PENN Lease
Join Our E-Mailing List Get latest industry news & more!

The Impact of Hurricanes on the Logistics & Transportation Industry

Posted on Wednesday May 25, 2022 by April U

Hurricanes Effect on the Transportation and Logistics Industry- Penn Lease

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.

In 2017, 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 SouthwestLouisiana 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.

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, 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 transportation industry and 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.

Climate Change Expected to Worsen the Frequency and Intensity of Extreme Weather Events

Scientists have been observing the impacts of climate change for years noting that the global annual average temperature for each of the years between 2013 and 2021 rank in the top ten (10) warmest years on record. Warmer global temperatures mean greater evaporation over oceans and lakes, which fuels severe weather events like typhoons, tornadoes, and hurricanes.

According to the Center for Climate and Energy Solutions, if global average temperatures continue to rise, the severity and incidents of extreme weather events like hurricanes, tornadoes, wildfires, droughts, extreme heat/cold, and extreme precipitation will increase. Severe weather often brings damage to infrastructure which results in delays and disruptions in the transportation industry and supply chains.

Although the transportation industry contributes the largest percentage of greenhouse gasses to the U.S.’s total emissions, many transportation businesses have started to implement strategies to offset climate change in an attempt to reduce carbon emissions and the extremely costly weather events which result from even slightly higher global temperatures.

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 costs 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, logistics 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 and informed of closures and alternate operation plans as they arise.

What the Transportation Industry can do to Reduce its Effect on Climate Change

The transportation industry is currently responsible for 29% of the nation’s total greenhouse gas emissions, making it the largest single contributor on record. The U.S. EPA and U.S. DOT have developed progressively stricter standards for cars and trucks to reduce carbon emissions and move the country towards fuel sources with lower carbon emissions. These standards include requirements for greater fuel efficiency, hybrid, and electric vehicles, and will reduce America’s dependence on oil.

The EPA’s SmartWay program helps transportation businesses find the most efficient supply chain routes, identifying ways to reduce fuel costs and greenhouse gas emissions. For years, the EPA has required that automakers display fuel economy, fuel costs, as well as ratings on greenhouse gas and smog-forming pollutants on their vehicles. The SmartWay program now supplies information on cars and trucks with the best fuel economy and lowest emissions to help transportation companies make environmentally informed investments.

Although the transportation industry currently contributes the largest amount of greenhouse gas emissions to the total emissions of the U.S., many businesses have started to take steps to decrease that number. By reducing the number of miles needed to travel, upgrading vehicle technologies, using low-carbon fuel, and operating vehicles more efficiently, transportation businesses are attempting to offset climate change and reduce the amount of extreme weather events that have become more frequent.

Transportation Industry Preparing for Hurricane Season 

Hurricanes, winter storms, and natural disasters 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 affected region begins to rebuild damaged residential and commercial properties, construction freight will be pushed into that area. 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, contact us for more information!

SOURCES:

 

Leave a Reply

Your email address will not be published.

  • Twitter
  • Facebook