Get the Load on the Road: Addressing Drayage Challenges
Drayage was an often overlooked part of the supply chain until early pandemic port congestion thrust it into the spotlight. Today, drayage providers are focused on accelerating a technology-based approach to meet communication and visibility challenges.
Drayage—retrieving shipping containers from one location, usually a local port, and then moving it inland to distribution centers and warehouses, shipping hubs, and retail stores—plays a crucial role in the supply chain throughout the world. It’s particularly important in the United States, which relies on imports.
“When ocean meets land, it is drayage that mobilizes supply chains,” says Kerry Byrne, president of Cincinnati-based TQL, a freight brokerage firm. “About 80% of global trade involves maritime transport. All containerized cargo is transported in and out of ports on drayage chassis.”
To put drayage’s role in perspective, the top 25 U.S. container ports handled 39.8 million 20-foot equivalent units (TEUs) in 2020, amounting to 4,500 TEUs passing through ports every hour each day in the United States.
“Each one of those containers had to be moved, one or two at a time, on a drayage chassis,” Byrne says.
Despite its importance, drayage has often been overlooked among the many components of the supply chain over the years. That changed early in the pandemic, when severe port congestion challenges heightened attention on drayage. Drayage carriers faced long lines that drastically hampered their productivity and were a striking symbol of the extent of the problems.
“The news was full of reports of supply chain hysteria focused on ports and congestion,” says Michael Mecca, CEO and founder of PortPro, a New Jersey-based company that provides a drayage transportation management system. “That news shined a light on drayage.”
The First Mile
Drayage is sometimes referred to as the first mile in logistics, and its importance is linked to that role.
“The United States is an import-heavy country,” says Drew Herpich, executive vice president and chief commercial officer of Atlanta-based Nolan Transportation Group, which provides freight and third-party logistics solutions. “To some degree, drayage is where it starts and stops. Delays, supply chain constraints, and cost increases for some products can all start with the drayage process.”
Before 2020, drayage often was taken for granted.
“Shippers just expected the drayage part of the process to go right,” Herpich says. “They also expected inventory levels to be replenished and warehouses to have the goods they needed. But the pandemic hit. Everybody saw inventory go down, warehouses were nearly full, and product usage was at a high level that we weren’t used to.
“All of a sudden, drayage became a critical piece in this situation,” he adds. “The question for shippers became, ‘When will I get this product off the ship? How will this move go? When will the shipment get to my warehouse?’”
The drayage environment has changed markedly since the supply chain slowdown in 2020.
“Currently, drayage drivers can make four to six turns daily in and out of ports, moving containers to staging areas for transloading or cross-docking so the cargo can be moved by rail or truck,” Byrne says. “During the supply chain crisis, drivers were limited to moving about one container daily.
“The resulting pile-up at ports was in part because drayage carriers couldn’t effectively do their job,” he notes.
An Array of Challenges
The capacity constraints, congestion, and driver shortages that proved to be drayage challenges early in the pandemic have dissipated as volumes have dropped.
During the pandemic, drayage carriers did not feel the need to proactively sell their services as they were just trying to keep up with demand. Today, however, carriers need to work to ensure drivers stay busy and they can keep up with payments on new equipment they acquired to meet previous elevated demand.
“Some companies are struggling now,” Mecca says. “There has been a big swing in the drayage space from one extreme to another in fairly short order.”
All carriers, including those in drayage, are contending with “market economics,” Byrne says.
“Federal Motor Carrier Safety Administration authority revocations have been at all-time highs,” Byrne says. “While the data isn’t broken out by equipment type, the information signals that the surge of new authorities that occurred in late 2020 and through early 2022 are exiting the market.
“Carriers now face lower rates and higher fixed equipment costs that make business financials unsustainable for many,” he adds.
Feeling Boxed In
Drayage is “a unique mode of transportation,” Mecca says, because of the many different parties involved—from shipping companies and equipment providers to terminals and ports.
“Many different parameters are boxing in these operators,” Mecca says. “They have to run almost perfectly in order to have success because there so many day-to-day challenges can come up. There is a bureaucracy—and there are a lot of stakeholders—in the drayage space.”
The lack of technology-enabled visibility and communication in drayage heightened the “pandemonium” around port congestion early in the pandemic, Mecca says. “A lot of companies didn’t have a great idea of what was going on in their supply chains,” he notes.
Cargo visibility in drayage presents unique challenges. In other modes, cell phones play a key part in tracking and communication. However, that’s tough to replicate in drayage.
“OSHA heavily restricts cell phone use in U.S. ports—the sheer chaos of moving equipment and vehicles, fall hazards from heights, and 40-foot container movements pose risks that cell phone distractions could compound,” Byrne says. “This creates a lack of visibility as tracking is often tied to check calls or tracking apps. Many providers manually check the port and terminal websites for cargo status.”
The challenges that drayage faced early in the pandemic helped accelerate a push for innovation in the drayage field. Funding and efforts behind tech improvements in drayage are on the rise.
