The Capacity Story Behind Record Rate Hikes
DAT Freight & Analytics reported this week that trucking contract rates for dry van and refrigerated freight posted their largest June-to-July increases on record. What makes this notable isn't the rate climb itself — it's that volumes declined across all three equipment types.
This is a capacity story, not demand. After nearly three years of freight recession, thousands of carriers exited the market. Fleets retired tractors and trailers. The slack capacity that let importers negotiate soft rates in 2023 is gone. Now, with fewer available trucks and steady-to-soft demand, rates climb anyway.
For an ops lead managing inbound into Port of Montreal, that distinction matters enormously. If rates were climbing because demand surged, you could plan for it and flex your dock accordingly. But capacity shortage hits different. Fewer trucks means carriers become selective about which loads they take, which forces you to fight for drayage slots, which means your dock windows start to slip.
Drayage Cost Pressure Hits First
Port-to-warehouse drayage is the shortest haul and the first place capacity pressure shows up. We typically see contract rates in the CAD 2,200 to CAD 2,600 range per 40HC from Port of Montreal to a Montreal-area warehouse, depending on destination (Lachine vs Dorval makes a 5–10% difference). That pricing was negotiated when capacity was loose and carriers were hungry for volume.
Contract rate increases of the size DAT is reporting usually translate to 8–12% upward pressure on spot rates within 4–6 weeks. If you negotiated drayage rates 6 months ago and they renew in Q3 or Q4, expect to pay more.
Reefer drayage is worse. Refrigerated units are scarce — carriers reserve them for high-margin long-haul runs (cross-border US-Canada, Quebec to Vancouver) rather than short Montreal drayage. That scarcity drives a premium we typically see at 25–40% above dry-van rates for equivalent mileage. When capacity shrinks overall, that reefer premium widens because carriers actively deprioritize cold-chain drayage in favor of work that justifies keeping a reefer on the road for days, not hours.
Dock-to-Stock SLAs Under Pressure
Assume your inbound container is released by CBSA within 24 hours of arrival and you run a 48-hour dock-to-stock SLA from Port of Montreal. With loose capacity, drayage happens same day or next morning. With tight capacity, carriers start cherry-picking loads. If a run is too small, too tight, or doesn't fill a truck profitably, it gets bumped to the next window. Your 48-hour cycle extends to 72 hours or longer.
FENGYE LOGISTICS' dock-to-stock process relies on predictable drayage arrival. When drayage slips, your putaway cycle time extends, your dock labor gets bunched, and your outbound consolidation timeline compresses. A shift from 14:00 to 13:00 cross-dock cutoff might seem minor, but it means 5–8 fewer pallets flowing through your dock daily. That adds up to 150–250 pallets sitting overnight at your in/out rate, typically CAD 35–50 per pallet per day on a sufferance warehouse.
That's expensive and customer-facing. Importers see their cargo sitting at your dock, blame you, and pressure you to reverse the SLA. You have no flexibility because drayage is already bottlenecked.
Long-Term Capacity Reality
Port of Montreal handled 2.4 million TEU in 2023, the latest published full-year figure. That volume depends entirely on drayage availability to move containers out of the terminal. When drayage capacity shrinks, port congestion follows. Add in CBSA exam delays — we routinely see exam-flagged containers hit 5–7 days dwell instead of the typical 1–2 days — and your forecasting window collapses.
Carriers won't add capacity until rates sustain 15% above operating break-even for 12 months straight. Current spot rate gains might get there, but contract rates are stickier and slower to move. Expect 9–12 months of capacity tightness, minimum.
Related: NRF Peak Ended in May: Your September Dock Doesn't Need Q...
Related: Spot rates climb, drayage windows tighten at Montreal
Related: TCI hits 11.6 — what a four-year trucking peak means for ...
What to Do Right Now
Start with your drayage contracts. Most importers and 3PLs renew annually or semi-annually. If yours come up for renewal before October, lock rates before September. September is when carriers start pricing Q4 season; early birds get better terms.
Audit your dock-door utilization next. With tighter drayage and higher rates, every move has to count. Re-examine your inbound release windows and your cross-dock cutoff times. Can you consolidate morning receipts and do a single afternoon cross-dock? Can you flex your receiving window by 2 hours to capture drayage that would otherwise sit overnight.
Talk to your brokers early. CBSA brokers and drayage brokers both see carrier feedback before the rest of the market. If they're quoting 15–20% Q4 premiums on inbound, that's not noise. That's forward-looking pricing.
Finally, model the Q4 scenario with your operations team. Assume drayage rates climb 12%, reefer 20%, and dock windows tighten by 1–2 hours. Does your picking speed or outbound consolidation model break. Do you need extra dock labor to handle overlapping inbound/outbound windows. Can you negotiate LCL consolidation or milk-run scheduling with importers to reduce per-unit drayage cost.
Drayage is going to be tight this quarter. If you want to talk through your Port of Montreal inbound strategy and where your dock-to-stock costs are heading, we run this math daily on our dock at FENGYE LOGISTICS.
Originally published at https://www.fywarehouse.com/news/trucking-rates-surge-on-capacity-shortage-lock-drayage-now-c73dfddb.
Top comments (0)