Worried about how container drayage costs will impact your supply chain next year?  You’re not alone.

Here are seven reasons the chassis and driver shortage will impact your operations in 2014:

  1. Most major ocean carriers have either largely pulled out of the chassis business or intend to do so in 2014.
  2. Multi-carrier steamship pools are rapidly becoming a thing of the past, and chassis availability for carriers who still supply chassis is much less consistent than in recent history.
  3. Chassis leasing companies and drayage firms do not have a uniform tariff for chassis rental, and the logistics coordination between these industries is not yet well developed.   Also, the technology needed for greater chassis control is not yet sufficient in these industries.
  4. Because most chassis rental firms and drayage firms are charging a daily rate for chassis (rather than the steamship industry’s lump charge or rolled-into-ocean-freight charge), the costs of cargo examinations and most other supply chain disruptions/delays will only increase.
  5. The drayage industry is already facing a labor crisis with current driver shortages only getting worse over the last few years.   If they increase wages to attract labor, prices will have to follow.
  6. With Map 21 and other legislative/regulatory initiatives, the driver shortage will certainly be exacerbated by tougher rules for hours of service (among other labor restrictions).
  7. The problems at Maher Terminals in Port NY showed that East Coast ports cannot handle surges of cargo in any kind of meaningful way.  A problem for one port rapidly becomes a problem for all.   As carriers encouraged customers to avoid NY, we saw major problems in Boston, Baltimore, and Norfolk as well as New York.

While these bullets only represent a modest portion of the overall story, they hint at the growing uncertainty facing importers and exporters who must estimate their future supply chain costs as accurately as possible.  The driver shortages and new regulations will clearly lead drayage carriers to increase prices and will almost certainly affect their ability to deliver cargo efficiently and on-time.  The dislocation and confusion on the chassis side will (at minimum) cause administrative costs to rise as importers, exporters, and logistics companies grapple with the variable and uncertain costs of chassis rentals.  Furthermore, there are added costs of chassis lease, administration (labor), and borrowing (cost of money) when drayage transits rise even slightly due to chassis shortages after the death of multi-ocean-carrier pools.  Said simply, the harder it is to match a chassis to a container, the higher your overall business costs will be.  The crisis at Maher Terminals offers us a glimpse of the much larger problem of transportation infrastructure facing U.S. companies who depend on international trade for their livelihood.

In future blogs, I look forward to breaking down the drayage “conundrum” into manageable sections and to offer potential remedies for importers and exporters who are currently scratching their heads, biting their fingernails, and crossing their fingers.   We can only hope you are not doing this all at the same time!

Talk soon (and feel free to vent with us by leaving a comment below).