NFI Industries

Having The Drayage Advantage

Prior to World War I, drayage operations were conducted by horse and cart1. However, the drayage that we know of today is any vehicle used to transport heavy loads a short distance. It’s come to be synonymous with the concept of moving containers to and from a shipping port or to and from an intermodal ramp. Dray equipment is made up of three components: truck, chassis, and container. Draymen will get the containers from the ship or train and take them to a warehouse or cross-dock and then return the container and chassis. Historically, chassis were owned by the ships but once the recession hit in the late 2000’s, ocean carriers profitability sank (pun intended) and they began to divest themselves of their chassis. Those companies that bought the chassis began renting them as they were needed which usually is on average about 3-5 days. As draymen came to the ports to get their containers from the ship they would have to rent a chassis to transport the container. The shippers of the goods would then have to pay an additional fee aside from their international shipment fees to rent the chassis.

In the past year we have seen a lot of activity surrounding the west coast ports. As the parties involved with the ports failed to reach contractual agreements, we witnessed the ports activity began to slow to a crawl over a span of a few months which left many companies scrambling to obtain their inventory. As the containers stacked up at the ports, there was the inevitable shortage of chassis that came with the heavy dwelling of containers as well as the sheer difficulty of navigating the ports. The long lines put heavy restrictions on drivers who were attempting to pick up the containers. Costs mounted for shippers, carriers, and port operators alike. Companies began implementing contingency plans where they were diverting volume away from the west coast and towards other ports in the United States. An agreement was finally reached in March of 2015 and the ports have since begun operations at normal speeds, albeit reduced volumes.

Current Challenges

Although negotiations were successfully concluded at the west coast ports, the entire situation had left companies reluctant to use those ports to unload. Instead, many decided to continue to move their volume to other ports around the United Sates. Many shippers have gotten used to the new ports of call and have realized that their networks are better off having their volume spread across multiple ports and regions. The impending opening of the newly renovated Panama Canal will also make the shipment of containers to the East Coast more attractive.

Regardless, as international trade continues to increase, so will the demand for drayage. A Journal of Commerce article recently stated, “The drayage business is only complicated by ever-larger ships straining terminals already constricted by the lack of 24/7 operations, a shortage of chassis equipment and truck drivers…”2. Each port has a community of workers and processes to get containers unloaded and loaded. These processes can make the drayage operation difficult to complete in a timely and cost efficient manner and inevitably drive up costs for the service. There are times that you may be expecting a container to be unloaded today but instead it won’t be unloaded until tomorrow due to delays relating to the above issues. The draymen then have to notify all available parties including the warehouse or cross-dock managers and chassis renters and hope that they can adapt.

The Optimal Drayage Provider

There are ways to successfully have a seamless drayage operation. A 3PL can possess qualities that can navigate the challenges that many face at the ports. For instance if your warehousing operation is managed by a 3PL that also offers drayage services then it’ll make the transfer of goods easier. The drayman and warehouse manager may have that relationship and flexibility to continuously communicate and be prepared for shipments or any changes that may occur. Aside from the relationships within your operations, the relationships around the region can also be of use. If your 3PL has other warehouses and operations in the area then they’ll be able to leverage their team and equipment to help reduce overall costs when it comes to avoiding costs like dry runs or bobtail fees by finding empty equipment with another 3pl client in the area.

A presence in the region is also helpful at the actual ports. Having a relationship with those working the ports and experience in drayage operations at those ports will be valuable. Having familiarity with the process as well as those involved in the process will make for a seamless execution. Chassis suppliers are included in those relationships. Some drayage carriers manage leasing and even own their chassis to eliminate that challenge and control potential costly rental fees. Having that transparency will simplify the process and you’ll know that you’ll have a chassis when the time comes and what you’ll pay for it in advance.

Ports will continue to improve their infrastructure and modify their operations to accommodate the high demand and volumes coming internationally. Having the right parties involved in your drayage operation will move your goods flawlessly, reduce/avoid unnecessary costs, and help optimize your supply chain.