Emergency Freight: What Harvey Tells Us About Irma

Emergency Freight: What Harvey Tells Us About Irma

Less than ten days after Hurricane Harvey, trucks are already moving freight out of Houston, with almost the same volume as before the storm. That doesn’t mean nothing has changed. 

Harvey hit Houston on Friday evening, August 25, and hung over the metro area for days, dumping more than 50 inches of rain on Southeastern Texas and Southwestern Louisiana. Floods in the Gulf Coast region tragically cost the lives of at least 60 people. Economically, Harvey inflicted enormous damage on homes and businesses.

Houston is home to a number critical industries, including energy exploration, oil and gas refineries, and related manufacturing of petrochemicals and plastic resins, among others. Houston is also a major freight hub for rail and sea traffic, as well as trucking, including trade with Mexico by land and with South America and other regions by sea. The port has since re-opened, as have some portions of the railroads, but some capacity has yet to be restored. It could take months. 

Houston Rates Remain Elevated, Due to Disruption and Pent-Up Demand

Immediately after the rain subsided, trucks began hauling in emergency relief supplies for residents of the storm-affected zone. Inbound rates skyrocketed, as trucks were likely to leave empty, and so were paid the equivalent of roundtrip rates, with additional compensation for detention and layovers.

Outbound freight has picked up by now, and rates have declined in both directions after the initial, post-storm peak. But rates remain elevated in the region due to supply chain disruptions and pent-up demand. Ripple effects from Harvey, and now Irma, extend across the country, and will be felt for months to come. 

 

Flood waters cover a Houston highway during Hurricane Harvey.

 

Irma’s Impact on Truck Freight is Different from Harvey’s

Hurricane Irma’s impact on freight appears to be following the patterns that are more typical of a big weather event, while Harvey was exceptional in many ways.

Big weather events, like Super Storm Sandy in 2012 and Hurricane Katrina in 2005, usually affect freight movements in three stages: 

  1. Before the storm, if it is predicted in advance, shippers hustle to move freight out of the way of the impending onslaught. Outbound rates rise sharply in the zone that will soon be battered by wind and rain.
  2. During the storm itself, nothing moves in or out of the area. It’s just not safe. FEMA and other organizations may move emergency relief supplies to a location on the outskirts of the storm zone, so they are ready to act as soon as roads are clear.
  3. After the storm is over, those emergency supplies are brought in, and the inbound rates shoot way up. This is usually a temporary increase, because conditions are still iffy. Plus, very few loads are available so soon after the storm, so truckers will probably have to deadhead back out. They are glad to help, but they want to be compensated for their time and effort. Van and reefer freight moves in first, and flatbed demand follows when it’s time to bring in construction equipment and materials for cleanup and rebuilding.

As of now, Irma is almost finished assaulting the Southeast. It is sunny today in Tampa and Atlanta, with a light breeze. But Irma caused the deaths of at least 11 people in the U.S., and dozens more in the Caribbean. Homes and businesses were destroyed. Millions are still without power in Florida. On a more positive note, relief supplies are being delivered by FEMA and other groups, and cleanup will get underway as conditions allow. 

It will take a very long time for freight transportation and logistics to return to normal, after two such monstrous storms in the same month. After Harvey smacked into Houston, some shippers started supplying the South Central region from distribution centers in the Southeast. So Atlanta,  Charlotte, Memphis and other regional hubs were moving freight to Arkansas, Louisiana, Texas, and Oklahoma, because Houston couldn’t do it. 

Then Irma headed toward Florida, and those same Southeast hubs re-focused and moved freight south instead of west. Meanwhile, the Midwest had to supply the Northeast, to compensate for all the freight that would ordinarily arrive from Atlanta. And the Midwestern warehouses were also called on to supply Colorado, which is often served by Houston. So it’s not so surprising that rates went a little crazy last week, in between the two megastorms. The pressure intensified even more because it was a short work week following Labor Day. 

We’ll see how this plays out, and you can score the accuracy of my predictions. Keep checking the DAT blog and DAT Trendlines for updates, as well as Facebook and Twitter, and let us know how the hurricanes have affected your business.

