Drayage Capacity Issues

The term drayage refers to the transport of goods over shorter distances. An example would be a truck shipment picking up at a seaport, border crossing, or inland terminal and delivering to a location within the same area. And even though the drayage covers very little mileage, it is responsible for a disproportionate amount of transport cost and delays.

Drayage rates are currently up as much as 30% over last year, and there are many current issues causing U.S. ports to struggle with drayage. Drayage is affected by any current capacity issue being faced by the trucking industry, some examples of which are the electronic logging device (ELD) requirements and a lack of drivers.

It’s not just trucking, either; volume increases of containers being sent via rail (up 3.9% in 2017) and ocean (up 7 percent in 2017) have negatively affected capacity as well. While the main leg of the transport may be ocean or rail, most shipments go over-the-road at some point, and for that over-the-road portion, you will need a driver and a chassis.

For the longest time, steamship lines were the primary owners of container chassis. However, years ago this changed and the chassis market now relies on truckers renting or owning their own chassis. This paradigm change couple with new regulations stating that chassis must meet “roadability” regulations have been instrumental in climbing drayage costs over the last few years. A lack of reliable, available container chassis is one of the main reasons for the rising drayage costs and the increase in transit time.

So where does this leave us?   Well, it has been a disastrous winter and the result has been dreadful for one of the top US freight hubs; Chicago has experienced unprecedented gridlock due to the winter conditions combined with the previously listed capacity issues. Certain carriers are opting out of using contracted rates that deliver to the door as they will be able to charge much more on the spot quote market.

So, now that many of the current issues with drayage have been identified, what can you as a buyer, seller, shipper, consignee, or importer do to lessen the burden and costs to your company? In the short term you can expect to pay a higher price for inland delivery moves, and while there are few real solutions to the current capacity constraints, there are things that a shipper can do to lessen their effect:

• Make sure to use the least cost carrier, the least cost mode, and service level that will still allow the freight to be delivered on time. Costs are rising, and making concentrated efforts to use the least cost options will help in keeping your pricing down.
• Ramp up premium approvals. If you are going to expedite or pay any substantial charge above least cost, make sure there are approvers in place and see that they have the tools to receive and approve the requests in a timely fashion.
• Analyze your data to look for possible freight consolidations and to ensure that any truck or ocean container is at capacity. If the entire space of a vehicle is paid for, it is a waste of resources if it is not utilized.
• Analyze your data and contracts to fully understand your transit time contract requirements as well as your carrier delivery performance. Being better equipped to understand your expectations, and how your carriers are ultimately performing, will allow you to make the correct choices on who to partner with and how to properly plan for your shipments.

These are just a few ideas of what a company can do to maximize spend in a seller’s market. If you have any additional questions on drayage, or how to improve your freight spend, visibility, and on time delivery please contact Allyn International at AllynLogistics@allynintl.com.

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China and Prague, Czech Republic. For more information, visit www.allynintl.com.