-time data, you can intercept service disruptions early—be it delays, miscommunication, or any other factor that could lead to customer dissatisfaction. Once you see where things are going wrong, you can make smart adjustments—tweaking processes, improving communication, or introducing new services. That means fewer complaints or penalties, stronger customer loyalty and a significantly healthier bottom line. With the right insights, you can turn challenges into opportunities, creating a customer experience that consistently meets and exceeds expectations. 

6. Implement Streamlined Inventory Management and Dispatch 

Let’s be real—getting shipments where they need to go isn’t just about choosing the shortest route. It’s about efficiency, cost savings and making sure everything runs like clockwork, from the beginning of the process to the end. That’s the TMS advantage.  

Integrating a TMS with your ERP and warehouse management system (WMS) ensures that you have the correct inventory levels before transportation planning begins, preventing costly disruptions. No surprises, no last-minute scrambles. With real-time data syncing, you can avoid costly split shipments, keep storage capacity in check and make sure order fulfilment will meet customer requirements, every time.  

Not only can this integrated functionality help you manage shipments to customers, but it will also help you ensure the right materials and goods are in your manufacturing facilities at the right time. This helps you maintain productivity and avoid costly production downtime, while smoothing downstream processes like dispatch and fulfillment. Plus, better demand forecasting means you’re not overstocking or missing inventory when you need it. In short, everything runs with utmost efficiency, saving you time, money and headaches. 

How To Reduce Transportation Costs With Route Optimization Software 

If your business relies on its own fleet of vehicles, every extra mile driven is money wasted. That’s where route optimization software steps in to save the day. Much like a TMS system streamlines freight operations, route optimization software ensures your transportation activities run in the most cost-effective way, while making tasks easier for staff and boosting customer service.  

With a combination of cost saving benefits from eliminating manual planning and lowering fuel consumption to cutting failed deliveries and increasing drops per vehicle, the best routing and scheduling software can help you slash expenses by up to 30%. Here’s how implementing route optimization software can cut transportation costs and streamline your logistics operations. 

1. Optimize Your Delivery Routes

The first way to reduce fleet costs with route optimization software is in the name—optimize your routes. Deciding which route your vehicles should take to the delivery destination is not always as simple as choosing the shortest distance—physical height, weight and load-type restrictions, one-way streets, roadworks or congestion caused by local events can make the shortest distance route impossible. 

The impact felt by these factors is then compounded when planning a multi-drop route as extra miles and time incurred affect the arrival times of subsequent deliveries. With advanced software, route optimization algorithms, coupled with detailed mapping options, calculate the best route for your vehicles in seconds. Comparing the distances between each delivery point and your warehouse, the system creates a feasible route sequence that will ensure minimum mileage and fuel consumption while still meeting all of your customer, driver and regulatory requirements. 

By optimizing the drop sequence and route, the best route optimization software can also increase the number of drops per vehicle and reduce the number of trips required to complete the day’s deliveries. This can result in substantial cost savings including fuel consumption, ongoing vehicle maintenance costs and driver wages. 

2. Cut Your Planning Time

With so many factors and variables to consider for each delivery, transport planning can be a time-intensive job. And if you're doing it manually, relying on spreadsheets and the knowledge of your planners, the results can be inefficient and sub-optimal. But with advanced routing and scheduling solutions, the software is configured to your business needs as standard, with vehicle types and sizes, loading times, delivery restrictions, meal breaks, and pre-agreed delivery time windows all taken into account in the automated route planning process.  

This means you can cut your planning time from hours to minutes with just a few clicks—and improve the accuracy of your routes at the same time. As a result, you can streamline your planning team or redeploy staff to focus on higher-value tasks. For example, planners have more time to prepare for seasonal demand fluctuations and investigate alternative transport strategies. In other words, you can use your transport team’s expertise and knowledge to improve efficiency further, saving money and miles. 

In addition, with less time spent planning your routes and schedules, order cut off times can be relaxed, often resulting in more orders being placed and fulfilled each day—decreasing your cost per drop. For many businesses, those extra hours gained equate to better use of vehicle capacity, helping to manage fluctuations in volumes or business growth without the need for additional trucks. 

3. Maximize Vehicle and Fleet Utilization 

As your transportation operation grows, the opportunity for inefficiency can increase too. Over reliance on hire vehicles to cope with extra demand and under-utilized own-fleet vehicles can often prove costly, but it doesn’t have to be this way. Luckily, implementing routing and scheduling software can help you reduce logistics costs by maximizing utilization of your fleet resources. 

With the right system powering your operation, you can often achieve a higher number of drops per trip by optimizing your drop sequence—cutting out unnecessary miles and taking advantage of backhauls or multi tripping to minimize empty running. This, in turn, can allow you to reduce the number of vehicles you need in your fleet, take on more business using your existing resources and ensure agency resources are only used where necessary, reducing your cost per drop. 

If you have a fleet of mixed vehicle sizes, advanced routing technology can allocate loads based on pre-defined rules specific to your business to help further increase the number of drops per vehicle. Plus, an advanced route optimization system helps you reduce transport costs even further by enabling you to prioritize allocating work to your own fleet before using expensive agency resources, ensuring your vehicles are not sitting at the depot while you pay for a hire vehicle and driver. 

