With so many moving pieces in the modern supply chain, and so many disruptive factors at play, managing the interplay becomes quite involved and complex, with drayage and transloading key pieces in the mix.
Consider just one inbound shipment from a manufacturer in Guangdong, China to a retailer in Chicago: a pallet is loaded onto a truck bound for the port of Shenzhen, then onto a container ship steaming to Los Angeles. From there, it’s brought by another truck that rolls to Chicago. In some instances, it might travel by multimodal rail out of port, then onto yet another truck for the final leg from the Chicago railyard to the retailer’s loading dock.
Along each step of the journey, drayage and transloading play a role in keeping the goods moving. They are key logistics services, links in the chain of intermodal and multi-mode transportation so vital to commerce.
And in case you think that market and geopolitical factors have crimped containerized imports, they continue to show strength. According to data from Descartes, twenty-foot equivalent (TEU) volume was up 0.4% month-on-month in December 2023, and up 9.2% from the previous year. With volumes rising despite headwinds, the need to have drayage and transloading logistics buttoned up is stronger than ever.
In logistics, drayage refers to the short-haul movement of goods from one mode of transportation to another. It’s commonly thought of as port drayage, i.e. longshoremen unloading container ships at a terminal, but it goes well beyond that. It also includes the intermodal movement of goods at airports, rail yards, and warehouses, and even shopping malls and trade shows. In essence, drayage services facilitate the movement of cargo to and from intermodal networks.
Without drayage, then, the supply chain comes to a complete standstill. During the pandemic, drayage workers didn’t earn the same “essential” status that made instant heroes of delivery drivers, but they are every bit as critical in the process.
While much is made of the “last mile” of transportation and logistics, especially in ecommerce, drayage is often referred to as the “first mile,” even though there are previous “miles” of conveyance from manufacturer to port. According to the Intermodal Association of North America, types include shuttle drayage (moving cargo from a rail hub or port to a storage facility), pier drayage (from a rail hub to a port or pier), and expedited drayage.
Transloading, as the name suggests, is the actual transfer of goods from one mode of transport to another. It mostly involves containerized freight but can also include palletized loads as well as chemicals, oil and gas, oversized loads, and agricultural products. Thus, drayage does the actual block-and-tackle work of transferring freight for transloading.
Intermodal transportation, on the other hand, involves moving containers from a cargo ship at the port to a truck or rail car at the terminal, and to a truck again to a distribution center, where it’s finally broken down and stored.
Transloading also differs from traditional supply chain operations such as cross-docking and breakbulk. Cross-docking has become an increasingly common supply chain tactic, especially for the rapid processing of “just in time” retail and ecommerce orders. It involves the direct transfer of inbound shipments to outbound, before they even touch distribution center inventory, thus moving them “across the dock.” Cross-docking allows companies to consolidate shipments from multiple suppliers and reorganize them for efficient shipment to retailers or end customers, often using special facilities designed for the purpose.
Transloading solutions, of course, are used to facilitate intermodal shipping. While the rail industry uses the term “intermodal” to describe the movement of containers on rail cars, as well as the use of trucks at either end of the run, intermodal is much broader. “Technically, containers can be hauled on ocean-going ships, river-, lake- and sea-going barges, trains, trucks, in rare cases on aircraft, and even occasionally pulled by pick-up trucks using flatbed trailers,” according to the North American Council for Freight Efficiency (NAFCE) in its 2023 intermodal and drayage report.
Breakbulk involves the shipment of items that don’t fit into standard shipping containers, often oversized items such as trucks, cars, and construction equipment—and supplies such as cranes, backhoes, and girders. Specialized ships are used with cranes and other equipment to load and unload breakbulk cargo, sometimes in a “roll on/roll off” fashion. As items are not deconstructed for shipment, breakbulk items can be handled and processed faster, saving time and money.
One advantage of using transloading for shipping bulk goods is the ability to avoid costly detention and demurrage (D&D) fees from port authorities. Demurrage fees are assessed when cargo is not removed from the port in a designated amount of time, acting as a drag on the flow of goods through the facility. Thus, freight forwarders are incentivized to not bring goods into port too early and get them out as quickly as possible. Detention charges are assessed on a per diem basis when containers and chassis equipment owned by the freight carrier are not returned in the period stipulated in the contract.
Transloading helps freight forwarders avoid these fees because it enables a highly efficient process for processing and handling goods between transportation modes. It therefore plays an important role in optimizing supply chain efficiency and flexibility.
