diff --git a/d2layouts/d2dagrelayout/layout.go b/d2layouts/d2dagrelayout/layout.go
index 97734237d..6a89729d3 100644
--- a/d2layouts/d2dagrelayout/layout.go
+++ b/d2layouts/d2dagrelayout/layout.go
@@ -495,33 +495,35 @@ func Layout(ctx context.Context, g *d2graph.Graph, opts *ConfigurableOpts) (err
 		// trace the edge to the specific shape's border
 		points[startIndex] = shape.TraceToShapeBorder(srcShape, start, points[startIndex+1])
 
-		// if an edge to a container runs into its label, stop the edge at the label instead
-		overlapsContainerLabel := false
-		if edge.Dst.IsContainer() && edge.Dst.Label.Value != "" && !dstShape.Is(shape.TEXT_TYPE) {
+		// if an edge runs into an outside label, stop the edge at the label instead
+		overlapsOutsideLabel := false
+		if edge.Dst.Label.Value != "" && !dstShape.Is(shape.TEXT_TYPE) {
 			// assumes LabelPosition, LabelWidth, LabelHeight are all set if there is a label
-			labelWidth := float64(edge.Dst.LabelDimensions.Width)
-			labelHeight := float64(edge.Dst.LabelDimensions.Height)
-			labelTL := label.Position(*edge.Dst.LabelPosition).
-				GetPointOnBox(edge.Dst.Box, label.PADDING, labelWidth, labelHeight)
+			labelPosition := label.Position(*edge.Dst.LabelPosition)
+			if labelPosition.IsOutside() {
+				labelWidth := float64(edge.Dst.LabelDimensions.Width)
+				labelHeight := float64(edge.Dst.LabelDimensions.Height)
+				labelTL := labelPosition.GetPointOnBox(edge.Dst.Box, label.PADDING, labelWidth, labelHeight)
 
-			endingSegment := geo.Segment{Start: points[endIndex-1], End: points[endIndex]}
-			labelBox := geo.NewBox(labelTL, labelWidth, labelHeight)
-			// add left/right padding to box
-			labelBox.TopLeft.X -= label.PADDING
-			labelBox.Width += 2 * label.PADDING
-			if intersections := labelBox.Intersections(endingSegment); len(intersections) > 0 {
-				overlapsContainerLabel = true
-				// move ending segment to label intersection point
-				points[endIndex] = intersections[0]
-				endingSegment.End = intersections[0]
-				// if the segment becomes too short, just merge it with the previous segment
-				if endIndex-1 > 0 && endingSegment.Length() < MIN_SEGMENT_LEN {
-					points[endIndex-1] = points[endIndex]
-					endIndex--
+				endingSegment := geo.Segment{Start: points[endIndex-1], End: points[endIndex]}
+				labelBox := geo.NewBox(labelTL, labelWidth, labelHeight)
+				// add left/right padding to box
+				labelBox.TopLeft.X -= label.PADDING
+				labelBox.Width += 2 * label.PADDING
+				if intersections := labelBox.Intersections(endingSegment); len(intersections) > 0 {
+					overlapsOutsideLabel = true
+					// move ending segment to label intersection point
+					points[endIndex] = intersections[0]
+					endingSegment.End = intersections[0]
+					// if the segment becomes too short, just merge it with the previous segment
+					if endIndex-1 > 0 && endingSegment.Length() < MIN_SEGMENT_LEN {
+						points[endIndex-1] = points[endIndex]
+						endIndex--
+					}
 				}
 			}
 		}
-		if !overlapsContainerLabel {
+		if !overlapsOutsideLabel {
 			points[endIndex] = shape.TraceToShapeBorder(dstShape, end, points[endIndex-1])
 		}
 		points = points[startIndex : endIndex+1]