Hurricane Season is Affecting Freight Rates in A Significant Way
Hurricane Harvey finally came to a halt on September 2nd and it wreaked absolute havoc with record setting rain. There are countless teams and task groups that have assembled to help by doing what they can to restore the devastated areas.
Trucks are being used to help restock shelves with food and supplies to replenish the affected areas as they begin to rebuild.
The conditions, however, are not normal.
People are paying astronomically higher rates for deliveries due to the 66% increase of shipping costs.
How Are Freight Rates Being Affected?
The spike is a result of “slow going and potentially costly” deliveries according to the Wall Street Journal, and with Hurricane Irma approaching as a fierce Category 5 I’m sure the prices are only going to continue to rise.
It’s also noted from the WSJ that the trucks are also having a difficult time finding loads to deliver for the return trips because of all the companies that usually export to other parts of the United States have remained closed.
Dave Menzel, COO of Echo Global Logistics, has said that prices are “skyrocketing” as a result of the possible days it’ll take to unload mixed with the possibility of not being able to find fuel.
Hurricane Harvey made landfall at the peak time of the shipping season and the shipping companies have been trying to do what they can to accommodate for the fluctuating freight rates.
Average freight rates have risen in the following areas:
- Van – $1.90 per mile (increase of 12 cents)
- Flatbed – $2.20 per mile (increase of 2 cents)
- Reefer – $2.10 per mile (increase of 3 cents)
Those prices don’t include accessorial fees for loading, unloading and layovers & those prices, “all of which have likely risen significantly for trucks carrying relief supplies” according to Trucker.com.
Other notable effects of Hurricane Harvey are as followed:
- The number of available outbound loads from Houston plunged 72% compared to the previous week, when the storm came ashore late on Friday, Aug. 25.
- Despite the loss of volume, the average outbound spot van rate from Houston increased 20% to $2.03 per mile.
- Houston-outbound lanes with significant rate changes during the week ending Sept. 2: Houston to New Orleans: $3.21 per mile, up 89 cents, with volume on this lane down 80%; Houston to Dallas: $2.57 per mile, up 46 cents, with volume down 65%; Houston to Laredo: $1.76 per mile, up 26 cents; Houston to Oklahoma City: $2.19 per mile, up 24 cents.
- Houston-inbound lanes with significant rate changes during the same period: Dallas to Houston: $4 per mile, up $1.60, with DAT noting it has never reported anything close to $4 per mile on this lane before; Denver to Houston, $1.63 per mile, up 59 cents, which is the largest ever weekly jump on a Denver lane, according to the firm’s data.
- The Federal Emergency Management Agency (FEMA) and other organizations continue to gather emergency supplies in warehouses and distribution centers on the outskirts of San Antonio, Dallas, Austin, Lafayette, La., and other metro areas, until trucks can enter the storm zone.
As previously mentioned, it looks like the United States is about to be hit with another catastrophic hurricane, Hurricane Irma.
It’s expected to hit Florida this Sunday and rigs are already being utilized.
Mr. Cooper of the Boyd Companies has stated that they are “hauling plywood and particle board out to Florida right now.”
We hope that the damage is as least severe as possible and that rebuilding and restocking won’t be necessary.