Drayage is a fragmented industry composed of thousands of small carriers, with a limited number of larger players. That could change as barriers to entry for owner-operators rise and the number of qualified truck drivers drops.
There have been a few sizable mergers and acquisitions in recent years — Maersk’s 2013 sale of Bridge Terminal Transport, with more than 1,300 owner-operators, to a private equity group, and RoadRunner Intermodal’s purchase last year of Adrian Carriers in the Midwest and Wando Trucking at Savannah, Ga., and Charleston, S.C., come to mind. Some over-the-road trucking companies are buying drayage companies to expand their services and move deeper into customer supply chains. A number of small drayage operators have disappeared through mergers, acquisitions, bankruptcies or simply by closing their doors.
Two issues in particular could encourage more consolidation: the rising costs of new Class 8 tractors because of emissions standards, and difficulty finding not just truck drivers but also safe, qualified drivers under tightening federal safety rules.
Shippers increasingly demand trucking companies of all types have good safety scores under the federal Compliance, Safety, Accountability program. Although CSA doesn’t rate drivers, their safety records can affect the CSA scores of companies that hire them, and those records travel with them.
Carl Frederick, co-owner of Container Transport Services in Kearny, N.J., estimated that 80 percent of applicants for his company’s driver jobs don’t meet his qualifications under CSA. “We turn them away, and two weeks later we see they’re driving for someone else,” he said.
The Federal Motor Carrier Safety Administration’s new requirements for electronic logging devices — likely to be required in all commercial trucks in 2016 or 2017 — will further tighten the reins on unsafe drivers, making it harder to cheat on hours of service rules.
The result will be a smaller pool of available drivers, and those qualified drivers will be in higher demand and demand higher compensation. Industry officials worry about a driver shortage, but it’s unclear whether one will materialize in drayage. In the past, many drayage drivers who have quit in frustration over delays at port terminals have climbed back into the truck cab when congestion eased. “I think some return to normal weather patterns will help a great deal,” said Charles W. Clowdis Jr., managing director for global trade and transportation at IHS Economics. “Psychologically, the weather takes a toll on these guys, who have a tough job anyway.”
Trucking overall eventually will face a driver shortage as the current workforce ages, CSA culls substandard drivers, and the economy recovers, he said. The American Trucking Associations estimates a shortfall of about 30,000 drivers exists today. Demand for drayage drivers would get a boost from continuing growth in intermodal rail shipments that require a truck move at either end, Clowdis said, but drayage operators may face stiff competition for drivers from higher-paying over-the-road carriers and companies in the energy sector.