Freight costs have spiked in the wake of Hurricane Harvey, which decimated Houston and the surrounding region. As businesses reopen and look to stock their shelves, many shippers are experiencing significantly higher rates. For example, according to online load board DAT Solutions LLC, the cost to hire a tractor-trailer to move freight from Dallas to Houston was an average 66% more in the week ending September 2 compared with the previous week.

The higher trucking rates are due to several factors: deliveries into Houston is slow going as the city makes it way back from the storm, trucks are struggling to find return loads from the city as so many businesses that export to other parts of the country remain shut, and fuel costs have risen. In a recent article in the Wall Street Journal (WSJ), estimates from Triple A show the national average rate for dry vans, the most common trucks, rose to $1.90 per mile including fuel surcharges for the week ending September 2, up 6.7% compared with the previous week. Average diesel prices hit $2.68, up from $2.55 a week ago, according to AAA.

Harvey has also affected transportation markets outside of Texas. For instance, hurricane relief efforts have diverted trucking capacity from other regions, and cargo has been rerouted to other distribution hubs, such as Denver.

The Port of Houston was also impacted by Harvey, shutting down for a week after the storm made landfall on August 25th. This was in the middle of the peak shipping season as manufacturers and retailers restock inventories and get ready for the holidays. The hurricane was also “a big disruption” for trucking operations that move cargo from the port to nearby rail lines, cites the WSJ article.

Harvey, Now Irma

On the heels of Harvey, Hurricane Irma has roared through the Caribbean and is now making its way to South Florida. The Federal Railroad Administration has already declared a rail emergency in Florida, and trucking capacity is also tightening up, with some truckers hesitate to accept loads that could leave them stranded in the region. According to Riskpulse, a supply chain risk analysis firm, all shipping and trucking interests along the East Coast, particularly Florida, should be closely monitoring the storm for potential impacts by this weekend.

Roanoke Underwriting specializes in helping agents and brokers secure commercial marine insurance solutions for global trade and logistics risks. For more information about our portfolio of products, please contact us at 1.855.213.4545.