What are drayage fees in container shipping? Learn all about how drayage fees are charged and how to minimize these costs.
The concept of drayage has a long history dating back to transporting goods via horse-drawn carts. In the olden days, a dray was a vehicle used to move goods, particularly a horse-pulled cart or wagon. In today’s terms, drayage involves the transport of goods over short distances, to prepare them for the next stage of the journey or delivery to their final destination.
Drayage is an essential part of the shipping and logistics industry. According to the Intermodal Association of North America (IANA), globally, 95% of all manufactured goods are moved in a container. And there are more than 60 million drayage movements made each year just in North America. This crucial process comes with unavoidable fees. Here’s everything you need to know about drayage fees.
What is a drayage fee?
Drayage can take different forms. The form that usually comes to mind is inter-carrier drayage, which is moving goods between different carriers, such as from a trucking carrier to a rail carrier. It can also be done intra-carrier, which involves transporting goods to different hubs owned by the same carrier. There’s also expedited drayage which can be arranged for time-sensitive shipments. Shuttle drayage is when a container needs to be moved to a temporary holding point because the next destination is temporarily full.
Ultimately, the fees attributable to each part of the drayage process contribute to your overall drayage costs.
Drayage fees can be substantial and have been the cause for much debate in the US. However, if you understand how drayage fees are charged and optimize the use of your containers, you can save on these expenses.
How are drayage fees calculated?
At its base, drayage fee is charged by weight: A base fee is charged for every 100 pounds of freight. For example, a shipment that weighs 123 pounds will be rounded and charged at 200 pounds. Some carriers have a minimum fee of 200 pounds per shipment. In addition to the freight’s weight, moving containers requires equipment, transportation, and storage availability to house the containers. All of these costs also contribute to drayage fees.
Other types of drayage fees include:
- Chassis split fees, which are charged when a transporting chassis is not available where a container has been unloaded. This fee covers the cost of taking a chassis to the container’s location.
- Pre-pull fees, which are incurred when a container has been picked up from a port or ramp but isn’t loaded or delivered on the same day. This fee covers the carrier’s cost of storing the container at the carrier’s yard.
- Drop fees, which are incurred when truckers drop off containers at a warehouse and return later to pick the emptied containers, as opposed to a live loading and unloading of the containers.
How other shipping costs stack up
Drayage fees aren’t the only ones that can quickly drain your accounts. You never know if boxes will be held up in customs, delayed on ship, or get stuck at port. In the meantime, truckers, customers, and carriers are impatiently waiting. And that comes with a heavy price tag.
With so many uncertainties, the key to avoiding as many extra payments as possible is to know if any changes have occurred. Knowing that the ETA has changed, you can contact the trucker, the customers, and even renegotiate free days or fees ahead of time. Now you might wonder ‘How do I do that?’ The simple answer is: by avoiding leasing containers through carriers – and digitizing your container logistics. Sounds daunting? It doesn’t have to be with Container xChange.
On xChange you’ll not only have all the information about every shipment right here in one place – your trading and leasing offers are also automatically updated for you. And you avoid leasing containers from carriers with hefty and hidden charges like demurrage and detention. Want to learn more about how xChange can help you avoid extra fees and save time and money? Click on the banner below, and book a call with our team.
3 ways to minimize drayage fees
While drayage fees are unavoidable, there are some ways to minimize them. Here are a few of these ways:
Keep freight weight low and combine shipments in a pallet or container
Weight is one of the primary determinants of your drayage fees. Any weight in excess of 100-pound increments is rounded off to the next 100 pounds and charged at the rate of the higher increment. Also, combining shipments avoids being charged a minimum weight fee.
Non-fragile items that are easier for the contractor to move (such as those in crates or square boxes) cost the least. Items that require special handling tend to be charged significantly more. To reduce the need for special handling, pack your freight to the specifications recommended and eliminate the need for special handling.
Ensure efficient shipping – time is money
Opt for a carrier that allows you to load or unload your goods at one go or in as few batches as possible – this will ensure the time taken to load/unload and move the freight is kept to a minimum. The simpler the shipping delivery is, the lower the chance for mishaps and additional charges as a result.
Ways to cut down costs in container shipping
You’ve probably struggled with containers stuck in the terminals for an infinitely long time. Port congestion. Shortage of chassis. And so the list continues. It can be difficult to avoid extra surcharges, but staying on top of your shipments is key to making changes ahead of time.
With Container xChange you have all the information about your shipments available at all times. You can check the status of the shipments through detailed track and trace reports – and get notifications when there’s a container event such as changing ETA’s, pick-up, and returns. This gives you the best possible overview of all your containers and lets you focus on the containers that urgently need your attention.
It’s pretty much impossible to talk about extra costs in this industry, and not think about demurrage and detention charges. These charges can add up to almost 20X the cost of the container itself. The reason these costs exist is to encourage container users to return the containers within the allocated “free days”. However, in practice, there are many situations that are impossible to fully control. For example, certain goods require a longer than expected time to clear customs. Or, depending on when the container arrives, there may be no space available at the factory or the warehouse it’s headed to. Also, arranging drayage itself takes time.
Save costs by using SOCs
By using SOC containers, also known as Shipper-Owned Containers, you can get around these hidden extra fees. With SOC containers, you borrow the boxes of a container owner who needs to reposition their empty containers. This, in turn, gives you bargaining power – resulting in more free days and lower per diem charges.
On Container xChange, you can find SOCs in more than 2500+ locations around the world and start saving on your shipping costs. Because our network is so extensive, most of the time, you can even use SOC containers for free! Find SOCs on xChange today.