Understand Drayage: What & Why It’s Costly

What is drayage?

In a sentence, drayage is the act of getting containers on a truck and delivering it to a warehouse, distribution center or customer appointed place.

The term ‘drayage’ is derived from the term “dray” – a horse-drawn cart or wagon, which was often used in the transportation of goods and commodities in the past.

Today, drayage has evolved into a multi-billion-dollar industry, largely thanks to the explosive growth of e-commerce and international trade. With more and more products and goods being transported by ship and stored in containers, there has been a rise in demand for drayage services.

Delivery vs Drayage

Delivery refers to the movement of goods from a warehouse or distribution center to its final destination.

Drayage, on the other hand, is the transportation of containers between different shipping terminals or ports. Drayage companies are responsible for moving containers from the port to warehouses or vice versa.

The delivery process involves getting goods to their destination, whereas drayage involves transporting containers within a logistics system.

What kinds of trucks are used for drayage?

In the drayage industry, tractor trailer trucks are frequently used to transport containers between ports, warehouses, and distribution centers.

A tractor trailer consists of two parts: the tractor, also known as the cab, and the trailer. The tractor is where the driver sits and controls the vehicle, while the trailer is where the goods or cargo are loaded and transported.

How far do drayage trucks travel?

It is common for drayage trucks to travel within 200 miles. Over 200 miles would require transloading the goods from the container to a truck, then truck to the destination.

There is a time limit to return an empty container, and the chassis cost is too high if you occupy it for a few weeks.

How many drayage trucks are there in US?

According to the American Trucking Association (ATA), there are approximately 3.5 million trucks registered for business purposes in the United States. Out of this number, it is estimated that around 80,000 trucks are specifically used for drayage operations.

Who owns chassis for containers?

A chassis consists of a set of wheels, suspension, and brakes that can be attached to a container and then pulled by a truck.

Traditionally, shipping companies owned and maintained their own chassis for container transportation. However, in recent years, there has been a shift towards leasing and renting chassis from third-party providers. This has led to more competition and options for shippers, but also added to the overall cost of drayage.

How do you calculate drayage rate?

Drayage rate basically calculated based on distance and fuel. The distance that the drayage truck will travel between the pickup location and the delivery location is a key factor in determining the rate.

The fuel surcharge is another key factor on drayage rate. fuel surcharge usually contribute 25~45% of drayage rate.

Depending on the port and traffic situation, there may be different accessorial charges on top of the basic fee that are built in.

Chassis fee

The cost for rental of chassis that carries shipping containers over the road

Chassis split fee

Charged when the drayage trucker has to make an additional trip to pick up or return a chassis from a different location

Pre-pull fee

Pre-pull containers from port and store overnight or multiple nights in holding yard to prevent demurrage charges

Demurrage fee

Charges from shipping company or port when containers are retained beyond a specified time.

Stop fee

Applies when the driver has to make two or more stops before final destination.

Per diem fee

Charges from shipping company when empty containers are delayed on return to port.

Pier pass fee

fee to gain access into the port for pick up

Why is drayage so expensive?

According to the American Transportation Research Institute, the average cost per mile for a combination truck (tractor-trailer) in 2020 was $1.59. while average cost per mile for drayage can range anywhere from $2 to $5.

There are several unique challenges that make drayage an expensive industry to operate in.

Regulations and compliance requirements

Drayage is subject to numerous regulations, including safety regulations and environmental regulations. Meeting these regulations can require additional equipment, training, and certifications, all of which can add to the cost of drayage.

Cost of labor

Drayage often involves tight schedules and deadlines, as the containers need to be moved in and out of port at certain time frame. This means that drivers may need to work long hours, which can increase the cost of labor.

Port congestion

Congestion and wait times at ports also contribute to the high cost of drayage. Ports can be very busy, especially during peak season, which means that trucks may have to wait for extended periods to pick up or drop off containers, leading to lost time and higher costs.

Fuel and Maintenance Costs

Fuel and maintenance expenses are another significant cost component of drayage services. Drayage companies must spend a significant portion of their revenues on fuel costs and regular maintenance of their equipment to ensure safe and efficient operations.

Demurrage vs Drayage

Demurrage is a charge imposed by the shipping line or terminal when a container is not picked up within the agreed-upon free time.

This charge is meant to encourage customers to quickly pick up containers so they can prevent the dock or terminal from becoming overcrowded.

On the other hand, drayage is the charge for moving a container over a short distance, typically, between the terminal and a nearby facility. This service is usually performed by trucking companies and is an essential part of the container shipping process.

Who pays container demurrage?

In most cases, the importer or consignee is responsible for paying the demurrage. This is because they have control over the timing of their shipments and are expected to ensure that their goods are ready for pickup within the agreed-upon time frame.

However, if the delay is due to factors outside of the importer’s control, such as port strikes or natural disasters, the carrier may be willing to negotiate or waive the fees.

OTR vs Drayage

OTR (over- the- road) refers to long haul trucking, while drayage is the movement of containers from a port to a nearby location.

OTR trucking typically involves driving long distances between states, often with a full trailer. The goal is to move as much cargo as possible from point A to point B efficiently.

Drayage, on the other hand, focuses on the transportation of containers over a short distance. Drayage trucks are usually used to move containers from a port to a nearby warehouse, distribution center, or other final destination.

One of the biggest differences between OTR and drayage is the cost. Drayage tends to be more expensive than OTR. In addition, there are often additional fees associated with drayage, such as port fees and congestion charges, which can add up quickly.

Drayage vs Intermodal

Drayage is a short-haul transportation service used to move goods from a port or rail yard to a warehouse or distribution center.

On the other hand, intermodal transportation involves the use of multiple modes of transportation such as trucks, trains, and ships to move goods over long distances.

One of the significant differences between drayage and intermodal is the distance covered. Drayage is mostly used for short-haul trips, while intermodal is ideal for long-distance transportation.

Intermodal transportation allows shippers to take advantage of different modes of transportation to move their goods efficiently, reducing costs and increasing capacity.

Another difference between drayage and intermodal is the cost.

Drayage can be costly, especially when shipping goods over short distances. In contrast, intermodal transportation is often more cost-effective, allowing shippers to save money and improve their bottom line.

What is the largest marine drayage company in US?

One of the largest marine drayage companies in the US is Pacer International. Founded in 1997, Pacer International is a logistics and transportation provider that offers a range of drayage services.

With over 1,400 owner-operator drivers, Pacer International operates in over 40 ports across the US, including the Pacific Northwest, Southern California, the Gulf Coast, and the East Coast. The company also offers intermodal and truckload transportation, making it a comprehensive logistics provider for customers.