Paul Benfer | KINETIC SUPPLY-CHAIN SERVICES, LLC
In these times of tight capacity, supply chain managers would do well to investigate the feasibility of a dedicated drayage operation to help move containers to and from the port.
Companies need to have enough volume to make a dedicated operation cost effective. Some organizations don’t integrate their import and export operations, while others allow their customs broker or vendor(s) to manage the flow of containers, which can create its own set of issues. The first step is to see what your volume is on a daily and weekly basis. As few as two container moves per day could make a dedicated drayage option cost effective.
The benefits of a dedicated driver for drayage are the ability to prioritize loads, superior visibility (which can be a challenge with owner-operator port driver fleets), a reduction in per diem and demurrage fees, and better overall control of your supply chain.
If you are a manufacturer, production often runs behind schedule. If you supply materials or chemicals that are used to manufacture products, your customers can be placed in situations where their plants and facilities face interruptions, or even more serious disruptions such as a plant shutdown scenario. If your client’s plant shuts down, it can cost that company tens or hundreds of thousands of dollars in lost production and wages. If that happens, quite often your customer will turn to you to help offset their losses. The Amazon Effect on retailers has dramatically shortened delivery windows, resulting in increased pressure on the supply chain to deliver goods within smaller timeframe of 24 to 48 hours, or face significant vendor fines. The above two examples reinforce the value of a dedicated port driver and operation.
In 2018, most ports and railheads experienced severe congestion due to larger ships, longer trains, inclement weather and fewer drivers. Some ports experienced delays of up to two weeks or more this last winter. Anyone who moved containers in multiple ports in 2017 and 2018 experienced, and continue to deal with, serious port and railhead delays. Many draymen now charge congestion fees to offset the cost of wait time at the port. Where they used to be able to make at least two turns in a day, in many cases their drivers can now only pick-up one container.
If you are a chemical manufacturer of hazardous materials, it makes even more dollars and sense to investigate the benefits of a dedicated driver who is certified and licensed to move these commodities. Each day it becomes more expensive and difficult to find carriers and draymen to handle hazardous materials. Between insurance costs, local police inspections and enforcement, many carriers have decided it is not profitable to continue to move them. There is more freight available than there are trucks. Why deal with the extra red tape, increased insurance costs and fines associated with the transportation of hazardous materials?
All the above point the way to the expanded use of dedicated port draymen as the shortage of drivers shows no signs of abatement in the foreseeable future. We are still years away from an autonomous-driver solution, and no one knows yet how the recent legislation passed in California will affect capacity at the two largest ports in the United States. Your best way forward is to secure capacity zealously for your company to protect and improve supply chain velocity and protect the company’s bottom line.
Paul Benfer is Managing Partner with Kinetic Supply-Chain Services, LLC, based in Hazlet, NJ. He can be reached at firstname.lastname@example.org.