Drayage Update: How Shippers can Mitigate Ongoing Disruptions
Global shippers have put drayage higher on the priority list in recent years as they’ve faced growing disruptions and costs when moving containers in and out of ports and rails. The reality of the Inland market is that any challenge upstream will have downstream impacts and with variable challenges in each inland market, knowing what things you can control is a large task.
Chassis and driver shortages have undoubtedly contributed to the problem but those of us working in inland solution design know drayage is an important component of the larger global supply chain. COVID-19 has triggered a domino effect of disruption but also changed inventory habits. Widespread port and rail congestion has resulted in longer dwell times and reduced throughput, and that in turn has created the potential for extra demurrage/detention and increased inland accessorial fees. We see this not just in the US but in many locations globally.
It’s through this lens of their larger supply chain that shippers should look for a solution to their drayage headaches. Because only by understanding how marine drayage fits into larger global supply chain activities and planning from that perspective shippers can find true, lasting relief from disruptions that have no sign of slowing down.
A high-level view of drayage
Behaviors only change if mindsets change first. In the shipping industry, marine drayage is often thought of as a simple activity – moving a container from one place to another. but that thinking ignores the interconnected nature of modern global supply chains. A container has many touch points as it travels from its origin to its final destination – and all of them can impact drayage cost and efficiency.
What’s more, every container’s shipping journey is unique to that place and time. Because of this, shippers should factor in the various challenges and constraints that a container can encounter based on the trade lane and markets it travels through.
For example, flexibility varies significantly by market. In Europe, containers can be picked up and returned to different locations. That’s not the case in the U.S., where shippers typically must return containers to their original out-gate location. Because of differences like these, shippers can’t assume that drayage is a viable solution for long-haul moves when routings change.
Different markets add other complexities to the drayage equation. Loading warehouses around the globe are vastly different, varying in loading hours, appointment requirements, carrier interaction, and volumes they can manage per day. Due to the inconsistencies, shippers cannot assume their drayage activities on the West Coast can be consistent with their strategies for other regions or countries because each is different. Box rules, mounting empty containers, off site storage and added appointment scheduling rules, unique per market, also add complication to the door move.
Collaboration, creative solutions, and utilizing the right technology are key to driving efficiency. Strong alignment and partnerships are critical to managing your inland movement, and everyone must do their part to support the marine drayage carrier network and those managing these services.
Regulatory changes in the works
While drayage has historically been an afterthought for shippers, the Federal Maritime Commission (FMC) is working to evaluate the practices and create standards. As chassis constraints have furthered port congestion around the country, the FMC announced it is initiating a study to determine the best standard processes to support an evolving and recovering global supply chain.
As part of the Ocean Shipping Reform Act of 2022, there are also billing terms and data elements under review. While it’s unclear how this could change the marine drayage carrier network, shippers should plan to mitigate the effects of ongoing disruption by thinking through their drayage strategies and ensuring they are prioritizing communication and transparency across their interconnected supply chain.
Clearly, some drayage challenges are outside shippers’ control. But by assessing how drayage fits into the larger supply chain, shippers can plan activities and identify potential upstream or downstream issues and focus on mitigating their risks in areas they can control like carrier engagement, communication, forecasting and facility flexibility.
The last two years have illuminated the need for advanced planning. By knowing well in advance what needs to be moved and when, shippers can give marine drayage carriers advance notice so they can commit and proactively plan on their end.
As supply chain disruptions have become the new “normal,” it’s become increasingly important for shippers to better understand the different parties involved before their containers reach dray carriers. Every container can touch a long list of parties, like steamship lines, NVOs, freight forwarders, customs brokers, and others. As more parties get added to the list, the container’s journey only grows more complex.
Shippers can take steps to streamline the hand offs between parties to keep containers moving efficiently. But it’s also important that third parties effectively communicate and keep the best interests of the shipper and customer in mind.
Do the research
The more informed shippers are about a container’s journey, the more they can get ahead of drayage challenges.
For example, steamship lines call certain terminals. Knowing in advance what terminal a container is bound for can help shippers understand what conditions or challenges they’ll face downstream. They could for instance identify if the U.S. port of entry has on dock rail service or if the containers will require a chassis and driver to relocate it to the rail terminal before it continues to an inland rail location.
For containers headed inland, shippers should understand the final terminal beyond just the market, such as Chicago. There are 6 international rail terminals in the Chicago market so picking the cheapest ocean freight rate to final rail isn’t a solid strategy if you are also adding 90+ miles to your final dray move, tolls and a chassis split fee.
Have a plan B
Even with the strongest communication and planning, things can still go wrong. Weather, infrastructure, and sudden delays in vessel scheduled can throw a wrench in any drayage strategy. When planning for drayage, shippers must look at the big picture and understand where things may need to pivot. Knowing the given market and its unique potential for disruption gives shippers the ability to make additional plans.
For example, one of our customers was faced with a large number of containers arriving at the IPI rail destinations all at once, creating a potential surge of congestion across their Minneapolis and Chicago facilities. Diversifying their drayage and transload options across the varying routing destinations helped them deliver everything on time and proactively extended facility hours and appointments to accommodate. Our dedicated carriers, that were familiar with the varying markets and complex warehouse relationships, helped the company reduce dwell time by planning ahead to ensure proper communications between parties and ultimately avoid major delays and backlogs.
As disruptions persist, there’s a growing role for technology to help shippers conquer their drayage challenges.
Technology can help reduce the administrative burden. Folding drayage activities into the same technology platform used to track and manage other supply chain activities, shippers can get ahead of problems.
While technological innovations are helpful, no solution can fix all challenges that come with drayage. Addressing the risks and avoiding the high costs that shippers are facing will require a big picture strategy as drayage is not a siloed activity. When shippers start to view drayage through the lens of the entire global supply chain, they begin to understand why effective planning, strong partnerships and communicating is critical to bring transparency to such a complex practice.
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