Current Dynamics Impacting Drayage Operations
With the many issues plaguing drayage operations, it would be difficult to pick just one that would resolve everything if it alone could be fixed. Instead, each greatly influences the other, which is a pretty universal truth across the global supply chain.
Current dynamics impacting drayage largely relate to shortages across the board—including drivers, parts, materials, chassis, storage, and more. All of that contributes to the congestion creating a logistical mess at rail terminals and ports, which also exacerbates drayage challenges.
Challenges like these have been building over the past year.
In an October 2020 article for the Journal of Commerce, Senior Editor Ari Ashe described the scenario then: “The amount of available drayage capacity in the market to handle container movements has dwindled in recent months due to a combination of factors. Those include a quick rebound in volume at ports and inland rail terminals, a slowdown in shippers unloading and returning containers, and drivers exiting the industry during the COVID-19 pandemic.”
One result of current dynamics is a persistent increase in drayage rates.
According to the BYC Drayage Spot Market Index recently launched by Book Your Cargo (BYC), the national drayage spot rate in September was 6% higher than August and 32% more than the same month last year.
And according to its October forecast, BYC doesn’t anticipate the upward trend to change anytime soon:
“The Northeast region rates are predicted to rise 10% and more above existing levels with low capacity and carrier availability is 3 weeks out.”
“The Midwest region rates are predicted to rise 15% and more above existing levels with low capacity and carrier availability is 4 weeks out.”
“The West region rates are predicted to rise 10% and more above existing levels with low capacity and carrier availability is 2 weeks out.”
There are many sector-specific perspectives about why drayage has been struggling so—which is not something we’ll attempt to address here. Instead, we’ll take a brief look at some of the dynamics impacting current drayage operations.
Why is drayage important?
FreightWaves defines drayage as “a freight service that moves goods from one truck to another in a port or at a distribution center. It may also include the movement of goods from a supplier to a retailer, in the form of in-store deliveries. A drayman’s job is to transport cargo from the dockside or quay to warehouses, factories, and other destinations on land.”
Drayage service is critical for operational efficiency at ports since it helps to ensure that container traffic keeps flowing and prevents the ripple effect of congestion that results when throughput stalls.
FreightWaves describes six drayage classifications:
Expedited: "This type of drayage service allows the cargo to be picked up from a port terminal and delivered to the customer’s site within 48 hours (or less).”
Inter-Carrier: “The cargo is taken from one company to another, but the same carrier transports the goods.”
Intra-Carrier: “Intra-carrier drayage is the transportation of goods within the same company.”
Shuttle: “…shuttle drayage employs the movement of an intermodal unit from a hub to another parking lot, since there is no more room at the hub.”
Pier: “Pier drayage, also called ‘pier to pier,’ is the movement of a truck from a terminal or warehouse to another facility. This type of drayage allows the cargo to be transported from a terminal to other transportation modes, such as ships.”
Door-to-Door: “A door-to-door drayage means that the drayage company transports the cargo directly to the customer’s facility.”
Current Drayage Dynamics
The supply chain crisis is helping to create various drayage issues—and drayage issues are also having an impact on supply chain recovery. There are many dynamics involved, including those briefly described here.
Shortage of Drivers
Although a shortage of truck drivers isn’t a new issue, things have gotten much worse since the pandemic hit and a confluence of factors created a perfect shortage storm.
Writing for SupplyChain247, Yossi Sheffi lists a number of both “traditional” and pandemic-related factors, noting that the latter are due to “the closure of parts of the economy during the height of the pandemic and the recovery from it.”
Sheffi also offers a grim prediction: “The pandemic has accentuated the problem to a point where it appears that driver shortages will persist for years.”
In the following video, Chris Spear, American Trucking Association CEO, discusses a variety of factors influencing the U.S. trucking shortage.
Shortages of Parts, Materials, and Chassis
Stakeholders across industries are struggling to obtain the parts and semiconductors needed to create new products—and to repair and maintain those that already exist.
In an article for Supply Chain Dive, Senior Reporter Jim Stinson cites one expert’s assessment: “The supply chain problem for makers of trucks and trailers is a multi-headed serpent, as steel supplies remain tight and OEMS struggle on their own to provide tires, foams and plastics.”
The shortage of intermodal chassis has become such a problem that the Biden administration decided to step in by “asking a ‘broad range of stakeholders’ involved with moving freight to help solve the country’s container and intermodal chassis shortages while also trying to alleviate supply chain chokepoints.” The U.S. Department of Transportation (DOT) recently published an information request in the Federal Register seeking public comment about “current challenges faced by the freight and logistics sector” related to a number of supply chain issues.
