Sep 27

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The State of Drayage and Container Activity in 2022

6 minute read
Brian Kempisty
The State of Drayage and Container Activity in 2022 Featured Image

Drayage shipping is a critical component of short and long-distance freight transportation. It involves retrieving shipping containers and relocating them and their cargo to another location. These intermediary points include transload facilities, distribution centers, warehouses, smaller transportation centers, shipping hubs, retail stores, and similar freight storage and handling locations. 

Simply put, port drayage is the process of transporting cargo from its port of destination to an intermediary. For instance, containers unloaded at a local port must be loaded onto trucks located at a sorting facility 5 miles inland. Drayage services transport the cargo from the port to the facility, so it quickly gets to the next destination.

Why Understanding Drayage Market Trends Matter for Shippers

Understanding what drayage shipping remains vital to continued growth and recovery today. While drayage may represent a small part of the overall journey freight makes, it is among the most critical of them all. Shippers often encounter delays, issues, and expenses with drayage transportation mainly due to not having the right drayage service provider and not being aware of current drayage market trends. And thanks to increasing demands, ongoing shortages, and economic factors increasing, accessing drayage services has become more challenging than ever. 

According to Supply Chain 24/7, “The truck driver shortfall hit 80,000 drivers in 2021 and is expected to grow to 160,000 by 2030.”  And this is just one of many challenges facing the logistics industry. Rising U.S. inflation and steep diesel prices are increasing the cost of shipping loads, where container shortages and driver access concerns further complicate the matter. Understanding the state of drayage today is critical for shippers.

Quick Look at Current Trends for a Drayage Market Update

Like every other aspect of shipping and transportation services, the drayage market remains volatile and in a near-constant state of fluctuation. With ongoing recovery efforts and a slow return to a new sense of normalcy, shippers and transportation service providers must closely watch drayage trends. September 2022 predictions, as highlighted by GlobeNewswire  include the following:

  • September 2022 drayage spot rates remain on track to be nearly 20% higher than this time last year, further adding pressure to already strained shipping lines.
  • Port congestion remains high in critical ports, with Savannah reporting 36 vessels adrift or at anchor, Houston with 24 boats, and NYC/NJ reporting 22 ships.
  • Northeast region rates could see more than a 25% increase over previous years, Southeast regions estimated at 27% increase, Midwest region at 19% increase, Pacific Southwest at nearly 25% increase, and the Pacific Northwest at a staggering 28% increase.
  • These increases are due to long carrier availability delays, low overall container capacity and access, and tight chassis and equipment availability.

These estimates and predictions demonstrate how volatile the drayage market is and how vital it is for shippers to be prepared for surges in demand, brace for ongoing shortages, and have contingency plans in advance. 

Challenges Facing the Drayage Market and Supply Chain Network 

Even with the expected dip in demand that usually comes with the summer months, the drayage market still has many challenges.  Demands remain high, especially as the summer winds down and the push toward holiday peak season looms large. Add to that continued issues with delivery logistics, driver shortages, capacity access, chassis shortages, and the ever-changing driver dynamics, and the drayage market is easily among the most volatile of them all. 

Import Inflation

Inflation continues to be an ongoing concern for drayage service providers, and the added pressure of rising interest rates has also helped to slow down drayage productivity further.

A Railroad Strike

While an immediate closure and strike have been avoided, the threat of future shutdowns looms large for those who rely on rail transport for drayage freight services.

Spot Truckload Rates from US Ports
The decline in outbound per-mile spot rates from US ports dropped more than last year due to supply shortages and ongoing disruptions within the industry a JOC analysis shows.

China Port Closures
Shanghai, Ningbo, and other major ports have closed for the second time this month due to COVID concerns and new storms disrupting port operations and shipping lanes.

Ongoing International Concerns

On top of all these market concerns is the looming fear over unstable international relations as war, pandemic, political and economic concerns remain significant concerns for shippers.

