Meaning of Drayage?
International trade includes several service providers who handle the transportation of goods. Such services primarily used for short distances are known as drayage. It includes services like trucking during transshipments, transloading goods from rail cars onto truck beds, or transporting goods from the destination port to the final delivery point. Shippers could either choose third-party service providers for drayage services or rely on freight forwarders. Specialized third-party drayage providers usually are located near transportation hubs, such as ports, railway terminals, or warehouses, to reduce the time to render drayage services.
History of Drayage
Drayage is a surprisingly old concept as the term was first used in 1791. In those times, traders used horse carts to shift heavy cargoes from warehouses to ports and vice-versa, to cover a few miles. The term 'dray' stands for horse carts. Therefore, drayage would involve horses carrying cargo over short distances in the old days.
The biggest downside of this mode of transport was the long time horse carts took. Service providers addressed this issue by switching to trucks for drayage. The growing usage of electricity in commercial operations and the emergence of combustion engines in 1860 meant that, by the late 1800s and early 1900s, trucks became the most common drayage carriers in shipping. Even today, service providers widely use trucks to move goods from warehouses or manufacturing facilities to ports and for last-mile deliveries.
Recently, freight forwarders and other service providers have started using technology to improve the transparency and sustainability of drayage services. This adds to the long list of benefits drayage already brings to shippers and service providers.
Why is Drayage Important?
Drayage is one of the quintessential and unavoidable aspects of maritime logistics. The importance of drayage in a business heavily depends upon the quality of the 3PL service provider a company selects. If a shipper picks a reliable service provider, then the drayage process can be hugely beneficial in the following ways:-
1. No congestion at ports
Shipping ports are already busy and heavily congested almost throughout the day. Several shippers, freight forwarders, port workers, transporters, and other parties are present at ports and operate directly from there. If a shipper entrusts their drayage to a reliable 3PL provider, they can avoid adding to the congestion. This also benefits businesses to carry out operations smoothly and efficiently. Additionally, the cost of using a 3PL service provider for drayage is decidedly lower than maintaining a physical presence at ports.
2. Expertise in moving goods safely
3PL logistics providers specializing in drayage are professionals with vast experience. They possess the know-how to handle goods safely while transporting them over short distances. Additionally, such handlers are well-versed in the various safety regulations that apply to different goods transported from one point to another. Generally, they would be better equipped to execute the job safely than the shippers themselves.
3. Greater visibility and control over the logistics process
As stated earlier, modern, digitized 3PL service providers employ many technologies to make drayage more trackable for shippers. Tracking improves visibility for shippers and, more importantly, lets them coordinate with their supply chain partners effectively, giving them a higher level of control over the process. For example, a shipper could direct a connected trucker carrying goods to a specific port to divert the vehicle to a different port in real-time, if required.
4. Minimization of supply chain lead time
The professional handling of drayage by accomplished 3PL service providers cuts down the time to execute that part of the logistics process. This helps to drastically bring down the overall lead time of a trader’s logistics and supply chain cycle.
5. Focus on core operations
While 3PL service providers expertly handle a trader’s drayage, the trader themselves can focus on primary business operations– manufacturing, packaging, marketing goods, and dealing with customer grievances and queries, amongst others.
What Does Drayage Include?
Drayage means two things— the transportation of goods over short distances and the accompanying charge for this service. Drayage includes all instances wherein goods for trade are transported over short distances. This could consist of goods transported from one warehouse to another within the same city, transporting a shipping container from a trader's warehouse to a port for international shipping, or transporting a container from a port or border to a trader's warehouse.
What are the Different Types of Drayage?
The following are the different types of drayage. Its classification depends on the origin of goods, breaks taken during shipping, and the end destination, among other factors.
1. Inter-carrier drayage
This includes the transport of goods from one type of carrier to another. For example, when goods are moved from a shipping port to a railway terminal, after which they will be taken ahead. Similarly, this could also include goods being transported from one railway terminal to another.
2. Intra-carrier drayage
Intra-carrier drayage involves transporting goods within the intermodal hub of a given freight carrier. For instance, goods transported from a rail hub to an intermodal hub wherein both are owned by the same freight carrier.
3. Expedited drayage
This involves the transport services provided when goods must be delivered urgently and within a short time.
4. Pier drayage
Pier drayage comprises transporting goods from a port to an intermediate transportation hub like a rail or a bus hub.
5. Door-to-door drayage
This classification includes goods moved directly from a storage facility to the end customer’s residence.
6. Shuttle drayage
This drayage includes the transportation of goods from an overloaded transit storage hub to a storage place wherein goods will be temporarily kept for a short period before they are moved.
Role of Drayage in the Supply Chain
The supply chain consists of several phases and stakeholders, and drayage glues them all together. Without drayage services, shippers will have to carry out intermodal or inland transportation by themselves. This additional task would distract them from their core operations, and even result in damage to their goods during transportation. Additionally, the absence of professional drayage services also slows down supply chain operations. Professional drayage services and technologies prevent this by playing the role of reliable and efficient intermediaries in the shipper’s supply chain.
Drayage Fees: How are they Calculated?
The cost of drayage depends on certain factors, which include: The distance between the origin and destination, the weight of goods being transported, the ease with which goods can be transported (using forklift, trucks, pallet jack systems), type of goods and packaging material used. Certain variable accessorial fees are applicable in addition to the base fees (based on the 4 factors listed here). Freight is generally weighed using a time-tested metric known as the hundredweight, also known as CWT. The base rate is given by:
The rate set by the service provider × Number of CWTs
CWT always begins at one (for goods weighing up to 100 pounds) and then increases while rounding off the excess weight of the goods to the next hundred pounds. For example, if the goods collectively weigh 101 pounds, then the service provider’s price will be 1+1=2 CWT times the service provider's charges. Additional charges are also applied to this to complete the overall drayage charges. The additional fees include:
Chassis split charges - Carriers charge this fee when they have to spend time and fuel to travel and purchase a chassis for transportation when it is not available at the container site.
Detention and demurrage charges - Carriers get an allotted 'free' time (normally up to 2 hours) during which they are not charged extra while picking up or dropping cargo at a port. If they exceed this time, they are charged a detention fee for the same. Similarly, they have to pay demurrage if their container is held at the port or terminal longer than a specified period. The exporter bears both these charges.
Fuel and mileage surcharges - This includes the cost of fuel used during drayage operations.
Pre-pull fees - A carrier charges this fee when they cannot deliver a package to its endpoint and end up storing it in their yard overnight or for a certain period of time.
Difference between Drayage and Cartage
These two terms are nearly identical, with just a few subtle differences, such as:-
Drayage involves transporting entire containers, whereas cartage breaks down the different elements before transporting them to metropolitan cities via roadways.
Unlike cartage, drayage service providers need to follow Internet Assigned Numbers Authority (IANA) guidelines.
Cartage involves an agent for correspondence, unlike drayage, where such a professional isn’t necessary.
Difference between Drayage and Intermodal Shipping
Many may mistake drayage for intermodal shipping and vice-versa; however, the two are vastly different terms:-
Unlike drayage, which only takes place via roadways, intermodal transportation involves multiple modes of transportation.
Usually, drayage is a constituent component of a larger shipment-related supply chain that culminates into an intermodal shipment.
Intermodal shipments are complex operations that require the participation of a freight forwarder. Drayage, by contrast, can be handled by a standard 3PL service provider.
Conclusion
The importance of drayage may tend to go unnoticed occasionally. Drayage services, if executed competently, allow traders to bring the ETA for deliveries closer. Therefore, it would not be an exaggeration to say that drayage services helmed well can lead to end-customer satisfaction.
