Steps to Becoming a Drayage Carrier
1. Assess the Market
Understanding your target market is essential when starting a drayage company. Talk to other operators in the field to get a sense of the competitive landscape and identify potential opportunities.
Reach out to logistics professionals, such as freight brokers, customs brokers, freight forwarding companies, and 3PL warehouse managers, to gain insight into their experiences with drayage providers. Their feedback can reveal gaps in the market that you might fill.
Learn as much as possible about the ports you plan to serve, competitor rates, and set a radius in which you’ll operate. For example, you may decide to focus on two port locations with a 150-mile delivery radius.
2. Determine Driver Compensation
After researching market rates for drayage services in your area, develop a compensation plan that balances competitiveness with profitability. Understanding this will help you budget for drivers and equipment, positioning you effectively in the market. Determine whether you want to start with a flat rate per day, rate per load, percentage of the load, etc.
Regardless of which model, be detailed in setting rates for your company drivers, estimating their daily loads, and structuring owner-operator compensation to attract and retain quality drivers.
3. Develop Scalability Goals
As the saying goes, “A goal without a deadline is just a fantasy.” Your business plan should outline your scaling goals. For example, you might target a mix of 20% company drivers and 80% owner-operators. Define specific yearly goals, like reaching 8 owner-operators and full-time company drivers within two years, with a revenue target of $2 million.
4. Secure Registration Agreements
In addition to standard trucking licenses like motor carrier authority and IFTA, drayage providers often sign the Uniform Intermodal Interchange & Facilities Access Agreement (UIIA). This agreement allows access to intermodal equipment at ports and rail yards, streamlines liability for equipment damages, and sets insurance requirements. The UIIA can help speed up time in getting set up with multiple equipment providers.
5. Acquire Vehicles and Equipment
Assess your initial budget to decide whether you plan to buy or rent equipment to get started. For example, you may decide to purchase chassis if they’ll be used regularly, but rent refrigerated trailers (reefers) as needed if that cargo type is less frequent. Find a professional that specializes in selling chassis equipment such as Chassis Hound.
6. Implement Technology Solutions
TMS & Quoting System: Choose a Transportation Management System (TMS) that helps with load tracking, quoting, and dispatching. In our operation, we use DrayMaster to assist with quoting.
Driver Qualification (DQ) Files and MVR Checks: Set up systems for driver applications, DQ file management, and Motor Vehicle Report (MVR) checks to ensure compliance with safety standards. Multiple platforms work well for this such as Ten Street or Foley.
7. Develop a Sales & Marketing Strategy
Success in any business, including drayage, depends on a solid marketing and sales plan that can adapt to your market. Utilize a combination of digital and traditional marketing tactics:
- Digital Marketing: Test Google Ads, optimize your website for SEO Traffic, and consider setting up email campaigns for shippers.
- Cold Calling: Reach out to potential customers to build relationships directly.
- In-Person Networking: Attend industry events to connect with logistics professionals and potential clients.
8. Hire and Retain Drivers
- Develop a thorough onboarding and vetting process, ensuring each driver meets safety and compliance standards.
Safety Program: Implement a safety program to train drivers and reduce risks.
Retention and Incentive Program: Set up bonus structures and incentives to retain drivers, such as safety bonuses or performance incentives.
9. Track Performance and Make Adjustments
Continuously monitor key performance indicators (KPIs) and adjust as necessary. For example, offer pay incentives, update technology like GPS tracking systems, and focus on areas that improve fleet performance over time.
Conclusion
By following these steps and making strategic adjustments as you go, you’ll position your drayage company for long-term success in a competitive market.
FAQS
How do I get into drayage as a broker?
To get into drayage as a broker, focus on building out your network of shippers and drayage providers in the geographic areas you would like to focus on. Familiarize yourself with the drayage process and study local operating procedures. Invest in the technology needed to streamline your brokerage services.
What is demurrage in drayage?
Charges are incurred when a shipping container is still at the port or rail terminal past the allotted free time allowed by the terminal operator.
