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Drayage in ecommerce is exceptionally critical.
Research says ecommerce retail sales will reach $8.5 trillion by 2023. This growth means there are more customer expectations to meet as customers want their products faster and cheaper. That’s where drayage comes in.
But what exactly is drayage, and what does it entail?
This article will demystify drayage and help you understand what to consider when choosing drayage in ecommerce.
What is drayage?
In the shipping and logistics industry, drayage is transporting goods or freight from the starting point to its destination. It often addresses only short distances and is known to be the start of the freight shipping process, AKA the first mile. Drayage can also refer to the US fee on goods transported within short distances.
However, in ecommerce, drayage specifically refers to the service of transporting goods (e.g., custom caps for your ecommerce branding) from the port to the freight’s inland destination, such as a storage facility or warehouse.
The main difference between the three definitions outlined above is one is a process, the other is a fee, and the last is the name of the service. In this article, we will focus on drayage in ecommerce.
Drayage vs. intermodal drayage
Intermodal drayage is transporting goods using different modes of transportation. Intermodal drayage often happens when the goods are traveling over long distances.
The image below shows how intermodal transfer generally works.
The main difference between drayage and intermodal drayage is the former covers short distances (the same metropolitan area), while the latter covers long distances.
How drayage fits into the current supply chain
There are multiple ports in the US. The annual trade of the Port of Los Angeles alone is about $294 billion. These ports often face congestion and backups. Drayage exists to lessen these issues, and ensure the optimal flow of goods from the transport hub to their destination.
Business owners not only have delivery expectations to deal with, but they also consider transportation costs and warehouse space. The warehousing market has a less than 3% occupancy rate.
The low vacancy rate means businesses cannot find storage fast enough. It also implies warehouse costs are on the rise. The combination of increased demand, increased fuel prices, and a labour shortage have led to a rise in transportation costs.
How the past will affect the future of drayage
The past two years have seen a surge in customer demand for ecommerce businesses, and it isn’t slowing down. Statistics show ecommerce will account for almost 21% of retail sales by 2023.
In light of the aforementioned challenges, drayage can no longer be an afterthought, as it can help take some pressure off of merchants and improve their supply chain agility. Drayage services like door-to-door drayage are instrumental because they eliminate the need for warehousing.
Using drayage and other land freight services like LTL can help ecommerce businesses balance costs and cater to customer demands.
Types of drayage
To help you figure out what kind of drayage you need in your ecommerce business, we’ve outlined 5 types of drayage.
1. Pier drayage
Pier drayage is when a shipping container is transported by truck from a rail hub to a port to be loaded onto a ship. The loading takes place in one city.
2. Expedited drayage
This is the transport of time-sensitive cargo by truck.
3. Inter and intra-carrier drayage
Inter-carrier drayage is the transportation of goods from one carrier to another. It could be from the drayage truck to the long-haul trucking company that will take the goods to their final destination (e.g., a rail yard or seaport).
Intra-carrier drayage is when the cargo is scheduled to board a ship at another dock within the same hub.
4. Shuttle drayage
This is moving excess containers to temporary storage. This sometimes happens when the shipping hub has more containers than it can hold.
5. Door-to-door drayage
This is moving goods from the transport hub directly to the final customer.
Cost considerations for a drayage service
Drayage service fees comprise a base fee plus a few other charges. Here are some of the most common fees you may see in drayage.
Drayage companies will calculate the number of miles it takes to complete the job and charge for the round trip.
For example, if the round trip is 155.1 miles and the average cost per mile is $2.73, the mileage cost will be $423.42.
The company will calculate the number of hours it’ll take to get the job done and charge you a flat fee.
If your cargo is over a legal weight, you will be charged extra fees. If your cargo is overweight, then consider other cheaper ways to ship your heavy items.
If the truckers pass through a toll during transport, the toll fee will be passed on to the shipper.
5. Chassis split fees
The chassis is the under-frame used to straddle a container before road transport begins. If the chassis isn’t in the same location as the container, the trucking company will charge you a fee to cover the cost of pick up. This fee is usually between $50-$110.
