Drayage Brokering in Today’s Market
December 18, 2013 - SCMR Editorial
Editor’s Note: Stacy Lange, who began her career at Maersk, is director of key accounts at XenonFS
For many years shippers have viewed drayage brokers as an effective means to save time and effort when they need to book drayage in unfamiliar areas or supplement the capacity available from their regular providers. These are important ongoing services, but shippers are missing a huge opportunity by not better leveraging the technology of today’s drayage brokers to further improve efficiency and mitigate risks and liabilities. Drayage brokers have evolved, increasing their technology capabilities significantly in recent years. Some now offer platforms with full integration of existing contract management and operating systems. Shippers, meanwhile, increasingly are resource constrained, being constantly tasked to do more with less in the face of ever stricter monitoring and compliance standards from government.
The True Cost of Drayage
To understand the full value of drayage brokerage, shippers need to look beyond the rate of a drayage move to the true costs associated with drayage management. The economic factors that go into a drayage rate are well understood: distance, time, supply, demand, and local nuances drive the numbers. But what about the less obvious costs involved with drayage? Imagine, for example, that you are sitting in LA and need to book your first (and maybe only) dray into Axis, Alabama. What do you do? You probably would turn to your handy rolodex or use Google to search for drayage providers in the region. Then you would have to start calling to check on availability and ask all the necessary questions about insurance coverage, and credit.
The time and effort that go into these tasks are difficult to quantify and usually are not measured, leaving companies to quantify their drayage spend using only the rates they pay providers. Based on some candid conversations with shippers, we calculate that a complicated drayage move can take more than two hours to manage end-to-end. Admittedly, moves involving a region and provider you know are less complicated and take a lot less time. But even in familiar areas, when you have a last minute shipment or you exceed your providers’ capacity, the administrative hours quickly add up.
When it comes to the risk aspect of drayage management, the stories – and firsthand experiences – are all too familiar, ranging from lost or damaged cargo to entire containers abandoned on the side of the road. If the drayage provider is uninsured or under-insured, the shipper is left holding the bag. That outcome can be easily avoided in today’s environment by relying on a broker to find fully insured and compliant providers anywhere in the US with just a few clicks of the mouse. To give shippers even more peace of mind, many brokers carry overarching liability insurance that provides added protection should anything go wrong. In addition, due to FMCSA MAP-21 requirements, all drayage brokers now are required to carry a surety bond for a minimum of $75,000.
As companies increasingly are hit with head count restrictions and asked to do more with less, productivity reigns supreme. One way companies can improve productivity in drayage operations is to use available technology tools to integrate drayage and ocean shipping processes. This allows users to seamlessly access drayage quoting, booking and status updates as part of the end-to-end ocean move, eliminating the need to manage these pieces separately and ending duplicate efforts. Overseas offices can quote and even book drayage through a web-based tool, avoiding a barrage of emails and phone calls between offices.
An organization’s total drayage lift can be handled under one umbrella without the administrative challenges associated with managing multiple vendors across the country. Another option, if preferred, is to manage drayage separately using a drayage broker’s stand-alone web-based tools.
What does the evolution of drayage brokerage mean to you?
Today’s web-based shipment management tools and drayage management solutions reduce costs by saving time and effort, while avoiding risk. Many of these tools are free to use as needed, enabling shippers to employ them in select situations without making a long-term commitment.
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