Port, Rail and Warehouse Congestion
Congestion abounds at ports, rail yards, and warehouses—which has a major impact on drayage operations, and which are also affected in a big way by the drayage capacity crunch.
In a recent Bloomberg article, writer Brendan Murray describes the ripple effect: “To understand why more than 100 container ships are waiting to enter U.S. ports from Southern California to Savannah, Georgia, it helps to keep tabs on the congestion that’s building at another key junction of freight transportation: rail yards. The so-called dwell time for containers at 11 major railroad depots reached an average of 9.8 days this month, according to a tally of its own boxes maintained by Hapag-Lloyd AG, the world’s fifth-largest container carrier. That’s up from 6.7 days in May and 5.9 in February.”
Citing data from Marine Exchange of Southern California, Grace Kay notes in an October 6th article for Business Insider that “On Tuesday, Los Angeles had nearly half a million 20-foot shipping containers — or about 12 million metric tons of goods — waiting in drift areas and at anchor for spots to open up along the port to dock and unload…”
Kay also notes that ports are operating below capacity and that there’s a mismatch in operating hours between the ports of Los Angeles and Long Beach compared to those in Asia and Europe—most of which are open 24/7.
“In September, the Port of Long Beach moved to increase their hours of operation to 24-hours on Monday through Thursday. The Port of Los Angeles did not follow suit, choosing instead to maintain its existing hours,” Kay writes.
Big Changes Ahead
Although 24/7 operations haven’t been the norm at Southern California ports, it looks like things are about to change.
According to an October 13th White House brief, “…the President will meet with the leadership from the Ports of Los Angeles and Long Beach and the International Longshore and Warehouse Union (ILWU) to discuss the actions they are each taking to address these challenges in Southern California. These leaders are announcing a series of public and private commitments to move more goods faster, and strengthen the resiliency of our supply chains, by moving towards 24/7 operations at the Ports of Los Angeles and Long Beach…”
The ”commitments” described in the brief include:
“The Port of Los Angeles is expanding to 24/7 operation. The Port of Long Beach expanded operations in mid-September. The Port of Los Angeles is now joining them by adding new off-peak night time shifts and weekend hours. This expansion means the Port of Los Angeles has nearly doubled the hours that cargo will be able to move out of its docks and on highways.”
“The International Longshore and Warehouse Union (ILWU) has announced its members are willing to work those extra shifts. This will add needed capacity to put towards clearing existing backlogs. This is an important first step, now the private businesses along the supply chain need to move their operations to 24/7.”
“Large companies are announcing they will use expanded hours to move more cargo off the docks, so ships can come to shore faster. Unlike leading ports around the world, U.S. ports have failed to realize the full possibility offered by operation on nights and weekends. Moving goods during off-peak hours can help move goods out of ports faster. For example, at the Port of LA, goods move 25 percent faster at night than during the day. These commitments will help unlock capacity in the rest of the system—including highways, railroads and warehouses—by reducing congestion during the day.”
The brief lists those “large companies” as:
Walmart: “The nation’s largest retailer, Walmart, is committing to increase its use of night-time hours significantly and projects they could increase throughput by as much as 50% over the next several weeks.”
UPS: “UPS is committing to an increased use of 24/7 operations and enhanced data sharing with the ports, which could allow it to move up to 20 percent more containers from the ports.”
FedEx: “FedEx is committing to work to combine an increase in night time hours with changes to trucking and rail use to increase the volume of containers it will move from the ports.”
Samsung: “Samsung is committing to move nearly 60% more containers out of these ports by operating 24/7 through the next 90 days.”
The Home Depot: “The Home Depot is committing to move up to 10% additional containers per week during the newly available off-peak port hours at the Ports of L.A. and Long Beach.”
Target: “Target, which is currently moving about 50 percent of its containers at night, has committed to increasing that amount by 10 percent during the next 90 days to help ease congestion at the ports.”
Describing the plans as “just a start,” the brief says that “these commitments provide a clear market signal to the other businesses along the transportation supply chain—rails, trucks, and warehouses—that there is demand to move additional cargo at off-peak hours.
Secretary Buttigieg and Port Envoy Porcari will continue to work with all stakeholders to help more businesses access these expanded hours, and move the rest of the supply chain towards 24/7 operations.”
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