According to an April 2022 report from Market Watch, “the Global Drayage Services market size is estimated to grow at a compound annual growth rate (CAGR of) 2% with revenue at $2.90 billion during the forecast period 2021-2025. The year-over-year growth rate for 2021 is estimated at 1.49% by the end of 2025.”  Understanding the challenges facing the drayage market and supply chain network is critical for shippers to remain competitive and profitable today.

Challenges and Hold-Ups to Know in Drayage Market

In addition to these ongoing challenges, other more localized factors are still impacting the domestic drayage market in the US. Knowing the common issues and how to avoid the delays and associated fees and expenses can help drayage shippers maintain a competitive advantage.

Rail volume and logistics remain a pressure point for drayage service providers, and a source of concern and aggravation as delays and other issues remain. The longer it takes for cargo to move from rail to trucks, the longer it takes on the next leg of the journey. Delays at the rail yard cause delays with final delivery to the customer.

  • Rail depots are seeing retail market freight loads almost double over the last year. Consumer demand has increased, and e-commerce sales are driving import levels. This means shippers require more chassis to move freight. Once a container goes from the rail to the ground, the need for chassis, drivers, equipment, and access space compounds the already tight schedules and adds to supply chain delays.
  • The ongoing fear of a looming railway strike is added to the already lengthy delays and rising concern over railway logistics. The Washington Post noted that “Two of the largest unions — representing 57,000 conductors and engineers — held out until the final hours…Disruptions were already being felt: Amtrak announced it would cancel all of its long-distance trains starting Thursday, and other rail systems braced for shutdowns.” The threat of shutdowns or other delays related to future strikes still causes concern for drayage service providers.

Empty cargo containers have piled up at ports, docks, and warehouses, making it difficult to access them when needed.  Some sea shipping lines and carriers just don’t seem to care about their empties and seem reluctant to pick them up.  This only adds to why chassis are in short supply and the impact this is having on drayage service bottlenecks and backlogs.

  • Shipping companies must prepare for the drayage market crisis by planning ahead, utilizing predictive forecasts, strengthening access to driver pools, establishing backup routes, and finding container space in advance. Using technology to improve logistics and supply chain visibility, such as driver pools and bidding platforms, can improve end-to-end drayage view across all transportation modes. Precise and reliable supply chain visibility remains key to making smarter decisions and overcoming obstacles in an uncertain transportation environment.
  • Pre-pandemic shutdowns and closures, demand for imports were high. As the worst of COVID hit, demand slacked off, and goods became stuck at railways and ports across the country due to closures. As things started opening up again, demand grew faster than many shippers, which drayage companies were prepared for. The shift from famine-like conditions to a near flood-gate of demand when things opened up again has put drayage market experts at a disadvantage for some time now. Overcoming the issues of chassis and container rerouting and movement is a pressing issue for drayage shipping service providers.

Shortages and poor planning and management are catching up to shippers. A 2020 report from Flexport noted one issue affecting drayage services is that “as containers age, they get scrapped, with 6-8% taken out of service each year.” So, when the sluggish demand from the beginning of the year sputtered back to life, the industry had fewer available containers than when the year began. The vicious cycle of port congestion and delays leads to more significant issues that continue to impact the drayage market in 2022 and will likely continue for some time to come:

  • Many terminals need appointments to return empty containers, which only adds steps and worsens scheduling hassles.
  • Shippers often struggle to get a return appointment; when they secure one, they are not always honored or accurate.
  • Empty containers often remain on the chassis, rendering them inaccessible and occupying space at the dock or yard.
  • Trucker productivity decreases, delivery rates suffer, customer satisfaction falls, and overall drayage market ratings fall.
  • The drayage market struggles with these and other compounding issues that create a domino effect of problems.

Everything from rail volume and transportation delays to the continuing shortage of critical drayage equipment these challenges are having a tremendous impact on the market.

Overcome Remaining Drayage Challenges With Industry Experts PortX Logistics

Ongoing issues for drayage providers will continue to compound supply chain issues. Many importers are off-cycle and don’t have the right balance for rail, truck, and drayage transportation. Contact Port X Logistics today for professional insight and expert guidance for your drayage market review needs.

Brian Kempisty