Parcel management used to be simple: hand everything over to one carrier and negotiate better rates each year to keep shipping costs at a minimum. However, the exponential growth of e-commerce — now over 20% of all retail purchases — has led to increasing parcel volumes and a surge in omnichannel fulfillment, driving the need for diversified carrier networks. These changes have made shipping operations more complex than ever, forcing businesses to rethink how to cost-effectively manage parcel fulfillment.

Legacy multi-carrier parcel systems were designed for straightforward tasks like weighing, rating, and label printing at high speeds, with little need for complex decision-making. Unfortunately, these systems fall short when managing the sophisticated requirements of modern e-commerce. Next-generation parcel TMS platforms need to achieve what freight TMS systems have long accomplished: enabling business users to manage complexity across multiple carriers with configurable rules for routing, load planning, mode shifting, and simulations.

As logistics become more demanding, transitioning from basic parcel management to more complex, technology-driven systems is essential, but what features and functionalities should shippers look for in a parcel TMS platform?

1. Cloud-Native, Microservices Architecture

Legacy systems often rely on outdated technology stacks that rely on manual intervention and constant administration to scale and adapt. A modern parcel TMS architecture should incorporate stateless microservices to support continuous deployment, security, scalability, and modularity. This ensures systems are always up-to-date, easily adaptable to mission-critical environments, and capable of handling dynamic workloads with features like auto-scaling and multi-regional failover.

2. No-Code Optimization Instructions

Traditional shipping systems require hard-coded programming to apply static business rules, making it challenging to adapt quickly in dynamic markets. Modern TMS platforms provide no-code interfaces, allowing logistics managers to easily configure decision trees and automate complex decision-making processes in shipping, fulfillment, order allocation, and digital storefronts. This reduces time to benefit, improves operational agility, and lowers unexpected costs without extensive IT involvement.

3. In-Platform Optimization Engine

Legacy parcel systems depend on carrier web APIs to compare multi-carrier rates, which are slow and unreliable, especially during peak periods. Modern TMS platforms feature onboard optimization engines capable of processing thousands of rates, transit times, and optimization instructions per second. High-speed processing supports more efficient order allocation and fulfillment waves to improve parcel management responsiveness.

4. Cartonization

Typically, legacy systems process shipments at the end of the line, missing opportunities for upstream optimization. Advanced TMS platforms use cartonization algorithms to determine the most cost-effective packing methods based on SKU data, reducing costs and waste. These platforms also consider factors like fragility, SKU orientation and fill percentage, improving space utilization while minimizing damage claims and carbon footprints.

5. Planning

Most legacy parcel systems apply business rules one order at a time, often too late in the process. Modern TMS platforms optimize routing and consolidation across order batches, allowing logistics managers to build and compare plans based on data-driven instructions. This upstream optimization enables better planning to meet carrier incentive targets and reduce shipping costs before orders reach the shipping stage.

6. Simulations and 'What-If' Analyses

Legacy systems offer limited post-shipment reporting, revealing only what did happen, rather than what could have happened. Next-gen TMS platforms provide virtual simulation capabilities, allowing logistics managers to model the impact of new strategies on cost and delivery performance. By applying instructions to historical shipping data, these platforms enable 'what-if' analyses for any number of scenarios:

• What if I had used a regional carrier last November?
• What if my primary carrier imposes a pickup limit during peak season?
• What if I change my inventory of carton sizes?
• What impact would general rate increases have had last year?

Insights from these simulations propel informed decision-making to improve planning and execution processes.

7. Personalized Label and Forms Design

Modern consumers demand personalization, but legacy systems are often inflexible and offer limited customization. Advanced TMS platforms offer low-code solutions for modifying labels, forms, and documents, allowing businesses to promote their brand effectively. Companies can create client-specific outputs and configure instructions for printing using familiar web development tools, enhancing brand visibility and customer engagement at the point of delivery.

As parcel management grows increasingly complex in the age of e-commerce, companies have to start thinking outside the box to remain relevant. Next-gen TMS platforms offer significant advantages over legacy systems, including increased efficiency, cost reduction, and enhanced adaptability. Implementing these advanced solutions is critical for future-proofing logistics operations and protecting valuable margins in a rapidly evolving market.

The time has come for logistics managers and shippers to evaluate their current systems and switch to next-gen TMS platforms to meet modern demands and stay competitive. Keeping up with the latest advancements in TMS technology will allow these businesses to be best positioned to adapt as new obstacles arise, solidifying their place in the market.