To no one's surprise, truckload spot, or non-contract, rates spiked during the week Hurricane Harvey unleashed its fury on Houston and the Texas and Louisiana Gulf coasts.
Also to one's surprise, diesel fuel prices jumped over the past week as Harvey blitzed the heart of the U.S. petroleum-refining industry and disrupted the flow of supply. According to weekly data from the U.S. Energy Information Administration (EIA) released this evening, average nationwide diesel prices effective today climbed to $2.75 a gallon, a 15-cent-a-gallon increase from Aug. 28 figures. The biggest increase occurred in the Gulf Coast region, which posted a near 19-cent-a-gallon jump from the prior week. EIA, a unit of the Department of Energy, breaks down its fuel reporting data by regions.
According to DAT Solutions, a spot-market load-board provider, rates soared on loads being moved into several emergency-supply staging locations in the vicinity of the affected areas. For example, the seven-day average spot dry van rate from Dallas to Seguin, Texas, a staging area about 30 miles from San Antonio, climbed to $858 for the 248-mile haul, according to DAT data released today. By contrast, that same haul in July averaged $577, according to DAT. In some cases, loads were being booked at $1,350. Only two business days of post-Harvey data were included in most recent data sets, DAT said.
Though loads from Houston fell 72 percent week over week, rates rose 20 percent, to $2.03 a mile, DAT said. The company didn't immediately comment on the reasons why, but higher fuel surcharges, as well as a dearth of trucks, appear to be the culprits. The prior-week data included available loads on Aug. 25 and 26, when Harvey came ashore along the Texas Gulf Coast, before the flooding in Houston had peaked.
Trucks have been heading into the affected regions to move loads of emergency supplies being arranged by freight brokers and third-party logistics providers (3PLs). Known in the trade as "FEMA Freight," after the Federal Emergency Management Agency tendering out the loads, the shipments can fetch hefty rates of $5 a mile or more. However, drivers hauling FEMA freight may have to park their trucks waiting for clearance to bring a load into the staging area. That cuts into their revenue-producing time. In addition, drivers may have difficulty securing outbound loads once they deliver the supplies, due to the drop-off in commercial activity in the stricken region.
The Federal Motor Carrier Safety Administration (FMCSA) said late last week it had waived its normal driver hours-of-service restrictions to facilitate the movement of emergency supplies to the affected areas.
Jeff Tucker, CEO of Tucker Company Worldwide Inc., a Haddonfield, N.J.-based broker and non–asset-based carrier, said some carriers are reluctant to go into south Texas because, at this point, there's nothing coming out. While some carriers will take loads into the region at a premium, others will not venture in at all, Tiucker said.
While the supply-demand picture is more challenging, Tucker said his company has been able to book its customers' loads with little or no disruption. "Generally ... we're making it work," he said in an e-mail.
The dislocations triggered by Harvey have been felt as far away as Grand Rapids, Mich., which is experiencing the worst truck shortage—relative to available loads—of anywhere in the country, according to DAT's map of load-to-truck availability. That's because an abundance of seasonal freight, such as apples and potatoes, as well as the typical consumer merchandise, is ready to move, but there are relatively few trucks to haul them. Much of the capacity that would normally serve the region has been re-routed to south-central Texas to work on the relief effort, DAT said.
Another factor impacting truck flows are the "on-the-fly" adjustments being made by shippers to re-supply DCs in Louisiana, Oklahoma, and other states that would have normally been served out of Houston, Peggy Dorf, a DAT senior analyst, wrote in a blog post last week.
As the Texas and Louisiana gulf regions recover from Harvey, Florida is bracing for Hurricane Irma, which is gathering strength and is projected to hit south Florida early Sunday morning with winds of about 145 mph. Fort Lauderdale's Port Everglades today issued "Port Condition WHISKEY" to take effect tomorrow morning. As part of the preparation, all vessels moored or at anchor should be ready to get underway; in addition, containers of regular cargo should be stacked to no more than four high and hazardous cargo to a maximum of two high, the port said in a directive late today.
The American Logistics Aid Network (ALAN), a non-profit group that connects logistics resources with organizations involved in disaster recovery efforts, is now focusing attention on Irma as well as supporting recovery efforts for Harvey, the worst U.S. natural disaster since Hurricane Sandy in October 2012. Harvey may end up being the most expensive disaster in the nation's history, surpassing the $108 billion cost of Hurricane Katrina in 2005.
Kathy Fulton, ALAN's executive director, said the group is capable of simultaneously handling two major crises. "The capacity exists within the supply chain community, as we've seen from the generous outpouring of support in response to Harvey," Fulton said in an e-mail. "The challenge is one of coordinating and directing the good will, a challenge which logistics and supply chain professionals are uniquely suited to address."
Editor's note: An earlier version of this story said that Tucker Company Worldwide Inc. was an asset-based carrier. Tucker is a broker and non–asset-based carrier. DC Velocity regrets the error.
