MISPERCEPTION #4: Drayage Carriers Don't Overbook
We all know airlines overbook.
They assume a certain percent of “no shows” and sell extra seats to ensure the fullest, most profitable plane. When the “no shows” actually show, the airline offers incentives to free up some of that oversold capacity.
Well, guess what? The same thing happens with intermodal freight – only without the reparations when things go wrong. The freight brokers and IMCs are the passengers unable to get capacity due to the overbooking by the drayage carriers, the airline.
The downside of overbooking for freight brokers
Drayage carriers are hard-wired to say “yes” to load requests, even if freight demand far outstrips capacity. They accept the load first, and then figure out a way to get it covered from their base of owner operators. If they can’t get it covered, they’ll call the broker with an excuse (e.g. driver is sick, truck broke down), leaving the broker in a bind.
The dominant model for drayage services is the non-asset-based carrier who contracts with independent owner operators. Drivers and dispatchers may decide to pick up another, more attractive haul during this time slot and push the scheduled load back. When this happens, brokers may learn about it first from shipping customers when they call wondering why the container has not yet arrived.
No broker likes to be blindsided in this way. As for shippers, they are left wondering just how much faith they should place in the current drayage system.
Drayage carrier overbooking is not outwardly discussed in the intermodal industry. It’s begrudgingly accepted as being part of “the business we’re in.” But if you’re a freight broker or IMC, there are bottom-line downsides to overbooking that should open your eyes to other tech-enabled options for sourcing intermodal freight capacity. Those downsides include:
Damaged relationship with shipper. If fall-offs happen and the broker cannot get the order covered, the shipper will look for a more reliable capacity source.
Productivity drag. When notified of a driver fall-off or a potential late pick-up or delivery, brokers may choose to find another carrier to save face with the shipper. Freight broker productivity really suffers when you’re double-handling loads and having to communicate the same trip information to another driver.
Lower profit. If front line brokers are investing time to cover overbooked/dropped loads, they are handling fewer loads per day. The more people needed to coordinate your freight bookings, the greater your overhead and the lower the profit.
How the DrayNow marketplace solves the overbooking dilemma
There is a solution to the downside of overbooking and that is sourcing drayage capacity from a freight marketplace like DrayNow, which efficiently connects intermodal freight demand with capacity. It’s a completely transparent platform where brokers/IMCs can post a load one time and have it viewed by hundreds of vetted intermodal drivers in the specific market where service is needed. Characteristics of the platform:
Drayage rates are market-driven and fair, so drivers are less likely to fall off for a route that better fits their operation.
Driver quality is highly important. Drivers are removed from the platform who do not meet DrayNow’s high standards.
If a fall-off should occur, for whatever reason, the load is reposted and typically accepted in around 8 minutes. The DrayNow carrier base includes 3,100 drivers who are highly active and engaged on the platform.
Capacity won’t always be plentiful
Right now, finding capacity is less of a challenge than it was in the past. Admittedly, carrier overbooking is more of a problem in a tight capacity market. But, as we’ve seen, the supply-demand cycle in freight can turn on a dime. It’s wise to seek a modern, technology-aided solution to sourcing dray capacity that addresses the continuing practice of overbooking by drayage carriers.
An added benefit to DrayNow’s marketplace is the availability of real-time data on container location. The DrayNow app sends signals to the platform from the driver’s phone on the truck’s exact location. That location is immediately available to brokers, along with a precise ETA estimate that can be relayed to shippers.
This level of data transparency has been sorely absent in the intermodal sector, but will soon become widely prevalent for brokers/IMCs managing intermodal freight.
This is the 4th entry in a series addressing common misperceptions about intermodal freight. Read our other entries: Misperception #1: When Carriers Say “Yes,” the Load is Covered, Misperception #2: The DrayNow Marketplace Can’t Work for Consistent Freight and Misperception #3: Your status updates from intermodal freight carriers are real time.