Stay safe out there!

 

DAT employees are donating to American Red Cross to help support those affected by Hurricanes Harvey and Irma, and DAT Solutions is matching those contributions. To learn more about how you can help, visit the Red Cross website. Transportation and logistics professionals are urged to contact the American Logistics Aid Network, if you can help provide trucks, trailers, or warehouse space.

 

Real Women in Trucking partners with DAT to offer a special on the TruckersEdge load board to its members. Sign up for TruckersEdge today and get your first 30 days free by signing up at http://www.truckersedge.net/promo584 or entering “promo584” during sign up. This offer is available to new TruckersEdge subscribers only.

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Here’s How Hurricanes Irma and Harvey Have Affected Van Freight

Here’s How Hurricanes Irma and Harvey Have Affected Van Freight

By: Matt Sullivan, DAT Solutions

DAT employees are donating to American Red Cross to help support those affected by Hurricanes Harvey and Irma, and DAT Solutions is matching those contributions. To learn more about how you can help, visit the Red Cross website.

 

A lot of the spot market freight volumes that were stalled in the aftermath of Hurricane Harvey have started to come back. Last week, Houston’s van freight volumes rebounded to 88% of pre-storm levels. That’s a quick turnaround, especially in the Labor Day week that included only four business days.

Outbound volume recovered in Dallas too, so traffic is moving throughout most of the state now. All Texas rates came down from the huge spike we saw in the previous week, but they’re still quite a bit higher than they were before the storm hit. That doesn’t mean that everything is the same as before – some cargo is not moving at all, and other types of freight are moving in higher volume because of pent-up demand. 

Of course, this was all before Hurricane Irma struck Florida. Our hearts go out to all those whose lives have been turned upside down by these two mega-storms, the wildfires in the West, or the earthquake in Mexico.

As recovery efforts continue, truckloads of emergency relief supplies from FEMA and non-governmental groups are moving into the affected areas. In the meantime, truck capacity was already getting tight on the spot market last week, boosting national load-to-truck ratios for both vans and flatbeds.

Diesel prices also continued to climb after a big spike from the week before. The national average price rose another 4¢ to $2.80 per gallon at the pump. That put even more pressure on freight rates, accounting for 3¢ added to the national average for each trailer type.

HURRICANE IRMA

Recovery efforts are also underway in FloridaAtlanta and Charlotte are the two major van markets that serve Florida, and outbound rates soared in those markets, but volumes were down. That means the storm threat might have led shippers to cancel or postpone some freight movements instead of expediting them. 

The ports in Savannah, Tampa, and Miami all suspended operations over the weekend, while the Port of Charleston closed on Monday. The ports should be back online now, but there could be some pent-up demand this week as a result of the closures. Also, some ships may have been re-routed from Houston to East Coast ports, so that will add to the pressure in port cities and regional hubs.

Another secondary effect from the storm was that outbound rates rose in Philadelphia and Buffalo. That’s a common trend when the flow of freight shifts southward. More freight is bypassing the Southeast altogether, and entering the Northeast from the Midwest. A lot of it gets warehoused in Buffalo, Philadelphia, and nearby Allentown before proceeding to the bigger population centers, including the New York metro area.

All rates below include fuel surcharges and are based on real transactions between carriers and brokers.

RISING LANES

Rates were generally up everywhere, with the least amount of change in California. Rates had already risen on a lot of lanes across the country, even before Hurricane Irma hit. Those prices could shift again this week, though. If you’re taking freight into Florida, remember that it’ll likely be even harder than usual to find loads coming back out.

  • Atlanta to Lakeland, in central Florida, jumped up 25¢ to an average of $2.94 per mile, and prices have continued to climb on that lane this week 
  • Charlotte to Lakeland also spiked 36¢ to $2.89 per mile last week, but this lane rate is already trending back down

There was also a lot of activity between Charlotte and Atlanta, and van rates rose in both directions. 

