If you were to poll a group of people on what the word “Drayage” means, you might get five different definitions. How can one of the most important steps in the supply chain and a vital component of the global trade market cause so much confusion? Let’s break it down:
What is Drayage?
By definition, drayage is the transport of freight from an ocean port to a destination. It’s also often described as the process of transporting goods over short distances, aka “The first mile.” Now, you may be thinking, what’s the big deal? Surely the first mile can’t be that complicated.
Think of it like this: One container’s journey from ship-to-shelf (or final destination) is akin to a row of dominoes. Drayage is the first domino to fall. If the first domino doesn’t fall correctly, it affects the entire row.
While the term drayage specifically refers to short distance movements as part of the supply chain process, the term is mainly used by the container shipping industry. Drayage loads typically have departure and arrival points in the same metropolitan area and do not focus on long haul or national movements.
Because a drayage load can have many connotations, there tends to be confusion among carriers on how to classify it. Many carriers simply equate “drayage” with having to go into a port, which isn’t always the case. While all drayage loads tend to originate at a port of entry, there can be several legs of a drayage load (port, yard, warehouse, rail) before the container arrives at its final destination.
While drayage may seem like a small step of the process, it's an integral part of the logistics industry and vital to the overall supply chain management process across the United States. That two-day shipping you love -- where you press a button on your computer or app and something magically shows up at your door two days (sometimes faster) later… Drayage plays a huge part in that. In fact, “the first mile” sets the tone for the entire journey from ship to shelf.
Why is Drayage so important?
There are several large ports across the United States from Seattle, NY, NJ, Georgia, Oakland, Houston and Miami. That said, over one quarter of the total container trade in North America travels through the ports of Long Beach and Los Angeles. Annual trade movement at the Long Beach Port alone is valued at $194 billion annually.
Combined, the San Pedro Bay Complex (LA + Long Beach) make up 32% of the nation’s market share and 73% of the west coast.
As the gateway to the Asia trade market, the San Pedro Bay Complex is crucial when it comes to drayage. The LA drayage marketplace is a $60B a year industry.
With that amount of money on the line in a given year, it’s somewhat surprising that congestion and inefficiencies are still huge problems at the ports. It’s generally known that major delays, driver frustration, financial penalties and missed deadlines are key factors and pain points in dealing with drayage loads. Some contributing factors are lack of chassis, not enough carriers and overwhelmed terminals that simply can’t keep up with demand.
Peak season can also cause major delays and problems at the ports. August through December leading up to the holidays tends to be the busiest time of year for massive backlogs of ships and delayed containers.
NEXT CEO, Lidia Yan knows the challenges all too well.
“If you go to Silicon Valley, nobody knows what drayage is. If you go to Wall Street, no one has ever heard of drayage. It’s our job to tell them how important drayage is - how important the first mile is. 30% of inbound freight comes into this city and the 36,000 warehouses here. This is the core of the economy. If the LA ports don’t move, we don’t have any clothes to wear, food to eat, raw materials to use.”
However daunting the process may seem, where challenges exist, so do opportunities for solutions.
“We need to automate the ports, because they are not automated right now. At NEXT, we’re building the first drayage solution in the world.”