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The Impact of Hurricanes on the Logistics & Transportation Industry

Posted on Friday September 21, 2018 by admin

Labor Day through the new year is the busiest season for the transportation industry due to extra loads being shipped for the holiday season, fall harvest and the rise of online direct to consumer sales.  It also happens to be hurricane season, which is immediately followed by the winter storm season.

Last year, following Hurricane Harvey, the total trucking freight load fell by 10% and the freight load out of Houston fell by 72%. Hurricane Harvey, which devastated southwest Hurricanes Effect on the Transportation and Logistics Industry- Penn LeaseLouisiana and southeast Texas, limited the goods coming into the USA from Mexico and Central America through Houston, the fourth largest city in the United States and a major transportation hub.  Hurricane Harvey was soon followed by hurricane Irma in Florida resulting in widespread regional impacts across the southern United States.

Following the 2017 hurricane season, industry leaders are taking extra care to prepare for the 2018 hurricane season which has commenced with the disruptive force of Florence in the Carolinas.  

Weather-related impacts, combined with pre-existing driver and chassis shortages, create extreme and often unpredictable challenges.  The companies that are successful at managing these challenges and meeting their delivery schedule and customer expectations, will have a competitive advantage.  

Decrease in Chassis and Trucking Supply After a Hurricane

Following a major hurricane such as the one which just struck the Carolinas, ports and depots may experience severe damage to roads, bridges, and other infrastructure as well as trailer, chassis, truck and equipment losses.  In addition, trucks and heavy-duty vehicles which did not sustain damage may be diverted from their regular duties in order to assist with emergency relief efforts such as providing water, food and building supplies to hard-hit areas.  Road closures from flooding as well as downed trees and power lines may linger long after the initial storm passes slowing the rebuilding efforts and making routine pick-ups and deliveries impossible.

Warehouses and fulfillment centers in areas affected by hurricanes are also forced to temporarily shut down.  Regional centers may take on the overflow, but these centers quickly reach capacity. The resulting bottlenecks can ripple out to other areas of the country.  The result is a shortage of inventory, longer distances between pick-up and delivery locations and longer idle and wait times from congestion at locations which are open.     

Price Jump for the Transportation Industry Following a Hurricane 

The shift in supply and demand  for trucks and chassis following a hurricane contributes to the higher cost of transporting goods. Following Hurricane Harvey, DAT Solutions reported that spot market truckload rates had increased by 6% points. In addition, these higher costs were compounded by the higher cost of fuel following the hurricane.

Texas is home to nearly 30% of U.S. petroleum refineries, most of which were shut down at least temporarily by Hurricane Harvey. CNN reported that the national cost of gas had spiked by 15% in the wake of Harvey and had continued to rise in the following months. These increases in transportation costs following hurricanes and natural disasters impact both the transportation industry, distributors, and retail outlets who rely on lower shipping cost and fuel prices in order to maintain healthy profit margins.  This risk may be mitigated by the proper insurance and taking appropriate actions prior to the storm.

How Truckers and Logistic Organizations Prepare for Hurricanes 

When reflecting on major storms and the damage they leave behind, it brings to the forefront the need for truckers, logistic and transportation organizations to be prepared. For these professionals, “preparedness” for hurricanes should include:

  • Paying close attention to weather warnings and road conditions
  • Ensure that your equipment is ready and running properly so you can quickly act to transport assets out of harm’s way without delay
  • Have a ready support team including logistics partners and chassis leasing partners to call on in an emergency
  • Establish a clearly outlined communication plan to keep your team functioning informed of closures and alternate operation plans as they arise.

Transportation Industry Preparing for Hurricane Season 

Hurricanes, winter storms, and natural disaster result in both immediate and longer term disruptions to the flow of freight and goods. Following a catastrophic event, it takes time to reorganize, reroute and recover from the effects of severe weather. However, as the area affected begins to rebuild damaged residential and commercial properties, construction freight will be pushed into that affect region.  At Penn Intermodal Leasing, we understand that efficient bulk liquid transport and storage is a key component of your business. When your organization is in need of chassis to lease or buy, contact us for more information!

 

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