New efficiencies in drayage could lead to dramatic and meaningful impacts, in part because there is so much room for improvement. In particular, drayage is ready for more widespread digitization that will lead to real-time tracking.
“You can get a lot of information about the steamship lines, but the biggest questions have always been, ‘now that the steamship line is in the port, when is my container getting off? When will my container be ready? When will it get to the warehouse? When do I contract my drayage driver?’” Herpich says.
“Now companies are looking at all the individual containers when they come off the ports from a technology perspective—when they get scanned, and how that data gets uploaded into the system,” he adds. “We’re getting more efficient from it.
“The problem is many ports still rely on antiquated systems,” Herpich says. “But if we can overlay some new technology, and get that information into our legacy systems, we can still improve the process that causes congestion like we saw in 2020 and 2021.”
A clear first step is to tech-enable drayage carriers through a transportation management system like the one PortPro offers.
“Seventy-five percent of drayage carriers use spreadsheets, so the first thing we need to do is introduce software that allows them to automate manual and tedious tasks, such as tracking containers, creating rates, dispatching and paying drivers, and managing documents,” Mecca says.
Similarly, new tech solutions are focused on providing the real-time drayage visibility that is often lacking, such as through the kind of chassis GPS tracking that TQL offers.
“GPS devices are generally great tools that have helped improve many aspects of logistics,” Byrne says. “Beyond real-time location, GPS can also provide compliance and safety information based on data such as speed and impact.”
Integrating technology at ports is a difficult prospect. Each port manages data differently, meaning providers must adapt to the individual port’s approach. “It’d be wishful thinking to think we can all get on one system together,” Herpich says.
Drayage simply has characteristics that make adapting comprehensive tech solutions challenging.
“From a big picture perspective, some efficiency aspects of drayage could benefit from technology,” Byrne says. “This hasn’t happened in a material way yet because there are typically about five parties involved in one drayage move: shipper, drayage carrier, freight forwarder, steamship line, and port. True integration would require all to make a sizable technology investment.”
Drayage seems poised to benefit from overall growth in port infrastructure investment. “Port infrastructure was at the heart of the supply chain crisis,” Byrne says. “Many ports, from those handling the highest tonnage to more moderate volume, have announced investments to make facilities more efficient, handle higher volumes and operate greener.
“Projects include developing land to expand existing port acreage, dredging to allow bigger berths and constructing inland off-dock container support facilities,” he adds.
More drayage carriers will adopt sustainable models and green practices, such as through the increased use of electric vehicles (EVs), to pay closer attention to their carbon footprints.
“The nature of frequent, local runs could be appealing to EV producers,” Byrne says. “Idling that occurs while trucks wait to load and unload containers and the empty miles they incur bringing containers back to port all seem ripe for procedural or technological intervention.”
The rise of automation and its integration into port operations will be a key issue to watch. Drayage often is cited as a field where autonomous vehicles could one day be a possibility.
Mecca says autonomous vehicles will be a part of drayage’s future, though not fully autonomous vehicles.
“Drivers are such an important part of what makes drayage companies run,” Mecca says. “But autonomous functionality and features inside vehicles that allow a more comfortable driver experience and increase efficiency is important and many companies are working to innovate on it.
“As more autonomous vehicles hit the road, becoming a truck driver will be more attractive,” he adds.
Drayage efficiency depends on other components in the intricately interconnected supply chain. For instance, labor challenges could mean that warehouses will not always be open to receive containers. The result is that drayage efficiency gains at the port could be lost at that link in the chain.
Although the market has cooled considerably in 2023, drayage today is more widely viewed as a critical component of the supply chain. That is leading to promising efforts to improve the field from a cost and service perspective.
“More companies are diving into their full supply chains and paying more attention to drayage,” Herpich says. “Where in the past a lot of companies looked mostly at full truckload or less-than-truckload shipments, and bypassed the domestic drayage part, they’re not any longer.”
Six Types of Drayage
Drayage, also known as cartage or haulage, is the transportation of freight between a cargo facility terminal and a customer’s facility. There are six types of drayage:
1. Cross-Town or Inter-Carrier — A movement of an intermodal unit “across town” from one railroad to another for continuance of the move.
2. Door-to-Door — Retail drayage involving over-the-road movement of a unit to a customer location.
3. Expedited — A movement of an intermodal unit over-the-road to get it there on time. This exceptional drayage usually involves time-sensitive freight.
4. IMX or Intra-Carrier — A movement of an intermodal unit from a carrier’s rail hub to the same carrier’s intermodal hub. IMX drayage extends the reach of an intermodal hub.
5. Pier — An over-the-road movement of an intermodal unit from a carrier’s rail hub to a port’s dock or pier.
6. Shuttle — A movement of an intermodal unit either loaded or empty from a hub to another parking lot because the railroad has run out of room at the hub.
SOURCE: Intermodal Association of North America