Most trucking companies and owner-operators utilize drop yards to remain competitive in today’s highly demanding freight transportation landscape. These strategically-positioned facilities in different cities and states are used mainly for trailer storage by truckers offering drop-trailer services or operating in one or more locations away from their home base.
Drop yards offer lucrative benefits to trucking companies and their truckers by enabling them to pick up and drop off multiple trailers successively. These benefits include load-time flexibility, reduced bobtailing, improved operational efficiency, lower cost per mile, and more.
In this article, we’ll explore drop yards in detail and discuss their benefits and drawbacks. We’ll also briefly explain how trucking companies can incorporate drop yards to increase their competitiveness and save costs.
What Are Drop Yards?
A drop yard is a facility that mostly holds semi-trailers for short or long-term storage. Essentially, they are intermediary trailer yards typically owned by real estate companies or large freight companies operating in the area.
However, many individuals with sufficient capital can also procure and manage drop yards for passive or active income generation (as they lease them out to trucking companies).
In most cases, drop yard owners are responsible for providing basic services, such as access management and security. However, truckers may be required to share the responsibility, depending on their agreement with the owner and other factors, like location and cost.
Drop Yards Versus Truck Terminals
It is common that the term drop yard is used interchangeably with truck terminals since they’re both used for storage. However, the key difference between the two facilities is that drop yards are mainly used for trailer storage whereby truck terminals are used for semis on a short-term basis.
As a result, drop yards are typically cheaper, especially considering they don’t generally offer additional facilities for truckers other than storage and basic security. In contrast, truck terminals, as the name suggests, are primarily used for trucks and occasionally trailers.
These facilities are generally larger and more expensive than drop yards. They have dedicated offices for operation management, and some offer additional services, such as repair workshops, truck & trailer wash, and even diners, restaurants, and other eateries.
However, the biggest difference from a logistics viewpoint is that truck terminals mostly offer short-term parking. Therefore, drivers can’t drop trailers or park their trucks for prolonged periods.
How Are Drop Yards Utilized?
Drop yards have a simple and effective operating model. Truckers can rent a space in the yard for a specified period. However, many larger trucking companies own or have a long-term lease contract for dedicated drop yards, meaning their drivers don’t have to pay to use the space.
Trailers are hauled to the yard via semis and uncoupled for storage. Many truckers haul doubles or triples in a single trip so they can pick them up for multiple deliveries without bobtailing large distances to their home base.
As a result, they can reduce their cost per mile (fuel, idling, tolls, and other expenses) and reduce the risk of accidents while bobtailing. Many truckers and trucking companies that don’t have facilities in certain cities or states but have several loads in that area use drop yards.
This is because they are an essential part of drop trailer programs where truckers leave a trailer at a client’s facility until another truck picks it up. Once the drop-off is complete, drivers can hook another trailer from a drop yard and pick up cargo from other clients.
Cost of Drop Yard Usage
Drop yards are typically rented out on a daily or monthly basis. Some charge per trailer while the majority charge by allocated space to reduce the administrative workload of monitoring trailers going in and out.
Many drop yard owners also offer leasing programs to allow trucking companies to charge other truckers for using their space. However, the cost of using these facilities varies based on multiple factors, including:
- Security levels
- Space required
- Duration of rental
- Location of yard
- Additional services
In summary, drop yards can cost anywhere from a few hundred to a few thousand dollars, depending on the facilities and trucker requirements. In some areas, you can expect to pay $150 – $200 for a single trailer space.
However, it’s important to note that increasing space requirements could lower storage costs per trailer, due to economies of scale.
Benefits of Using Drop Yards
Drop yards offer a variety of benefits for trucking companies and owner-operators looking to store trailers, including, but not limited to the following.
Higher Productivity & Efficiency
Most truckers select drop yards on their most frequently used routes or locations with a large pool of existing and potential clients. These facilities allow them to drop off and pick up multiple trailers before making a backhaul trip, increasing their overall productivity.
Drop yards also increase operational efficiency by eliminating the need to travel long distances to pick up trailers after a drop-off. They reduce the risk of downtime caused by mechanical failure, traffic, bobtailing accidents, and more.
Better Trailer Utilization
By using drop yards, drivers can reduce trailer mileage significantly, which increases the overall profit per mile traveled. As this would contribute to reduced wear and tear, trailers would also achieve their return on investments at a quicker rate allowing trucking companies to reinvest their capital to increase their capacity.
Requires Fewer Drivers
Due to increased trailer utilization, trucking companies would inherently minimize the need to procure multiple semi trucks and hire more drivers. In other words, they can reduce their operational expenses significantly.
Since trips nearby drop yards are typically shorter, companies can avoid slip seating while meeting delivery volume targets and complying with HOS regulations. Consequently, shorter travel distances to pick up trailers would improve driver satisfaction levels.
Alternatively, trucking companies may also enter into subhauler agreements with owner-operators and smaller companies located nearby a dedicated drop yard to service clients within the vicinity.
For instance, they can hire truckers to haul cargo for a client instead of assigning their own drivers to make long-haul trips.
Reduces Equipment & Maintenance Costs
Tire repairs and replacements are among the highest trailer maintenance costs truckers have to bear. Since drop yards are located in various locations, truckers can choose from several pick-up and drop-off locations.
As a result, trailers don’t have to get hauled to and from home bases, ultimately reducing wear and tear on trucks and trailers. Therefore, truckers can benefit from reduced equipment and maintenance costs.
Drawbacks of Using Drop Yards
As you can see, drop yards offer several lucrative benefits for truckers. However, they’re not without a few drawbacks, which we will delve into below.
Leveraging drop yards requires strategic pre-planning for effectiveness and efficiency. In other words, trucks must follow a precise schedule and arrive within the drop yard operating hours to drop off or pick up trailers.
Therefore, depending on their location and road conditions, trucking companies are vulnerable to delays and disruptions affecting their productivity and profitability.
As seen above, drop yards can reduce the cost of fuel, maintenance, and other aspects of freight operations. However, it can increase costs in other areas. For instance, to drop off and pick up trailers, you need to invest in multiple trailers, which are expensive.
Companies with trailers also have to spend more on equipment upkeep. Other additional costs may include additional drop yard space, security, regulatory cost, insurance, and more.
Using drop yards may increase liabilities for theft of cargo, trailer equipment, and other resources. Less secure drop yards may be hotspots for vandalism and other illegal activities.
Therefore, securing these facilities can be an expensive and daunting task requiring a comprehensive security system (for example proper lighting, security cameras, fencing, ground personnel, and more).
Moreover, in a near-capacity drop yard, truckers and drop yard owners face higher damage risk during drop-offs and pick-ups which may be due to human errors and equipment failure, resulting in additional expenses for either or both parties.
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Co-Founder & Writer
About the Author
Andrew is a multi-business owner with over 12 years of experience in the fields of logistics, trucking, manufacturing, operations, training, and education.
Being the co-founder of freightcourse has given him the ability to pursue his desire to educate others on manufacturing and supply chain topics.