Transportation Management Fundamentals
Mode selection, network design, cost structure and the levers that reduce freight spend without hurting service.
By SupplyChain.management · Last updated
Definition
Transportation management covers mode and carrier selection, routing, execution and freight cost control across inbound and outbound flows.
Why it matters
Freight is often the second largest supply chain cost and the most visible part of customer experience.
Formula
Cost per Unit Shipped = Total Freight Spend / Units Shipped
Example
Shifting 40 lanes from parcel to consolidated LTL cut cost per unit by 18% with a one-day transit increase.
How to interpret it
Cost and service move together. Judge changes on landed cost plus the service consequence, never cost alone.
How to improve it
Consolidate orders, review mode rules against real order profiles, cut expedites through better planning, and manage carriers with scorecards.
Common mistakes
Chasing rate reductions while shipment size and expedite frequency quietly destroy the savings.
Related KPIs
Related SupplyChain.tools
Run the numbers on SupplyChain.tools - this page covers the management decision.