Just how important is getting it right in the first mile out of the port?
For buyers, shippers, brokers, and carriers, drayage is a high-stakes balancing act of matching supply and demand with capacity.
Drayage is the moving of goods by truck from or to an ocean port from or to an inland port, warehouse, or intermodal terminal typically in the same metropolitan area. Successful transport relies on the syncing of many moving parts, and stiff penalties such as fines and fees can await shippers and carriers when they stumble. These costs hurt (especially for the smaller players) but the systemic impact can be far more significant.
Let’s explore some drayage mistakes and both the immediate and more profound costs of these blunders.
WHEN SHIPPING GOES SIDEWAYS
For shippers, forecasting is critical to first-mile success, yet many continue to miss the mark. Accurate predictions are never easy, and the shifting trade landscape resulting from the US-China trade war has only made forecasting that much more difficult.
When forecasts are off it can be abundance or scarcity—either drayage capacity sitting idle or loads never getting picked up. For example, in January of 2019, many drayage companies under forecasted their numbers resulting in more volume than predicted. In this scenario, loads sit, revenue and income shrink, and customer service suffers.
The months following saw an overcorrection, with hyper-aggressive forecasted numbers resulting in drayage carriers sitting idle or going home and shippers often still responsible for footing the bill.
Changing Delivery Instructions
Remember the old saying about not changing the rules in the middle of the game? It never applied more than in the shipping industry. When shippers change delivery instructions such as rerouting the delivery to a different location, it can trigger a series of effects—none of which benefit drayage.
The new destination often isn’t prepared for the unexpected volume—this can create added congestion, equipment shortages, and compromised efficiency. Carriers get stuck in long lines with extended unload time that can trigger detention fees for shippers. The extended unload fees for truckers can range from $30 to $50 per hour and $25 to $90 for equipment engaged over contracted time. If cargo sits, the shipper’s wallet takes another hit—demurrage fees range from $75 to $150 per container per day increasing over the stay.
Rerouting also contributes to equipment dislocation and shortages (especially chassis) and can trigger “empty mile” trips. These dry runs can incur bobtail fees typically ranging from $200 to $400. With the estimated 65 billion empty miles per year truckers drive, it’s easy to see how expensive a change of plans can become.
Changing routes and the resulting congestion costs carriers too—their income suffers as they aren’t able to make as many trips. Department of Transportation numbers indicate detention time is responsible for an estimated 1.1 to 1.3 billion dollars of lost trucker income annually.
Failing to Prepare for Customs
To err is human and mostly pardonable but to show up unprepared is, well, not. U.S. Customs requires a boatload (pardon the pun) of documents and forms for shippers including bonds, licenses, permits, certificates of origin, and commercial invoices. Many shippers bog down in Customs simply because they don’t have their paperwork in order.
Inaccurate or incomplete paperwork brings at least an inconvenient delay—possibly resulting in missed appointments, late deliveries, and angry customers. Negligent documentation can incur fines up to four times the duty or 40% of cargo’s value. If fraud is proven, the entire load can be seized or fines up to full value of the shipment levied.
WHEN TRUCKERS GET IT WRONG
As challenging as the first mile is for shippers, it can be just as daunting for carriers, especially since strict ELD enforcement went into effect. Ah yes—that ELD mandate.
Failing to Plan for Hours of Service Restrictions
For carriers, planning their work schedules is vastly more difficult in today’s landscape of strict ELD enforcement. Many are failing to plan or miscalculating their hours of service (HOS) and getting stuck with two choices. Neither is desirable but both preferable to paying the stout fines for HOS violations which can range from $1000 to $10,000 with the average penalty being $2,867.
Drayage carriers approaching their HOS limit can choose to park the load, go off duty for the required ten hours of rest, then resume their journey. This option dramatically increases transit time, often resulting in missed appointments and late deliveries. A second option is dropping the load for another carrier and thus incurring added operational cost for the shipper as well as the fallout from late delivery.
Going on AutoPilot
This phenomenon is especially prevalent if a trucker is familiar with the lane and customer—human nature takes over, and the routine details of a delivery shift to auto-pilot. When critical instructions such as delivery window, door dock, or location inevitably change the results can be chaotic. Ultimately, the system bogs down and revenue, income, and customer service all take a hit.
Drayage succeeds or fails based on clear, consistent, and accurate lines of communication between all moving parts. Unfortunately, many carriers today fail to maintain transparency regarding their location, capacity, and schedule.
When carriers go dark complexities mount for shippers and brokers as they no longer have access to the information they need to match supply and demand with capacity. Kind of like trying to play chess blindfolded, they are left guessing, and the entire drayage ecosystem suffers.
When mistakes occur in the first mile, the shockwaves are felt by all in this tightly woven industry. Shipper missteps impact carriers—and vice versa. The cost of fines and fees sting at the moment, but the real impact of first mile blunders penetrates far deeper. Drayage miscues result in systemic inefficiency—dislocated equipment, idle carriers, and undelivered freight. Shippers lose revenue and reputation, carriers lose income, customer service plummets, and these are the costs nobody can afford.