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Drayage Update: How Shippers can Mitigate Ongoing Disruptions

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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.  

Planning ahead

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.

Leverage technology

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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Drayage Issues to Persist Through 2022

By Drew Herpich, Chief Commercial Officer, Transportation Insight & Nolan Transportation Group

Despite growing inflation concerns and increases in energy prices, businesses investments are up while consumers continue to spend. During Skechers’ first quarter earnings call on April 26, COO David Weinberg said, “We find the U.S. consumer is doing quite well, and we continue to have great sell-throughs, both our own and from what we hear from our third-party retailers as well. So right now, we haven’t seen any slowdown or any decrease in demand when product hits our shores and we can get it out…But currently, we could certainly deliver more if we get it.”

Indeed, supply chains remain tight in support of business investments and consumer spending. Despite some softening in the truckload (TL) market, there is no softening in drayage.

There is a slight reprieve on the US West Coast due to COVID lockdowns in several Chinese cities, but US East Coast ports are experiencing backups as shippers diversify their use of ports to lessen their exposure to the US West Coast ports. According to Sea-Intelligence Maritime analysis, Asian imports into the ports at Charleston, Savannah and Virginia increased 16% year over year during the first quarter.

Expectations are that backups along the east coast will continue for the next few months. “We fully anticipate vessels to backlog on the East Coast this summer and I don’t think Savannah is going to escape that,” said Griff Lynch, CEO of the Georgia Ports Authority.

In addition, once Chinese lockdowns are suspended, there are strong possibilities that US West Coast ports could see the return of significant backlogs and, at the same time, could potentially be faced with a strike or slowdown from the International Longshore and Warehouse Union (ILWU). The contract expires July 1, but analysts expect talks to be positive and continue into the month before an agreement is reached.

As a result, drayage will be pressured from port backlogs and from inland supply chains that remain constrained. Delivery expectations, transportation costs and warehousing space are among the pressure points that are driving drayage issues.

Delivery Expectations

Shippers continue to expect speedy deliveries to replenish and supplement existing inventories. However, due to port backlogs and inland congestion, many retailers including Abercrombie & Fitch, Bed, Bath & Beyond, and noted missed sales during the Christmas holiday season due to delayed receipt of inventories.

Supply chains are like dominoes if not kept in check – a delay in the first-mile could likely impact the rest of the supply chain. Speedy deliveries are also expected in the last-mile of the supply chain.

According to a recent survey from technology provider FarEye, 38.9% of shoppers are unlikely to give retailers a second chance after a poor delivery experience. Delivery delays and poor communication contribute most to bad delivery experiences and 36.8% of consumers changed their opinion of a brand due to a bad experience.

Equipment shortages are also causing delivery delays as supply chain providers are also faced with supply chain issues. Containers are dwelling longer at ports either because importers are taking longer to unload the cargo or shipping lines roll export bookings, causing the turnover of chassis between customers to slow.

Manufacturers are responding to the need for more chassis but are struggling with hiring workers and procuring subcomponents. Chassis makers originally thought enough supply would be injected into the market by the third quarter of this year, but that timeline is now pushed into 2023.

So much cargo is flowing through US ports that regional warehouses are maxed out. As a result, importers struggle over what to do with the containers, leave them in the port, in a dray lot, or parked outside the warehouse. The first option results in demurrage fees, while the second and third options cause the chassis to dwell for a period of time. Of course, the best option is to work with a trusted supply chain partner that can manage the entire supply chain instead of just one part of it.


Real estate investment trust firm Prologis gave us an update on the warehousing market during its April 19 first quarter earnings call. The company sees the market for space remaining tight for some time. It noted that during the first quarter, occupancy didn’t experience the normal seasonal decline. Instead, it remained flat with the fourth quarter at 97.4%. “Even if retail sales declined 5% as consumers shift their spending to experiences versus goods, we project that the market will still require an incremental 800 million sq ft of space in US alone,” Hamid Moghadam, co-founder and CEO of Prologis, told analysts. “People are running to catch up on the demand that they’re seeing from their end customers and they’re not getting there. They’re always behind.”

Commercial real estate services company, JLL notes in a recent research report that a “supply crisis is coming soon in the market for US distribution center space, as new construction can’t keep up with demand.” Over the last decade, total US industrial inventory increased by 18%. But that overall growth was outpaced by the 24% rise in demand for industrial (mostly warehouse) space over the same period.

JLL also says the total cost to build a new warehouse, including labor, is up 21% over the last year.

Transportation Costs

In addition to warehousing costs, transportation costs are packing a punch for shippers. Regardless of transportation mode, the costs have escalated since the pandemic began in 2020. Strong consumer demand, capacity constraints, fuel costs and worker shortages have contributed to the high transportation costs. Additionally, insurance, driver pay and demand for trucks and tractors have also increased. If there are any green shoot in terms of transportation costs, ocean and trucking spot rates have declined in recent months as shippers shift to contracts to ensure consistency and capacity needs. But contract rates are, on average, higher year-over-year. However, we are beginning to see some contract rates slowly dip and could potentially decline further due to the economic uncertainties in the market.

Surcharges have also added to the transportation cost pain. In 2020, UPS and FedEx introduced a COVID surcharge to manage heightened demand. Today, the surcharge remains in place but has since been renamed demand surcharge.

The sudden jump in fuel prices in March, attributed to the Ukraine-Russia war, has led to double-digit fuel surcharges across all transportation modes including from parcel carriers.

The fuel pain will likely continue through 2022. The US Energy Information Administration (EIA) expects that global consumption of petroleum and liquid fuels will increase by 2.4 million billion per day from 2021.

However, this forecast is down by 0.8 million barrels per day as a result of downward revisions to global GDP growth.


A lot of uncertainty continues in supply chains and costs remain high. As a result, drayage issues will likely continue through the end of the year but perhaps not to the extremes noted in 2021.

While some backlogs at ports are expected once China’s COVID-lockdowns are lifted, US West Coast ports have been able to work down existing backlogs. But contract negotiations with the ILWU could negatively impact operations when the contract expires on July 1.

Meanwhile, capacity is loosening in the trucking and rail markets and consumers are beginning to balance their spending on goods and services as the pandemic eases. Inflation and other economic concerns, however, will drive uncertainty in supply chains. Shippers will likely turn to their supply chain partners in search of cost savings and assurances of on-time deliveries to ensure goods are available for purchase.

Drew Herpich is the Chief Commercial Officer (CCO) of Transportation Insight (TI) and Nolan Transportation Group (NTG) responsible for fostering and developing partner relationships with the most dynamic carrier offering in the industry.