Space doesn’t allow for an airing of the perpetual rail/transloading vs. truckload discussion. There are many variables in terms of cost, speed, and overall value that freight forwarders need to weigh. In general, trucking has taken the lion’s share of the domestic freight market over rail, although the latter saw some gains in the second half of 2023.
The Interconnection: Drayage and Transloading
As noted, drayage and transloading are interdependent aspects of supply chain logistics. The interplay between them is crucial in cases where cargo arrives at a transportation hub via one mode and needs to be transferred to another. Drayage and transloading operators need to collaborate closely to ensure efficient freight movement. For instance, cargo drop-off and pickup schedules need to be coordinated, to make sure shipments are properly handled and transferred between modes on a timely basis.
In general, drayage and transloading work in tandem to make supply chains more efficient by streamlining the movement of goods, reducing transit times, optimizing transportation modes, and providing a greater degree of flexibility than single-mode transit.
Transloading center services include cargo consolidation and deconsolidation, based on the needs of each shipment. This also enhances supply chain flexibility and reduces transportation costs.
Challenges in Drayage and Transloading
There are a number of challenges faced by freight forwarders, freight forwarders, and importers when it comes to drayage and transloading. For example, volume spikes such as those seen during 2020 and 2021 not only cause massive port congestion but leave them scrambling for available containers and chassis. It also leads to high D&D charges as equipment is left stranded in the wrong locations.
Labor issues are also a major factor. A costly, disruptive strike was averted last June when the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) struck a six-year deal covering workers at all 29 West Coast ports. Now the threat of a strike at East and Gulf Coast ports looms, with a contract set to expire on Sept. 30, 2024.
Inefficiencies also exist in drayage operations, especially in the flow of empty containers and chassis, leading to supply/demand mismatches. As in many other areas, digital solutions are being implemented to increase efficiency over spreadsheet and paper-based systems. All of this, of course, has a spillover effect on transloading operations, as anything affecting drayage impacts transloading as well.
The choice of transportation mode is another issue that bears on drayage and transloading. First of all, different modes have different geographic reach, which impacts procurement. The mode also needs to be compatible with the size and space requirements of the cargo. Related to that, the choice of standard container or breakbulk has ramifications for drayage and transloading.
The selection of transshipment points (ports, rail terminals, airports, etc.) affects the choice of drayage providers, and where to secure transloading facilities. The closer they are to these hubs, the greater the efficiency and the shorter the transit time.
Sustainability is another consideration. Drayage operators in California are facing a challenge as the state is seeking to ban the registration of new gas or diesel vehicles for use in drayage operations, under the auspices of the California Air Resources Board (CARB). They were given a reprieve from a Jan. 1, 2024 deadline, pending resolution of a legal dispute between CARB and the California Trucking Association (CTA).
Having a seamless paperwork process for customs clearance and regulatory compliance — which varies across modes — is vital to avoiding time and cost overruns, including drayage and transloading services.
Leveraging Third-Party Expertise
Many freight forwarders are turning to third-party logistics (3PL) providers to help them manage many aspects of their cargo transportation, including drayage and transloading services. They offer targeted solutions to help them overcome common challenges in importing freight from offshore markets, and efficiently getting it to its final destination.
An experienced 3PL can offer solutions to help you overcome common challenges in freight importing that involve drayage and transloading. For example, they have established partnerships with a network of carriers and providers in both disciplines and can coordinate the critical timing of freight pickup and dropoff along the entire journey from port to door.
Advanced technology, including AI, machine learning, and blockchain, are transforming drayage and transloading operations, and top 3PLs are at the forefront of the revolution. These technologies improve supply chain efficiency, visibility, and security as goods move along the supply chain. Algorithms analyze historical data and real-time information in order to predict congestion, optimize routes, and estimate arrival times with a high degree of accuracy.
Blockchain provides an immutable, transparent ledger of all transactions, giving freight forwarders peace of mind that all goods are traceable throughout the supply chain. This degree of transparency and accountability is especially important for high-value or sensitive cargo.
Turn to Professionals for Your Drayage and Transloading Needs
Freight forwarders and importers face a number of challenges in managing the complexity of drayage and transloading, including logistical hurdles and growing regulatory mandates. The related services work in an interdependent fashion to move goods along expeditiously, but it takes an experienced hand to oversee all the details and ensure that nothing gets dropped.
Wicker Park Logistics, a leading provider of 3PL services, takes a tech-driven, consultative approach to craft end-to-end solutions tailored to your specific transportation needs. From all aspects of inbound logistics to transportation management, freight consolidation, expedited, customs clearance, and regulatory compliance, Wicker Park is your one-stop shop delivering exceptional services and consistent results. Speak to an expert today.