Drayage, otherwise known as short-distance transport, represents a vital link in intermodal freight transport. Completing the “last mile” of delivery between ports and businesses is simply crucial.
Drayage is also a specialized form of truck driving. It involves unique needs related to managing resources and drivers’ time on the job. For that reason, there are a variety of specialized drayage fees included in this process.
Let’s review drayage costs and drayage fees — and how to keep those charges low for your business.
What are Drayage Charges and Drayage Fees?
An Intro to Drayage Fees
Dray shipping, dray transport, or drayage, is “the transport of shipping containers and cargo to and from sea ports”. Drayage also implies short distance transport.
While different types of drayage can sometimes cover somewhat long distances, the limits are always within the same urban or metropolitan area.
What’s more, drayage is usually considered to be just a part (albeit an important one) of a larger logistics operation or intermodal transportation strategy.
The term drayage is also sometimes used to refer to the line item on a bill for short-haul transportation as opposed to the transportation process itself. More often than not, though, a distinction will be made between drayage referring to transport and drayage fees, also sometimes called drayage rates, drayage charges, or even drayage costs.
How Are Drayage Rates Calculated?
Drayage trucking refers to the transport of shipping containers from their point of arrival (often a port) to their next stop. Sometimes, drayage trucking is also referred to as “intermodal drayage” since shipping containers are often referred to as “intermodal containers”.
Whatever you call dray shipping, it’s important to understand the associated rates and how they’re calculated, since there’s a lot of confusion around added fees and charges associated with this type of shipping.
Despite the short distance associated with drayage, there’s a whole lot that factors into calculating drayage rates, including:
- Your freight’s hundredweight (CWT)
- How far your freight is traveling
- When your freight is delivered vs. handled
- How easy your freight is to transport & whether special handling is needed
- Freight carrier type and type of packaging
That’s just the beginning. All of these factors contribute to the base drayage fee.
Many fees are often charged on top of this base fee. This is where drayage charges can get confusing, leading to misunderstandings and misconceptions. This is why we’ve created this blog post — in hopes of clearing up misunderstandings related to some of the different categories of drayage fees and why you might incur each.
There are fees for containers over legal weight limits, fees for tolls incurred that get passed to the shipper, fuel charges, and more…
There are also demurrage charges, detention fees (also known as per diem charges), and storage charges, among others, all of which can add up quickly…because of this, let’s explain some of the more murky drayage costs individually.
Demurrage vs. Detention
Businesses sometimes exceed the amount of time they’re provided to use shipping containers. Other times, they pick up a container at an intermodal port later than the agreed-upon deadline for pickup.
In these types of scenarios, shippers will charge fees to encourage their intermodal containers to remain in circulation and prevent supply chain issues. Demurrage and detention fees are two of the most common types of related fees.
On a basic level, as it pertains to intermodal freight, demurrage simply refers to “containers that contain cargo while held inside a port.” Demurrage fees, therefore, are charged by shipping lines when customers exceed the limits of their agreement.
Most shippers allow for up to seven days of “free time” (that is, time to use and move a shipping container at a port) between carrier shipments. If the carrier exceeds this day count, demurrage fees begin to accrue.
Demurrage vs. Storage
Another important category of drayage fee to be aware of is storage fees. As we explain in our blog post “Demurrage vs. Storage: What Will Cost You More?”, “Demurrage and storage fees are different in nature and purpose. Perhaps the most significant difference is that demurrage fees are charged by the shipping lines (or the owners of the container), and storage fees are charged by the port or terminal. In both cases, the charges are passed on to the customer.”
Also referred to as “port storage costs”, storage fees can apply to “full containers uncleared for import, full containers yet to be shipped for exports, and empty containers within the port.”
What’s more, it is possible to incur both storage fees charged by the port and demurrage fees charged by the shipper at the same time for the same freight.
Per Diem vs. Demurrage
We’ve explained demurrage charges vs. detention charges.
“Per diem charges” represent the same thing as detention charges, therefore understanding the difference between per diem vs. demurrage is, in effect, the same as understanding the difference between detention and demurrage.
How Can I Keep Drayage Fees Low for My Business?
Now you know more about drayage transport and many of the associated fees and charges you could incur. So what can you do about it all? In other words, how can you reduce drayage costs for your business?
Here are a number of helpful actions:
- Optimize Container Space: Try to consolidate your shipments whenever possible. This may require efficient packing, as well as being mindful of any cargo that requires special handling. The exception would be that it may, at times, be cheaper to ship mixed loads separately even if that runs contrary to consolidating shipments.
- Be Flexible About Pickup & Drop Off Times: Plan pickups and deliveries during off peak hours to avoid peak fees. The added benefit to doing so is that you may also experience quicker turnaround times.
- Select Warehouses & Distribution Centers Strategically: Choose locations that are nearest to ports or hubs whenever possible.
- Negotiate Contracts: Work closely with drayage providers to negotiate favorable contracts. This might involve discussing volume-based discounts, long-term partnerships, and transparent fee structures.
- Partner with a Drayage Specialist: Partnering with a specialist in dray shipping can make all the difference. At Iraheta Bros, we are a preferred Oakland area drayage partner.
Estimate Your Drayage Shipping Costs Today
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