  • Charlotte to Atlanta was up to $2.57 per mile
  • Atlanta to Charlotte hit $2.61 per mile

Secondary impacts were felt on lanes like Allentown, PA to Richmond, VA, where rates were up 29¢ to $2.64 per mile. More surprising was the lane from Chicago to Buffalo – it’s been up and down all month, but it skyrocketed 82¢ to $3.30 per mile last week

FALLING LANES

The sharpest rate declines were in Texas, but only compared to a week when intrastate lanes hit the highest prices we’ve ever seen. Trucks have been delivering FEMA loads and other emergency relief cargo to the area, and then they were leaving empty or sticking around to find a load out. More available trucks means that rates are going to fall, and that’s starting to happen now on outbound loads from Houston and Dallas, in particular.

  • Dallas to Houston rates fell an average of 54¢ but were still high at $3.49 per mile
  • Denver to Houston also dropped 31¢ to $1.35 per mile, which is still higher than it was before  Harvey. Denver was being supplied out of Chicago while Houston was underwater, but the Houston-to-Denver head haul should be back online by now
  • The biggest decline on outbound Houston lanes was the one to New Orleans, which fell 63¢ from a record high and is now down to $2.61 per mile. That’s still pretty high. Before Harvey, the same lane paid $2.32.

Find loads, trucks and lane-by-lane rate information in DAT load boards, including rates from DAT RateView.

 

Real Women in Trucking partners with DAT to offer a special on the TruckersEdge load board to its members. Sign up for TruckersEdge today and get your first 30 days free by signing up at http://www.truckersedge.net/promo584 or entering “promo584” during sign up. This offer is available to new TruckersEdge subscribers only.

 

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Expect Hurricane Harvey to Have a Long-Term Impact on Trucking

Expect Hurricane Harvey to Have a Long-Term Impact on Trucking

By: Peggy Dorf, DAT Solutions

Hurricane Harvey is going to have a big impact on freight transportation and logistics in the weeks and months to come. The record rainfall finally stopped after four days and 50-plus inches, but Southeast Texas and Western Louisiana are still battling dangerous floods and many roads can be navigated more easily by motor boat than by anything that runs on wheels. Truckload rates are rising, and routes are changing rapidly, as emergency supplies head into staging areas near the storm-affected zone

Because Houston, in particular, is a huge hub for all types and modes of freight, the storm has cut an important link out of supply chains that serve a six-state region and beyond, via truck, rail and sea. 

Houston is the fourth-largest city in the U.S., so it’s a big destination for consumer and industrial goods. It’s also the number-one source of outbound spot market freight for flatbed trucks, as well as number six for vans and reefers.

Plus, Houston is home to the only deep-water port in the Gulf of Mexico, so as long as ships can’t dock there, they must be re-routed − either to Miami or another East Coast port or out to Los Angeles or Long Beach on the West Coast. That triggers a disruption of the entire domestic transportation network for any shipper whose freight typically docks at Houston. On top of all that, most Houston-based oil wells and refineries are now offline, removing about 20% of fuel from production. Other energy and fuel producers may well be able to pick up the slack, but the disruption will likely lead to an increase in fuel prices for the near term.

All those factors make the aftermath of Hurricane Harvey potentially more disruptive to freight transportation and to the economy as a whole than either Super Storm Sandy or Hurricane Katrina. 

The effects are already far-reaching, as seen in the Hot Market Map below, depicting outbound load-to-truck ratios by market on August 30. Trucks are needed in Memphis and Greenville, SC, where some of the posted loads were likely headed to FEMA staging areas surrounding the storm zone, and others were filling gaps in the supply chain that were caused by Houston’s sudden absence as a key freight hub. While all those trucks are heading to the South Central region, however, the Upper Midwest is clamoring for trucks to move seasonal produce, consumer goods and industrial freight. If you have trucks in that area, there a lot of shippers and brokers who would welcome your support. 

 Find loads, trucks and lane-by-lane rate information on DAT load boards, including rates from DAT RateView.

 

Real Women in Trucking partners with DAT to offer a special on the TruckersEdge load board to its members. Sign up for TruckersEdge today and get your first 30 days free by signing up at http://www.truckersedge.net/promo584 or entering “promo584” during sign up. This offer is available to new TruckersEdge subscribers only.

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