4. Improve Planning With Real-World Data:

Ensuring your transportation planning is optimized for efficiency is important, but what happens out on the road can have a massive impact on cost optimization in logistics. Without that real-time visibility, opportunities for further cost reduction through improved planning are often missed. 

By linking your vehicle tracking systems with live routing tools, you can review planned vs. actual activity reports. This highlights areas where costs could be cut simply by amending your planning parameters. For example, if there is excessive slack in the plan you may be able to reduce the planned unloading time by 10 minutes which could mean that an extra drop can be added to the trip. 

By giving your transport route planners visibility of real-world activity, they can refine planning parameters for a more realistic and cost-efficient schedule. And the best part? You can do this over and over as you collect more data, ensuring you're consistently optimizing your transport operation and creating a continuous improvement loop. 

5. Generate Consistently Accurate Arrival Times 

Accurate and realistic delivery times are crucial to controlling transport costs. Too much slack in your unloading time parameters could result in under-utilized trucks. And just as important—not allowing your drivers enough time to unload before the next delivery is due could cause failed deliveries later in your schedule. 

With advanced route optimization software, the emphasis is on ensuring your plan is feasible in the real world. You may be able to cut a truck from your fleet by allocating an extra five drops to every route, but if there isn’t enough travel time allocated between drops or hours available in the driver’s shift to achieve those additional drops, then you will be failing deliveries. As you know, this can incur penalties, ramp up redelivery costs and dent customer loyalty—losing you more money than you save in the long run. 

The best route optimization algorithms calculate exact times and distances between each of your deliveries, factoring in the maximum speed of the vehicle, additional time required for unloading and driver meal breaks. This extra level of detail means you can confidently offer accurate delivery time windows to your customers and ensure your vehicles are fully utilized. Enhanced mapping options enable you to improve your predicted arrival times to include average road speeds and route restrictions, allowing you to maximize delivery volumes on every route, improve first time delivery rates and reduce your costs. 

6. Model Strategic Business Changes 

Every day your route planning system and vehicle tracking devices collect valuable data about your operation. So why not use that information to make educated decisions about your business? In particular, you can use insights to reduce logistics costs, improve customer service and therefore boost profitability. 

With strategic route planning functionality you can use your historic routing and scheduling data from daily activities to model and analyze the cost implications of alternative transport strategies or business growth before you go ahead and implement them. 

Without interrupting your daily transportation scheduling operations, you can set up a copy of your base data to ask "what if" questions and reflect on your current processes. Then all you have to do is experiment with your parameters—such as vehicle capacity, warehouse location or loading/unloading times, to get an immediate comparison of fleet requirements, total miles, total driver hours and operating costs. 

And because the system is using your existing business rules and historical data as a base, you can be sure that the operational and cost savings are specific to your business rather than being based on industry averages and estimates. 

Bonus Logistics Cost Reduction Tactics 

1. Proof of Delivery Software for Last-Mile Savings: When it comes to streamlining final-mile deliveries, electronic proof of delivery (ePOD) software can make all the difference. By digitizing the delivery confirmation process, you can reduce paperwork errors, prevent disputes and streamline billing. Faster resolution of delivery issues means lower administrative costs and happier customers, both of which boost your bottom line. 

2. Telematics and Route Execution Integration: Telematics, with its ability to provide critical insights into driver behavior and vehicle performance, is a powerful tool in your hands. It helps to lower fuel consumption and maintenance costs. But when paired with route execution software, these systems unlock even greater efficiencies. Together, they provide real-time visibility into routing adjustments, ensuring that on-the-road changes align with cost-saving strategies. 

Ready To Reduce Logistics Costs With Aptean Transportation Solutions? 

In an industry where margin is everything and costs only continue to rise, reducing logistics costs is a must-have for staying competitive. To that end, you need the right technology to safeguard profitability and business growth—cutting excess costs from day one and helping you implement strategies for future savings, too. In this blog we’ve explored various ways in which TMS and route optimization software can help your business tackle escalating transportation costs, but that’s just the tip of the iceberg.  

With Aptean’s suite of transportation management solutions, you’re not just reducing expenses—you’re embarking on a transformative journey for your entire operation. Our advanced transportation management system and route optimization software are designed to streamline your processes and protect your bottom line while simultaneously boosting customer service and enhancing team productivity. With seamless integration, cloud deployment, artificial intelligence (AI) capabilities and the support of our expert teams, you’ll be ready to take control of your logistics strategy and drive better results, faster. 

And that’s not to mention our complementary solutions, including electronic proof of delivery software, route execution tools, industry-specific enterprise resource planning solutions and warehouse management systems. By partnering with Aptean for your software ecosystem, you eliminate the hassle and extra expense of dealing with multiple vendors and can instead focus on driving your business forward.  

So, why wait? With Aptean, you’re not just prepared for what’s next—you’re leading the way. Discover how Aptean TMS solutions can transform your logistics operations—schedule a demo with our expert team today.