Of all the many links that make up a global supply chain, drayage is among the most challenging to perform efficiently and profitably.

Drivers who haul containers and trailers over relatively short distances, usually between ports, rail transfer yards and distribution centers, subsist on razor-thin profit margins. They’re at the mercy of economic ups and downs, soaring gas prices, labor unrest at the docks, the need to constantly upgrade equipment, and prehistoric check-in systems that might have them waiting for hours at terminal gates.

Add to that a hyper-competitive landscape that’s driving down rates and causing tensions between drayage companies and shippers, and you have a business that barely gets by on its best day. Currently, the market is still struggling with overcapacity that resulted from a huge influx of trucks and drivers toward the end of the COVID-19 pandemic. Even with rates remaining low, “a lot of that supply hasn’t left the market,” notes Michael Mecca, founder and chief executive officer of PortPro, a vendor of transportation management system (TMS) software for drayage providers and freight brokerages.

In this post “gold-rush” period, small owner-operators continue to vie with larger and better capitalized drayage companies for a limited amount of business, Mecca says. And while rates have recovered “a touch” over the past nine months, “it’s nothing material. Margins for drayage operators are as thin as they’re ever been.”

One of the biggest pressures on drivers of all types in recent years is a slew of new regulations aimed at curbing greenhouse gas emissions. California in particular has seen a wave of rules mandating that drivers either equip their existing units with expensive anti-pollution systems, or purchase entirely new rigs that meet current environmental standards. They’ve had some help in the past from state programs offering low-cost loans, but one in particular, the California Air Resources Board’s Truck Loan Assistance Program, has since been terminated. As a result, the necessary investment in “green” vehicles “is cost-prohibitive to a lot of companies,” Mecca says.

Margins are already tight for drayage providers. And while some enlightened shippers might be willing to pay a premium for trucking services that employ emissions-curbing technology, that’s not always the case. What’s more, when legislation ends up mandating the adoption of such vehicles, compliance becomes the norm is instead of a competitive advantage.

When it comes to communications technology, Drayage providers are further hampered by a lack of connectivity among the many partners involved in a move. Dispatching is especially lagging in efficiency, Mecca says, although recent advances in artificial intelligence could go a long way toward streamlining that process. The benefits are many: lower fuel expense, fewer empty miles, improved optimization of equipment and better use of driver time. “Dispatch automation is a huge deal,” Mecca says.

For their part, terminals at ports and transfer yards need to upgrade systems for handling appointments, expedite the movement of vehicles in and out of their facilities, and place containers in the right spots. Terminal operations get backed up, Mecca says, when workers must search for a box that’s buried deep in the stacks.

Certain elements remain out of the drayage driver’s control. Chief among them is the possibility of strikes or slowdowns by dockside labor. When a port operation shuts down, drivers are among the first to feel the pain. Shippers might respond by diverting their cargoes to other port areas, depriving local drivers of a significant of business in the longer term.

Despite all these negatives, Mecca declares himself positive about the drayage industry’s prospects in 2025. “Things have been trending in the last 18 months in the right direction,” he says. “Hopefully, the economy continues to [do so] as we get out of inflationary times.”

Mecca believes freight volumes will soon catch up to the supply that’s in the market. Meanwhile, “there are opportunities today to embrace ways of having more efficient operations. Drayage providers should not be worrying about things they can’t control. They should be figuring out ways of operating more efficiently, so that they can be more aggressive in the space. That’s what ultimately will separate the best companies from the ‘OK’ companies.”