Freight Marketplaces Offer IMCs a New, Highly Reliable Pool of Drayage Carriers
Freight brokers sell capacity.
No trucks, no business.
So, expanding the carrier base is always a priority.
For IMCs that manage dray moves in and out of rail yards, strategies to grow capacity typically revolve around adding or growing with larger drayage carriers. That’s a mistake.
Not only is this type of capacity very limited (your competitors are chasing the same carriers), it may not be the best kind of capacity to achieve an IMC’s dual business goals of great service at a profitable rate.
The best opportunity for IMC’s to tap into incremental dray capacity is the freight marketplace – a model that is firmly entrenched across other OTR modes but, until recently, has not been an option for sourcing intermodal drayage carriers. One of the main attractions of marketplaces for IMCs is the type of carriers that participate – specifically, smaller owner-operators who have shifted from long-haul to intermodal.
Intermodal freight marketplaces like DrayNow have recruited thousands of drivers – many former long-haul truckers – for whom intermodal is now their bread and butter. These are drivers who, historically, had not been able to pull for IMCs because they didn’t have the requisite bonds and insurance. But today they run under the authority of marketplace sponsors.
“Typically, IMCs have not had access to the one- or two-truck carriers,” says Chris Brach, VP of Operations for freight broker Radiant Clipper. “Companies like DrayNow are moving drivers from long-haul and bringing new, highly reliable capacity to the intermodal dray market.”
Brokers who use intermodal freight marketplaces gain three primary advantages: improved service, reduced risk and better pricing.
Improve service quality
Go into any small retail establishment. Who’s more focused on customer service, the owner or a worker? Same with hauling freight. Owner/operators are entrepreneurs who take pride in their work and whose livelihood depends on satisfying customers. It’s a different mindset from a company driver being told what to do, where to go, and when.
With freight marketplaces, these owner-operators look at a set of available jobs and choose the lane, time and run radius that makes sense for their lifestyle and bottom line. So, they are invested in a way that company drivers are not.
Another bonus for the IMC is that these smaller owner-operators want to get paid quickly, so they make sure paperwork is correct and processed quickly. This allows brokers to speed their own billing process, improving cash flow. To enable this, certain intermodal marketplaces post electronic versions of BOLs, PODs and other paperwork on an easily accessible portal. Drivers use a mobile phone app to photograph documents, which are immediately uploaded to the portal.
Many brokers rely on the same core group of drayage carriers. As the business grows, this can become quite risky, as when a key carrier partner needs to divert assets to a special project for another shipper. You don’t want all your eggs in just a few baskets.
An intermodal freight marketplace lets brokers spread capacity needs across hundreds of carriers actively looking for freight in a particular market.
Secure better pricing
The traditional fixed-price approach that IMCs use to set contracted drayage rates is flawed. For example, let’s take a contracted lane involving 3,000 moves a year. An IMC will typically try to cover the lane using one carrier at a set price that is locked in for the year. The idea of fixed rates is foreign to marketplaces – and for good reason. Capacity fluctuates during the year, so brokers should be able to capitalize when this price flexibility favors them and their customers.
Another pricing benefit of intermodal freight marketplaces is their ability to create perfect supply/demand matches, resulting in a better rate. If a driver is now making regular pickups in Chicago from his base in Northern Indiana, then he would naturally value a delivery into Chicago from his home region – and he would handle that container delivery for less. Fixed pricing ignores the benefits of this type of market efficiency.
Intermodal freight marketplaces also create network efficiency by increasing opportunities for street turns. DrayNow, for instance, has visibility to the load activity of hundreds of IMCs on a particular lane. That makes it easier to identify opportunities to use the same just-delivered box for a subsequent outbound container move, or vice-versa.
IMCs don’t need more drayage carriers, they need the right carriers
By leveraging the power of freight marketplaces in the intermodal space, IMCs tap into a rich source of capacity that they’ve simply not had access to before. By building relationships with owner-operators through marketplaces, IMCs can find carriers faster, monitor shipment status in real time, increase productivity, and capitalize on market-driven pricing.