International Maritime

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Falling rates, increased costs threaten US drayage operators

By Bill Mongelluzzo platforms that allow freight interests to book freight directly with their competitors, Schrap said.

RoadOne, based in the Northeast, sees the technology marketplace as the latest threat because it allows brokers to increase market share without investing in trucks, facilities or equipment.

“ Technology platforms position themselves as tech providers, but they’ re really just brokers,” he said.“ They’ re taking market share as fast as they can. This is not sustainable [ for traditional drayage providers ].”

But Michael Kroul, CEO of the truck broker KTI, said technology platforms are useful in that they help brokers see where the pricing market is in each region and where the freight opportunities are. He emphasized, though, that most brokers do not use the platforms as a tool to force rates lower at the expense of traditional drayage operators.

“ It’ s not brokers who are causing rates to go down,” he said.“ We’ re not the lowest rate out there.”

Drayage providers across the US say their survival is under increasing threat amid rising cost pressures driven by new competition, including technology-enabled platforms. To stay in business, operators are more often turning to mergers or acquisitions to bolster their companies in a bid to hold off competitors, market players have told the Journal of Commerce.

Drayage truckers say their costs have been rising since COVID-19, while at the same time their pricing power is under downward pressure.

“ We are in a situation where new entrants, brokers and AI are in competition with us,” said Matt Schrap, CEO of the West Coast-based Harbor Trucking Association( HTA).“ The lowest price wins. This race to the bottom has to end.”

Ken Kellaway, cofounder, chairman and president of RoadOne IntermodaLogistics, which has drayage operations across the country, said a price difference of as little as $ 50 among competitors will win the business.

“ The cost pressures are the largest I have seen in my career,” Kellaway said.

When Oakland-based drayage provider GSC Enterprises announced it was shutting down its operations, traditional operators wondered aloud who might be next.“ It’ s surprising that others haven’ t fallen yet,” said

Robert Loya, chief operating officer at TGS Logistics.

Traditional drayage companies in Los Angeles and Long Beach, many of whom have been operating for decades in the largest US port complex, are seeing market share erode as their contract-based customers seek lower prices from brokers, some of whom use tech-enabled

Operating costs are rising faster in California than other parts of the country due to clean-fuel rules. Chizhevskaya Ekaterina / Shutterstock. com

‘ Tragic’ imbalance

Kroul said the pricing pressure is due to the excess capacity that came into the drayage market during the post- COVID-19 boom when cargo volumes surged.

“ Everyone came into the market with COVID, and many of them did not leave,” he said.

Because drayage capacity exceeds demand, prices continue to trend lower while operating costs over the past three years have risen.

“ We see what costs operators are operating at, and it’ s a tragedy,” Kroul said.

Operating costs in California are rising faster than in many other regions due to environmental rules that require the use of cleaner fuels, with the ultimate goal being to completely phase out the sale of new diesel trucks in favor of zero-emission heavy-duty trucks by 2035. Drayage operators are also affected by“ indirect source rules” under which drayage operators serving the ports and warehouses must contribute to overall reductions in emissions at those locations.

“ California’ s drayage truckers continue to be subject to the most stringent environmental rules of any state in the country,” the California Trucking Association said in a statement.“ A prolonged, challenging rate downturn combined with a crushing, unpredictable regulatory environment is endangering our members’ ability to keep cargo flowing at some of the nation’ s largest and most important port complexes.”

Both in California and nationally, smaller drayage companies are being bought out by operators with“ larger bankrolls,” TGS Logistics’ Loya said.

“ The bigger ones are going to get bigger and the smaller ones are going to go away,” he said.“ Those companies with fewer than 50 trucks are struggling.”

Kellaway said the root problem— brutal price competition— isn’ t going to fix itself, and as a result, more bankruptcies could be on the horizon.

“ If bankruptcies accelerate, then maybe customers will start to take note,” he said.

email: bill. mongelluzzo @ spglobal. com

16 Journal of Commerce | August 4, 2025 www. joc. com