Forward Air Expands Drayage Reach to Reduce Dwelling Costs
The Expedited Freight segment of Forward Air recorded a 24% increase compared to the previous year, with consolidated revenues of $319 million in the second quarter. This growth is not solely attributable to demand from end customers, but also to the strengthening of the intermodal network at strategic locations such as Kent, Washington, and Linden, New Jersey. The expansion is based on the integration of local operators, including Edgmon Trucking, acquired in 2022 for an estimated value of approximately $22 million annually in revenue.
The local drayage capacity allows a reduction in the average dwelling time — that is, the period during which a container remains at the port without being unloaded or moved — from 4.7 to 3.1 days. This compression of time has a direct impact on operating costs: each day less in demurrage equates to a reduction of $850/TEU for the end customer. The intermodal network is now structured in three tiers: port, drop yard, and internal logistics facility, with flows managed by a proprietary system that monitors the real-time location of the container.
Integrated Capacity as a Lever for Controlling Operating Costs
Expanding drayage capacity is not simply about acquiring infrastructure, but a strategic step towards direct management of the operational cycle. In Seattle and Tacoma, Forward Air has been operating for two years with a 5-acre facility in Kent, serving both the main port and the secondary hub of Seattle. In New Jersey, the new facility in Linden is designed to integrate the existing drop yard with a dedicated transloading structure within six months.
The strategy is based on a hybrid model: 70 independent trucking companies managed by Edgmon Trucking, operating under a call-to-service contract. This allows for operational flexibility without increasing the fixed costs of the company’s own fleet. The average cost per intermodal shipment has decreased from $1,850/TEU in 2023 to $1,670/TEU in 2026, thanks to reduced downtime and improved routing between train and truck.
The Operational Bottleneck: The Intermodal Network as a Protective System
The net effect of strengthening the intermodal network is the creation of a protective system against bottlenecks related to port traffic. The problem is no longer the delay in transportation, but the uncertainty in managing customs clearance times and fees applied during storage. Forward Air has reduced its dependence on third-party operators for port operations, transitioning to a model of direct control over 30 terminals.
This reconfiguration allows for proactive management of tariff variables: when the cost of demurrage exceeds $1,200/TEU, the operator can choose to divert goods to an alternative hub without compromising the level of service. The system was tested during the initial congestion at Port Newark in 2026, where it allowed a reduction of 37% in operating losses compared to the previous period.
Economic Impact: Reduction of Cycle Costs and Improvement of Working Capital
The optimization of the intermodal network has a direct impact on the P&L. The average cost per TEU has decreased from $1,850 to $1,670, with a reduction of $180/TEU compared to 2023. This effect translates into an improvement in gross margin from 28% to 30%, even though the cost per ton is stable at approximately $450.
Working capital has been reduced by 17 days in the average cycle, thanks to the acceleration of transloading and the elimination of waiting times at ports. The value of working capital tied up in containers stationed has decreased from $28 million to $23 million on a quarterly basis. This allows for greater financial flexibility for future investments.
Monitoring Operational Risk Over the Next 6 Months
The next six months will be crucial for assessing the sustainability of the model. The first indicator to monitor is the facility drayage utilization index: if it falls below 78%, it indicates an overestimation of demand and a risk of unrecovered fixed costs.
The second indicator is the variation in the average cost per TEU on intermodal routes. If it exceeds $1,750, it suggests that tariff or logistical pressures are regaining momentum. In case of an increase in demurrage costs beyond the critical limit of $1,200/TEU, the network will need to activate bypass protocols towards alternative hubs such as Savannah or Baltimore.
Photo by Alex Kalinin on Unsplash
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