"All In" Drayage Rates- Better for the Shipper or the Carrier?

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Drayage is the short-haul transportation of goods, typically a shipping container, to and from ports, rail yards, and warehouses. Drayage rates are the fees associated with this movement, and they are notoriously complex due to a variety of factors that can change unexpectedly.

A common industry practice is to offer an "all-in" drayage rate. This is a single, flat fee that is meant to cover all costs associated with a drayage move. While this seems straightforward and appealing to shippers, it presents significant challenges for drayage carriers.

What's in a Drayage Rate? 💰

A drayage rate is not just a simple charge for mileage. It's a combination of a base rate and numerous accessorial fees. The base rate is usually determined by the distance of the haul, but the accessorial fees are where things get complicated and unpredictable. Some of the most common accessorial fees include:

  • Fuel Surcharge: A variable fee that accounts for fluctuating diesel prices. It's typically a percentage of the base rate and changes weekly based on national fuel price indexes.

  • Chassis Fees: A fee for using the wheeled frame (chassis) that the container sits on. This can be a daily rental fee and can be a source of delays if a chassis isn't available at the container's location, leading to a "chassis split" fee.

  • Detention Fees: Charges that apply when a driver has to wait for an extended period at a pickup or delivery location beyond a pre-allotted "free time," which is usually one to two hours

  • Demurrage Fees: Penalties charged by a port or terminal for containers that remain on-site past their allowed "free time." These charges can escalate quickly and are often out of the carrier's control.

  • Tolls and Port Fees: Fixed and variable costs for using toll roads and for accessing port or terminal facilities.

  • Pre-Pull Fees: A fee charged when a carrier pulls a container from the terminal to their own yard for storage, often to avoid demurrage charges, and then delivers it at a later date.

The Difficulty with All-in Rates for Carriers 😩

An all-in rate is meant to simplify billing for shippers by rolling all of these potential fees into one predictable price. However, this model places a significant risk on the carrier.

  • Unpredictable Costs: The biggest challenge is the volatility of the industry. Port congestion, unforeseen delays at a shipper's facility, and rapidly changing fuel costs can all lead to expenses that the carrier didn't budget for.

  • Loss of Profitability: If a carrier quotes an all-in rate and then encounters unexpected delays or charges, those costs eat directly into their profit margin. What may seem like a profitable job on paper can quickly become a loss.

  • Risk Mitigation: To account for these variables, carriers often have to build a significant buffer into their all-in rates. This can make them less competitive compared to carriers who quote a base rate and itemize accessorial fees as they occur.

  • Lack of Control: Many of the most expensive accessorial fees, like demurrage or detention, are caused by factors outside of the carrier's control, such as port operating hours or a customer's slow loading process.

  • Transparency Issues: While all-in rates are meant to be simple, they can hide the true costs of a move. A carrier might not be able to justify a higher rate if the customer doesn't see the specific reasons for the extra cost.

In short, while an all-in rate is convenient for the customer, it forces the carrier to take on all the financial risk of a short-haul move. The unpredictable nature of drayage, with its many potential delays and fees, makes it incredibly difficult to accurately predict a final cost at the outset, turning a seemingly simple all-in quote into a major gamble for the carrier.


Catch the drayage conversation on Drayage Junkies, a podcast that airs live every Tuesday at 12:00 PM CST / 1:00 PM EST. The show is dedicated to all things drayage. You can listen here: https://www.logisticsloungeshow.com/drayage-junkies.html

For all your latest transportation news, return to TruckingNewsHub.com

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