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Freight rates swell ahead of Hurricane Florence

Dive Insight:

"Typically, freight transportation goes through 3 stages before, during and after a big storm," said Dorf.

  • Before the storm: A "flurry" of transportation activity, dominated by outbound freight from the affected area. Just outside the storm zone, markets see more inbound freight as FEMA stages emergency supplies in trailer yards and warehouses.

  • During the storm: "Nothing moves in or out until the storm abates and the roads are clear," said Dorf.

  • After the storm: Water, food and emergency supplies are trucked into the affected area first, in dry and refrigerated van loads. Flatbeds follow, with construction equipment and materials. Rates rise on inbound loads, due to hazardous road conditions and uncertain delivery times.

Hurricane Florence, a Category 4 storm, is expected to reach the East Coast on Thursday or Friday. It's impact on supply chains will depend on where it strikes, how far inland it travels, and where flooding events occur.

"If there is extensive flooding in the area, as there was during Hurricane Harvey, the disruption could cause rates to remain elevated for weeks. If the damage is confined to the coastal areas, the supply chain impact of Florence will likely be less severe than Harvey, because while Houston is an important regional hub, the major Southeast regional hubs — Atlanta, Charlotte, Memphis — are not in Florence's path," said Dorf.

However, the extent to which the hurricane diverts sea and rail traffic could still elevate rates in those markets. If a storm affects a port so severely ships cannot dock, the containers must still be unloaded, stored and transported from a new port, adding to logistics costs. High flooding could also divert rail traffic.

In the meantime, however, activity is focused on securing cargo and emergency supply staging areas. Dorf said they have heard "anecdotal evidence of staging areas in Maryland, Northern Virginia, and Delaware." 


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