6. Pre-pull costs
Pre-pull is the cost charged when the drayage company picks up the cargo but doesn’t deliver it to the distribution centre or warehouse on the same day. The fee is for storing the container for the shipper. Pre-pull costs between $125 – $300.
7. Drop fees
Drop fees are incurred when the trucking company delivers the container to a distribution centre but cannot offload immediately, so they have to come back to do it.
8. Detention fees
Typically, shippers are allowed one to two hours of extra time, but if the driver or equipment stays longer, the shipper will pay a fee. The average per hour is $60-$100.
Drayage considerations for ecommerce businesses
The factors above will help you understand what your bills are made up of so you can dispute unnecessary charges when needed.
But if you’re getting sticker shock, don’t worry — there are ways to minimise your drayage fees, much like how you can reduce costs for your ecommerce business by using automation, a digital business card, and so on.
When you’re choosing a drayage carrier, consider these factors to make sure you’re getting great service for what you’re paying:
1. Delivery history
Ensure the drayage provider has a good track record of timeliness, reliability, and safety. Remember, the trucker’s attitude and work ethic reflect on your organisation.
2. Capacity to handle the workload
If you are shipping large consignments or you ship consignments that need extra care, double-check that the drayage company can handle these needs.
You need a drayage partner that communicates well and promptly to enable you to plan effectively. Delays and snags happen all the time in freight shipping, and you never want to be stuck wondering where your shipment is — or what you’re being charged for.
How a trusted logistics partner like ShipBob can optimise your supply chain
As a leading fulfilment company, ShipBob helps fulfil tens of millions of orders for thousands of ecommerce brands. These brands send their inventory to ShipBob (any of their fulfilment centers across the US, Canada, the UK, Europe, and Australia), who then picks, packs, and ships orders as they are placed.
Partnering with a logistics partner like ShipBob is a supply chain improvement method that can speed up time to getting your customers into customers’ hands. In addition to outsourced fulfilment, ShipBob provides other solutions for in-house fulfilment like its Merchant Plus warehouse management software.
Optimise freight shipping with ShipBob
With ShipBob’s managed freight program FreightBob, ecommerce businesses that outsource fulfilment to ShipBob and need to ship from China to the US can navigate drayage and other aspects of the freight shipping process with ease. Working alongside Flexport’s Flow Direct LCL shipping program, FreightBob expedites freight shipments, lowers freight costs, and distributes inventory across ShipBob’s fulfilment centre network to help you master your freight management.
To learn more about how FreightBob can help you optimise your international freight shipping, click the button below.
“In preparation for Black Friday Cyber Monday (BFCM), we decided to try out ShipBob’s new freight program FreightBob, which is an exclusive program designed to help merchants get freight from China to the US faster, then distribute the inventory to the proper fulfilment centers to ship out quickly.
The time-savings achieved on the shipment using the dedicated freight service were incredible. We not only cut down our shipping time from Hong Kong to LA significantly, but even saved money doing it.
Thanks to ShipBob’s freight program, we had no stress and were super well-stocked for the rest of the year and into 2022, without any kind of inventory issues that have plagued us in the past. Once picked up from the port, ShipBob cross-docked it from California to Pennsylvania, while keeping some inventory in California too.”Nathan Garrison, Co-Founder and CEO of Sharkbanz
Below are answers to the top questions about drayage.
How much does drayage cost?
Drayage services typically cost between $1600-$3000.
What’s the difference between freight and drayage?
Freight is another name for the cargo/goods that are carried. Drayage is the service used to carry freight over short distances from a starting point (usually a port) to a destination (usually a warehouse).
Can ShipBob help with drayage?
FreightBob, ShipBob’s managed freight program powered by Flexport, can help you expedite your freight, distribute your inventory, and navigate details like drayage with ease.
How can I find a drayage service?
You can find a drayage service through an internet search, or by a referral from another ecommerce business.