Drayage Carriers In The Modern Supply Chain

Drayage Carriers In The Modern Supply Chain

Categories: Port Drayage.

As we move into the second half of 2017, port drayage continues to experience significant growth-related challenges. The rapid growth of eCommerce in recent years has increased the demand for goods, but also reshaped the routes they travel. To meet this demand, large eCommerce companies have increasingly built regional warehouses to enable the fast delivery of goods to consumers and businesses in the immediate area. This has had a significant impact on port trucking operations.

In the past, drayage carriers would take a large percentage of their containers to a rail connection or a distribution center for long-distance trucking. Today, more cargo is going directly to local warehouses instead of regional or national warehouses that serve large swaths of the country. In other cases, to ensure consistent supply during peak sales times, excess cargo is temporarily stored in 3PL provider’s warehouses near the port until a company figures out where it should be sent. All of these changes increase demand for drayage services.

Since many ports are located near (but not in) major metropolitan areas, warehouses must be nearby to enable fast fulfillment and efficient inventory management. In ports near urban areas, suburban warehouses are often more cost effective; drayage carriers are increasingly being called on to move cargo to these locations.

The Basics of Drayage

The specifics of port transportation have changed over time, but the basic function has stayed the same. Drayage originated as a horse-driven cart with low sides (a dray) that was used to transport goods a short distance, typically from a dock to a long-distance freight solution. Today, drayage remains essential for getting cargo from ships to local warehouses and distribution centers. Nevertheless, this link in the supply chain is often a bottleneck on flow of goods from across the world to their final destination.

The demands on drayage have changed as the world has changed, and the rise of globalization over the past thirty years has altered the flow of goods. Ports have seen a significant increase in cargo traffic and effective movement of containers from the harbor to local destinations has become more challenging. Changes in the trucking industry over the last three decades have combined with a significant increase in goods entering our markets from APAC, creating a situation that makes it more difficult for beneficial cargo owners to get their goods in a timely manner.

New Challenges

The importance of drayage in getting goods from the port to rail terminals, warehouses, and other distribution centers had led to significant competition for business. Consequences of this include the presence of a large number of drayage carriers and the widespread use of drivers classified as “individual owner-operators.” While the latter lowers costs, it often results in higher driver attrition, because operators frequently give up or move on to more lucrative jobs after paying their dues in these relatively low wage jobs. Combined with congestion at many ports, this has led to driver shortages for drayage operations, potentially slowing the speed of cargo movement.

Seasonal surges in cargo and aging local infrastructure in many areas has led to significant bottlenecks as well. In today’s fast-paced environment, not being able to fulfill orders is a significant liability. That’s why it’s essential to have your port operations in order. Technical advances have helped to streamline some port drayage operations but much of the industry still prioritizes low-cost labor over advances that improve efficiency. While competition is stronger and prices are low, consistency of service is not always a given. This is why it’s often helpful to work with a third party logistics firm to help avoid costly problems.

Although technological advancements have led to better tracking of goods, this hasn’t always translated into more a effective supply chain. The structural problems in the drayage industry have lead to delays at ports, often leaving cargo sitting around for days. It often comes down to the individual drayage carriers and how they integrate technology with effective movement of goods. Since the port trucking industry has many operators, including some fly-by-night vendors, it’s important to find reliable carriers with a long track record and proven results. This is the best way to ensure your cargo arrives in a timely manner while avoiding paperwork problems that less experienced operations may have.

If you need a partner to help you strategically manage and successfully move your products out of the port and onto their final destination, be sure to download our ebook - Speeding Time-to-Shelf and Cutting Costs- a must read for today’s logistics managers.