Port trucking companies say they are seeing an influx of new drivers that once served long-haul shippers but have left that sector because of falling truckload rates and increasing operating costs, including fuel and insurance.
The move marks something of a turnaround from when drivers were exiting drayage because of high truckload rates and difficult working conditions. While adding new capacity on the margin, those returning drivers are likely to do little to bring down drayage rates due to high congestion at ports.
Drivers are coming to intermodal at a time when long-haul rates have been on a slide. Rate benchmarking firm DAT said that the nationwide average spot truck rate for hauls over 250 miles was $3.07 per mile in July, down from $3.80 in February 2022, and down 7 percent from a year ago.
Jason Hilsenbeck, president of intermodal load board Loadmatch.com, told JOC.com that about 100 new motor carriers signed up to haul container loads posted on his board over one weekend in July, a previously unheard-of number. Hilsenbeck said that some of the new entrants have little to no port experience.
“We’re having to ask these drivers, ‘do you have experience pulling containers?’,” Hilsenbeck said. “They’ll tell us, ‘I’ve had 15 years of experience in dry-van, how hard can it be?’”
Fifteen new carriers have signed up to haul containers in both New York-New Jersey and Houston ports in July, Hilsenbeck said. In competitive markets, he said new intermodal entrants are offering lower rates, but that’s sometimes because some new intermodal carriers don’t know how to quote a drayage rate.
“It’s chaotic,” Hilsenbeck said.
Drivers giving up operating authority
The Intermodal Association of North America (IANA) said during the first half of 2022 that it had 2,600 new motor carriers register for interchange agreements to haul containers, a 30 percent increase in the number of intermodal carriers.
The Port Authority of New York and New Jersey saw new registrations to enter the port’s marine terminals hit 1,009 trucks in June, the highest number of monthly registrations in two and a half years of records. Along with the replacement of older trucks, the registrations likely reflect new carriers in the market, local trucking sources said.
Melvin Buckner, the sales director of intermodal and truckload carrier RFX LLC, told JOC.com he has recruited about a dozen owner-operators that had previously focused on long-haul to handle drayage in Houston. RFX is the brokerage division of Pittsburgh-based cold-chain carrier Refrigerated Express, which also relocated four company trucks to Houston to serve that market.
As long-haul rates have fallen, Buckner said the move into drayage was necessary for drivers to earn the same pay. For example, truckers hauling regular dry-van freight gross about $650 for the trip from Houston to Dallas, down from a 2022 peak of $1,000, Buckner said. A container move on the same lane pays about $1,300, he said.
Similarly, the Houston-to-Shreveport dry-van haul current pays about $1,200, down from $1,600 earlier in the year, Buckner said. But a container haul on the same lane pays about $3,600, he said.
Intermodal carriers earn more because of the extra equipment, extra procedures at ports, and insurance needs relative to hauling dry-van freight, Buckner said. Some major truck insurers, such as Progressive, won’t cover shipping containers. In addition to IANA registration, intermodal drivers need federal licensing to get into the ports and need to register with the ports themselves.
“It’s a big chunk of change” to get into intermodal, Buckner said. “There’s a lot of things these drivers have to learn, and it’s time-consuming and costly.”
Different work experience
Along with the upfront costs, truckers face a completely different work experience than pulling up a dry-van trailer to a loading dock, ContainerPort Group President Joey Palmer told JOC.com. He said it could take a month to familiarize new drivers with the various trucking procedures at marine terminals and rail ramps.
Palmer said ContainerPort has seen about the same number of owner-operators return to drayage as had previously left to take advantage of high long-haul rates. Those drivers are a mix of owner-operators who are new to intermodal, as well as experienced drivers who had their own operating authority to haul freight rather than being part of a fleet.
“We are certainly seeing some migration of drivers into drayage coming from truckload and flatbed, and some that pursued their own operating authority,” Palmer said.
Palmer said some drivers became motor carriers with their own authority to haul freight thanks to strong demand from major beneficial cargo owners that were importing heavily over the past year. Now with many of those shippers dialing back their overseas purchasing, drivers with their own authority are finding the costs of being an independent motor carrier are too high, he said.
Palmer said drayage fleets are able to negotiate with chassis providers to get preferential availability over motor carriers with just one or a few trucks. Fleets can also leverage fuel cards and other technology that has been routinely available to long-haul truckers, but are generally less available in drayage, and even less so to single-truck motor carriers.
“Operating under your own authority was attractive at its peak, but most of them have returned to contract directly to a carrier, especially with rising insurance costs and diesel costs.”
Still, truckers that are returning to drayage won’t find it easier to operate in ports, and it could be even worse than when they left. A dispatcher with a Carteret, New Jersey-based motor carrier who asked not to be identified said they raised trucking rates for the port-only move to $425 from $180 due to the long delays drivers experience at marine terminals. The portion of the haul outside the port is charged at a per-mile rate.
Palmer said that while ports are difficult places to operate for truckers, they are offering a steadier income than in spot truckload markets. Likewise, the ability to be home at night is attracting drivers who are tired of living life on the road, he added.
“Drayage rates remain strong and customer demand remains strong,” Palmer said. “Drivers seem to be happy coming back to drayage.”
Source: Journal Of Commerce
