Drayage

In logistics, drayage is a cargo transportation service that's especially valuable in the modern trade market. Since many direct-to-consumer brands manufacture their products overseas, it’s important they understand and carefully consider their drayage options.

By definition, drayage is the transport of shipping containers from their port of arrival to their final destination. Drayage is usually part of a longer journey, such as moving cargo from a manufacturing plant to a fulfillment center. Drayage is sometimes referred to as dray services.

The term drayage implies short-distance travel, but “short” is a relative term. As a blanket term, drayage can refer to simply moving a container from port to shipyard, or moving the container for miles—as long as the drayage distance is smaller than the cargo’s overall journey from Point A to Point B. There are several types of drayage that serve different purposes and use different modes of transportation, which we’ll get to later. 

The entities that use drayage services are strongly incentivized to return the shipping containers to their port, so drayage sometimes involves a return trip after the cargo has been offloaded.

Intermodal drayage is the movement of cargo over short distances by multiple transportation methods: truck, sea, or rail. When used alone, “drayage” usually refers to transport by truck only. 

For example, let’s say an umbrella company imports its umbrellas from a manufacturer in Asia, and fulfills orders from a warehouse in Texas. Once the cargo arrives at a shipping port, it will need to be driven to a railyard, where it will be loaded onto a train. The train will carry the umbrellas to the stop nearest the fulfillment center, at which point another truck will carry the cargo to its final destination. The movement of the umbrellas from the port to the warehouse is intermodal drayage.

Container drayage is simply the short-distance movement of cargo inside a container. While “drayage” as a blanket term is moving any cargo a short distance on its shipping journey, container drayage specifically refers to cargo that is moved while still inside a container, such as the ones you’d find on a cargo ship. 

For example, a shipping container might be removed from a cargo ship and driven to a railyard, where the cargo is loaded off the container and into a rail car. 

Container drayage also refers to the transport of an empty container back to its port once the cargo has been unloaded. 

To move large transport containers like those we described above, special vehicles are required. A drayage truck is typically a heavy-duty diesel truck used to move shipping containers between ports and nearby destinations. Trucks used for dray services may have reinforced axles that allow them to move heavier loads than a standard vehicle could support.

In addition to drayage trucks, there are drayage chassis—the base frame of a wheeled vehicle. Drayage chassis are more durable than tri-axle trucks or typical overweight load chassis. Drayage chassis are specifically designed to support the weight of ocean containers on roads. 

Drayage truck drivers often have special training and experience to help them fulfill their responsibilities. Because ports hold significant portions of the country’s imports and exports, reliable dray services are essential. The value of goods that pass through ports every year reaches into the billions of dollars.

Drayage is a critical component of the supply chain because it acts as a logistics stopgap that connects different processes. Most of the time, cargo is handled by multiple entities on its journey from origin to destination through a process called freight forwarding. But the cargo still needs to get from one freight company to another—for example, from port to rail yard—which is where drayage comes in. Without drayage, companies would have no way of moving their cargo during transfer.

Benefits of drayage on the supply chain

Put simply, drayage makes the logistics world go ‘round. Now let’s look at some specific benefits drayage has on the supply chain:

• Faster movement of cold cargo: Drayage is especially important when moving temperature-sensitive products. Drayage can speed up the movement of cool, refrigerated, or frozen items to preserve their quality.
• Reduce congestion at ports: It’s not difficult to imagine the chaos that would ensue if all the containers on a docked ship were unloaded at the port. When these containers are moved away from the port, it reduces congestion and allows the port to operate more smoothly and efficiently while loading and unloading ships.
• Faster container repositioning: Once a shipping container has been emptied, it needs to be moved to the next shipper quickly. The freight company that owns the container will want a quick turnaround time so no importer or exporter experiences a delay in their shipment. Drayage trucks can quickly and easily move containers for maximum efficiency.‍
• Reduced freight costs: The companies that own shopping containers strongly incentivize shippers to return containers quickly. If the company using the container doesn’t return it within a specific time frame, they’ll face steep penalty charges. Ports may also be charged a penalty for leaving containers in shipyards for too long. Drayage enables everyone involved in the movement of goods to avoid these penalties by keeping containers moving.

Drayage example

An example of cargo moved by standard drayage would be imported inventory that is driven by truck from a shipping port to a warehouse, where it will be stored until a consumer places an order.

Intermodal drayage example

An example of intermodal drayage would be like the umbrella company we described earlier. The cargo would arrive at a shipping port, then be driven by truck to a rail yard. Once loaded onto the train car, the cargo would be moved to another rail yard nearest its final destination. A truck would then drive the cargo on the final leg of its journey to the warehouse. 

Container drayage example

Container drayage refers to the transfer of cargo within a shipping container. An example would be a truck driving a shipping container to a railyard from the port, or the truck returning the empty container back to the port.

There are several types of drayage services. The classifications include:

• Inter-carrier
• Intra-carrier
• Expedited
• Pier
• Shuttle
• Door-to-door

Inter-carrier drayage

This form of drayage service involves moving goods short distances between transportation hubs operated by different carriers. An example of inter-carrier drayage is moving cargo from a seaport to a rail terminal for the final leg of its journey, in which the port and terminal operate independently. 

Intra-carrier drayage 

Intra-carrier drayage is the movement of goods between locations controlled by the same company. An example may be moving goods from one dock to another within a single transportation hub for the next leg of the cargo’s journey. 

Expedited drayage

This is the fastest form of dray service. Because of its speed, it's more expensive than other types. Expedited drayage usually includes picking up cargo and delivering it to the next destination within 48 hours.

Pier drayage

Pier drayage involves moving containers or cargo from one point to a pier or a port. The point of origin may be a factory, warehouse, rail yard, or other location.

Shuttle drayage

Shuttle drayage may be useful when there is a lot of traffic at a hub or pier. It involves taking cargo or empty containers from an origin point to a parking area to be picked up and taken to its final destination. This helps reduce unnecessary clutter or congestion at the port.

Door-to-door drayage

With door-to-door drayage, goods are shipped directly to the customer from a port or rail hub without stopping at a warehouse. This is similar to direct shipping, in which items are sent directly from manufacturer to customer; but door-to-door drayage differs in that the drayage transportation only refers to the transportation from local port of arrival to customer, not the full trip from the manufacturer to the buyer. Additionally, drayage typically refers to large container orders—either bulk orders or wholesale shipments—rather than DTC orders.

Drayage fees are calculated based on the weight of the cargo, with a base fee charged for every 100 lbs. This charge is not prorated, so a container weighing 120 lbs. would be charged at a rate of 200 lbs. The base rate is then multiplied by the dray rate, which is determined by location and drayage provider. Most companies also have a minimum weight charge, so if your cargo is lighter, you’ll be charged based on the minimum weight instead of the actual weight.

So, if you were to move a 197-lb. container using a provider that has a 100-lb. minimum weight and a dray rate of $80, you would spend $160. [(200 lbs. / 100) x $80] = $160

In addition to the penalties a company may face for returning a shipping container late, there are other fees that may be applied depending on the situation:

• Pre-pull fees are assessed for carrier storage if the container is not shipped out of port the same day.
• Chassis split fees are charged if the chassis for transporting is unavailable.
• Drop fees are charged for drop-offs that will be picked up later from warehouses.

Fees can vary based on time and other factors. For example, drop fees may be higher if the load stays at the warehouse longer.