Tech Platforms, Rate War Put US Drayage Providers at Risk
Drayage providers across the United States are under mounting pressure as rising operating
costs, new competition, and technology-enabled platforms squeeze profit margins, forcing many
to consider mergers or acquisitions to stay afloat.
Industry executives shared in a Journal of Commerce report that rates have been under
downward pressure since COVID-19, even as costs climb.
“We are in a situation where new entrants, brokers and AI are in competition with us. The lowest
price wins,” said Matt Schrap, CEO of the Harbor Trucking Association.
Ken Kellaway, chairman of RoadOne IntermodaLogistics, said even a $50 price difference can
determine who wins a contract. “The cost pressures are the largest I have seen in my career,”
he said.
The recent closure of Oakland-based GSC Enterprises has raised concerns about who might be
next. “It’s surprising that others haven’t fallen yet,” said Robert Loya, COO of TGS Logistics.
Traditional drayage firms in Los Angeles and Long Beach are losing market share as contract
customers turn to brokers, some using tech platforms that connect shippers directly to
competing carriers. Kellaway warned these platforms allow brokers to grow without investing in
trucks or facilities.
But broker KTI CEO Michael Kroul countered that excess capacity, much of it added during the
post-COVID cargo surge, is driving rates down, not brokers. “Everyone came into the market
with COVID, and many of them did not leave,” he said.
Smaller operators, particularly those with fewer than 50 trucks, are increasingly being bought
out by larger, well-funded companies. “The bigger ones are going to get bigger and the smaller
ones are going to go away,” Loya said.
Industry leaders warn the trend may accelerate. “If bankruptcies accelerate, then maybe
customers will start to take note,” Kellaway said.
Despite the situation felt by drayage providers across the U.S., California operators face short-
term relief as President Donald Trump eased environmental rules after revoking California’s
Advanced Clean Trucks zero-emission mandates and NOₓ emissions rules in June, effectively
prohibiting enforcement of these standards now and in the future.
