Introduction
In the intricate world of logistics, drayage plays a crucial role in transporting goods over short distances, typically between ports and nearby warehouses or distribution centers. However, despite its seemingly simple scope, drayage is a highly specialized segment of the supply chain that requires careful monitoring and optimization.
To ensure cost efficiency, timely deliveries, and overall smooth operations, shippers must focus on specific performance metrics that pertain to drayage. In this blog, we will explore the five essential Key Performance Indicators (KPIs) every shipper should track to improve their drayage operations.
What are KPIs?
Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively a company is achieving its operational objectives. In drayage, KPIs provide shippers with valuable insights into performance, allowing them to measure everything from efficiency to cost-effectiveness.
By tracking the right KPIs, shippers can make informed decisions that streamline operations, reduce delays, and enhance communication between all stakeholders.
Why Drayage KPIs Matter
Drayage may be a small portion of the supply chain, but it is critical to overall logistics success. Poor drayage management can result in costly delays, missed deadlines, increased demurrage fees, and unsatisfied customers.
By closely monitoring drayage-specific KPIs, shippers can identify bottlenecks, anticipate potential disruptions, and optimize their operations for greater efficiency. Moreover, the right KPIs help shippers maintain better relationships with their carriers and improve accountability, ensuring that every step of the drayage process runs smoothly.
5 Essential Metrics That Shippers Must Track in Drayage
1. Turn Time (Terminal Dwell Time)
Turn time refers to the time a drayage truck spends at a terminal, including the time it takes to pick up or drop off a container. This KPI is crucial because delays at terminals can have a domino effect on the entire drayage operation.
Shippers should track turn times to understand how efficiently their carriers are operating at ports and whether congestion or inefficiencies at terminals are causing delays. Reducing terminal dwell time helps shippers avoid demurrage fees and keep shipments on schedule.
How to Improve:
Partner with carriers that have a strong track record of quick terminal turn times.
Work closely with port authorities to anticipate congestion issues and plan around peak times.
2. Chassis Utilization Rate
A chassis is a critical component in drayage as it is used to transport containers. Chassis shortages or mismanagement can lead to operational delays, additional fees, and higher costs for shippers.
The chassis utilization rate measures how efficiently the available chassis are being used, and how often containers are waiting for chassis availability. Shippers should aim to maximize chassis utilization to avoid delays caused by lack of equipment.
How to Improve:
Monitor chassis availability in real-time and secure dedicated chassis when possible.
Work with carriers that have access to large chassis pools to avoid delays due to shortages.
3. On-Time Delivery Rate
On-time delivery is a crucial KPI for all segments of the supply chain, but in drayage, it carries unique significance. Drayage often acts as the link between ocean freight and further inland transportation, so any delay in drayage can disrupt the entire delivery chain.
Tracking the percentage of drayage deliveries that are made on time allows shippers to evaluate carrier performance and adjust strategies to meet customer expectations.
How to Improve:
Establish clear communication channels between shippers and carriers to ensure real-time updates on delays.
Opt for carriers with a proven track record of reliability and consistent on-time performance.
4. Detention Time
Detention occurs when a truck is delayed at a facility for a longer period than agreed upon. In drayage, extended detention times can lead to increased costs for both shippers and carriers, along with significant delays in transporting goods.
Tracking detention time helps shippers identify problematic facilities or inefficient processes that lead to these delays. Reducing detention time can greatly improve overall drayage efficiency and reduce operational costs.
How to Improve:
Negotiate contracts with carriers that include incentives for minimizing detention time.
Use technology to streamline appointment scheduling at pickup and drop-off locations, reducing wait times.
5. Empty Miles (Deadhead Miles)
Empty miles, also known as deadhead miles, refer to the distance a drayage truck travels without a load, which is a significant cost driver in drayage operations. These empty trips are inefficient and costly, as they result in fuel consumption, wear and tear, and lost revenue for carriers.
Shippers should track and minimize empty miles by optimizing route planning and ensuring that trucks are moving with cargo as much as possible.
How to Improve:
Work with carriers that use advanced route optimization tools to minimize empty miles.
Build relationships with multiple carriers to increase the likelihood of backhauls and reduce deadhead trips.
Tracking the right KPIs is essential for optimizing your drayage operations, reducing costs, and ensuring timely deliveries.
By focusing on metrics like terminal turn time, chassis utilization, on-time delivery rate, detention time, and empty miles, shippers can streamline their drayage process and achieve greater operational efficiency.
At DrayHub, we provide the tools and insights you need to track these KPIs and optimize your drayage operations. Contact us today to learn how we can help you improve your performance and stay ahead in the drayage industry.
