20 DC VELOCITY MARCH 2018 www.dcvelocity.com
newsworthy
Ultra-tight dray capacity forcing users to
pay just to hold trucks
The availability of drayage capacity in the U.S. has recently become so tight
that, in some markets, shippers and intermediaries are voluntarily paying a
flat fee on top of the prevailing dray rate just to reserve a truck, according to
an industry source.
The source said shippers are ponying up the fee, which is often in the $200
to $300 range, without any prompting or mandate from the carriers. The
practice appears to be most commonplace in Chicago, where the overall tight-
ness of truck supply is compounded by inclement winter weather across the
Midwest. But Chicago is not the only market where it is happening.
According to the source, the practice is occurring at ports, where dray trucks
move containers from vessels to nearby locations such as a warehouse or
railhead, and in domestic truck-rail service, where drivers ferry freight to and
from rail ramps situated in high-density traffic corridors. Phil Shook, inter-
modal director for C.H. Robinson Worldwide Inc., the Eden Prairie, Minn.-
based broker and third-party logistics service provider (3PL), said there’s
anecdotal evidence that the practice is mostly occurring at the nation’s ports.
This type of trend would run counter to the many 3PL drayage arrangements
that are long-term and strategic in nature, Shook said in an e-mail.
The source said it is highly unusual for dray users to voluntarily pay just
to reserve a vehicle and then be charged for dray rates. Dray rates themselves
have escalated significantly as well. Ted Prince, co-founder and chief operating
officer of Tiger Cool Express LLC, an Overland Park, Kan.-based provider
of temperature-controlled intermodal transport for produce and food products, said he’s seen drayage rates increase by anywhere from 10 percent to as
much as 80 percent over the past months. Prince said the top-end figure is a
combination of higher base rates and the soaring costs of “accessorials,” fees
charged by carriers for services beyond the linehaul. Dray companies are often
presenting on a “take-it-or-leave-it” basis, Prince said in a phone interview.
The problem of ultra-tight dray capacity is a “major nationwide problem,
but the pain is more localized,” Prince said. Some markets are being hit harder than others, he said, adding that Harrisburg, Pa., and Portland, Ore., are
chronically short of dray capacity, the latter market because it doesn’t generate
the box volumes of other West Coast ports and thus lacks a large cluster of
independent draymen. The Portland dray market is dominated by big providers like Lowell, Ark.-based J.B. Hunt Transport Services Inc. and Oak Brook,
Ill.-based Hub Group Inc., which have in-house dray fleets. Owner-operators
make up a large chunk of the nation’s dray supply.
Overland Park-based 3PL MIQ Logistics said many of its regional dray carriers are reporting significant backlogs on existing orders and are not accepting new business until April. Shortages of chassis equipment are also being
reported in the Midwest, and as a result, many Chicago rail terminals have
grounded containers, MIQ said. Adding to the problem is that chassis providers are requiring drayage carriers to pick up equipment from remote locations,
resulting in more miles traveled and increased wait times, according to MIQ.
The dray shortage is a microcosm of the capacity tightness found across
the trucking industry. Both truckload and less-than-truckload (LTL) space
is extremely tight. LTL carriers are increasingly seeing business that would
normally move via truckload head their way because truckload capacity is
harder to find.
—M.S.
alliances
Chicago-based 3PL Coyote
Logistics has deployed
Descartes Systems Group’s
MacroPoint freight visibility solution to enhance shipment visibility for customers. In other Coyote news,
the company has partnered
with KeepTruckin to bring
electronic logging devices to
40,000 carriers in the Coyote
network. … Consulting and
software solutions firm
enVis-ta has deployed its Enspire
Commerce unified commerce
platform for The Tot, a company focused on delivering
nontoxic items for infants,
young children, and families.
… Subscription wine retailer
Winc has extended its agreement to use Snapfulfil’s cloud-based WMS for another two
years. … Nypro, a design and
manufacturing services provider to the healthcare and pharmaceutical industry, has selected Dematic to supply an automated guided vehicle (AGV)
system for the company’s manufacturing facility in Gurnee,
Ill. … Ariens Co., a Wisconsin-based equipment manufacturer, has renewed its contract
with Redwood Logistics for
third-party logistics services.
… Logistyx Technologies, a
provider of transportation
management execution systems, has partnered with
JDA Software Group Inc. to
offer a fully integrated parcel shipping solution for JDA
Warehouse Management customers. … Florida-based retailer City Furniture has selected
Blue Ridge’s cloud-native supply chain planning technology to support its growth and
optimize inventory levels in
both stores and DCs.
