Shippers often complain about the cost of drayage rates, particularly due to the fact that it is the shortest part of a freight shipment’s journey. However, drayage is an essential part of the shipping and logistics industry, and it’s important to understand the basics of how drayage rates are calculated.
Key Takeaways
Our guide below outlines how to calculate drayage rates and strategies to reduce the costs associated with this first mile of distribution.
There are a number of details that go into calculating drayage service rates.
The most common factors include:
Drayage carriers typically calculate their base fee using the factors above. Along with these, accessorial charges also come into play.
Some of these charges can be accounted for before the shipping process, meaning that the carrier outlines their rates and additional charges for incidentals like fuel, detention times, and toll charges when you hire them. However, you may run into unpredictable fees and charges that you won’t know about until after the job is completed.
As far as the base rate goes, freight is measured in hundred-pound increments, or CWT. A carrier will typically set a certain rate, depending on the level of handling the freight requires, multiplied by how many CWTs the freight weighs.
Hundredweight is always rounded up to the next hundred pounds, even if it’s only slightly over. This means that 105 pounds would be rounded up to 2 CWT, 295 would be rounded up to 3 CWT, and so on. Once the base rate is established, additional drayage fees make up the rest of the bill.
When it comes to the fees that you’ll see on a drayage shipment, there are a few that are regularly used. Below, we outline and define the most common types of drayage fees.
Chassis Split Fees: A chassis-split fee is charged when a chassis is not already available at the container site. In that case, a carrier will have to spend additional time and mileage traveling to pick up a chassis for transport, which will then be passed along to you as an extra fee.
Detention and Demurrage Fees: Carriers allot a set amount of “free time” (typically 1–2 hours) when they won’t charge extra when picking up and dropping off cargo. However, if the carrier is delayed longer than the time they’ve allotted, a detention fee will be charged.
Demurrage is similar, but has to do with the containers themselves. A container can only be held on-site at a port or terminal for about four to five days. If it is stored beyond the time limit for any reason, the shipper will be charged a demurrage fee for holding the container on-site.
Drop Fees: This fee is incurred when a carrier drops a shipping container off at a warehouse or distribution center for pickup at a later time, rather than live loading/unloading of the freight. This occurs when freight requires additional handling time for services like palletization.
Fuel and Mileage Surcharges: Many carriers have set rates based on the number of miles traveled and the amount of fuel consumed to complete the job. This rate is often agreed upon beforehand, but may be charged after the job is completed if prices have significantly changed.
Pre-Pull Fees: Charged when a carrier picks up freight from a port or rail terminal, but can’t unload or deliver the freight that same day. The carrier then stores the cargo in its own yard. While this helps the shipper avoid costly demurrage fees, the cost will still be passed along in the form of pre-pull fees.
Toll Fees: Toll fees are pretty self-explanatory. If the carrier incurs tolls while completing a drayage service, those fees will be passed along to the shipper.
Considering how many different costs make up overall drayage rates, shippers should do what they can to bring those costs down in order to maintain profitability.
There are no ways to eliminate drayage fees entirely, but there are things you can do to avoid certain charges or to reduce the amount that you owe. Some of the most effective strategies are listed below.
Depending on the freight you’re moving, you may be charged a different rate based on its packaging. Floor-loaded crates often incur the lowest rates, while pallets are slightly more expensive, and fragile items that require special handling cost the most.
Drayage rates are calculated based on the hundredweight (CWT) of a given freight shipment. By combining multiple pieces that each round up to the next hundred pounds into one single piece of freight, you can lower the overall CWT of your shipment. Additionally, many carriers require a 200-pound (2 CWT) minimum for freight. Consolidating the freight can help avoid those additional charges.
For example, let’s say you planned to ship four separate pieces of freight, each weighing 60 pounds. The drayage carrier’s rate was $100 per piece of freight. Because the weight of the freight is rounded up to the next hundred pounds, each piece would weigh 1 CWT. At a rate of $100 per CWT, the base price of your shipment would be $400.
However, if your carrier has a 2 CWT minimum, then instead of being charged 1 CWT for each, each piece would actually be rounded up to 2 CWT. That would make your shipment $800 for four 60-pound pieces of freight.
If you consolidate each 60-pound piece of freight into one larger crate, the carrier would view your shipment as just one 3 CWT (240 pounds) piece of freight. Your new base price would be $300.
Not only does that consolidation save you $100 on the initial price, but it saves $500 on a carrier with a 2 CWT minimum.
Ship in as few batches as possible, and try to be flexible with pick-up and drop-off dates. If you can load or unload all of your freight at one time, that will save you from having to pay the costs of additional trips.
Additionally, try working with your carrier to find the optimum days to receive and transport shipments. Depending on factors like port volume or equipment availability, this can help you avoid driver wait times, pre-pull fees and other hard-to-predict charges.
This may seem to contradict the previous point, but depending on the type of freight you’re shipping, it may make sense to ship mixed loads separately. The rate for loads can vary depending on how the freight is packaged or whether it requires special handling.
If you have a mixed load, meaning crated freight (lower rate) is mixed with freight that requires special handling (higher rate), you should consider separating these shipments under different bills of lading. Depending on the carrier, you may be charged a higher rate for the entire shipment if all types of freight are kept together.
Documenting and taking photos of your shipments provides you with evidence to back up any claims that may occur if something goes awry in transit. This can help defend against erroneous charges.
Third-party logistics (3PL) providers often partner with drayage services near U.S. ports. They can also consolidate all your storage and distribution needs into one full suite of logistics services. Our partnerships with 3PL providers allow us to extend those services to you, in addition to regular truckload freight transport.
Are you looking to save on drayage rates? USA Truckload Shipping can help you book power-only drayage and save you money while doing it.
As a full-service 3PL partner, we can help with all of your shipping needs, from the first mile to the last. Our experts are here to walk you through the shipping process every step of the way, providing a variety of shipping solutions, including:
Fill out a hassle-free freight quote or give us a call at (866) 353-7178 and book your drayage services today.
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