September 15, 2017 Severe Weather Alert: Transportation Impacts 09/15/2017 Much of the southern United States now faces months — if not years — of cleanup and reconstruction in the aftermath of Hurricanes Harvey and Irma. With transportation disruptions, extended power outages, a drop in fuel production, and manufacturing halted for a period after each storm, recovery will take time. Transportation Mode Updates from Carrier Assessments As transportation providers begin to recuperate from the immediate interruptions caused by the hurricanes, carriers, suppliers, and customers must work collaboratively for resolutions to offset the impacts of supply chain disruptions. Active communication across the supply chain is imperative for coordinating short- and long-term recovery efforts. With two different economies – manufacturing in Texas and tourism in Florida, the impact on freight transportation will vary. The effects in Texas will be heavily tank truck and railcar related, while in Florida it will be primarily dry vans for consumer goods. Flatbed will be impacted in both regions as rebuilding starts. Notices of disruptions and service outages may be available on many rail and trucking carriers’ websites. OVER-THE-ROAD: Carriers are accepting and attempting to move as much freight as possible in the impacted areas, although operations remain slightly-to-moderately limited. Guaranteed/Expedited shipments to weather impacted areas may be delayed due to conditions and customer closures. According to the Florida Division of Emergency Management, approximately 1.9 million homes and businesses were without power in Florida, five days after Irma’s landfall. Service delays should be expected. RAIL: In Texas, all major Class I railroads in the area—Union Pacific Railroad, BNSF Railway and Kansas City Southern Railway—effectively have restored service on their networks, but delays remain. In Florida, Norfolk Southern has restored mainline track to service throughout Georgia and Florida. Regularly scheduled road train service has resumed, however NS continues to meter in traffic to Savannah, GA, Brunswick, GA, and Jacksonville, FL and surrounding areas. CSX Transportation engineering crews continue to work to restore service in the impacted areas. The network is now operational into Tampa, FL, with additional progress expected on lines in Miami, Okeechobee, and Jacksonville today. Service restoration may be curtailed by lack of power to road crossings. Florida East Coast Railway successfully operated trains across the network and anticipate the ability to operate at increased train speeds by the weekend. Market Impacts & Highway Updates Productivity People have been displaced from their homes and will live in recovery facilities for extended periods. Capacity Capacity across the country is projected to shrink – shippers should expected to see slowdowns in equipment availability for the next several weeks. Hurricane recovery efforts will increase freight demand, which will pull trucks out of their normal cycle Tight capacity usually drives rates higher. Fuel Damage to refineries on the Gulf Coast resulted in fuel shortages and higher prices across Texas and in other places throughout the US. Irma also created localized challenges and fuel scarcities in the Southeast, preventing fuel supplies from getting to where they are most needed. Diesel fuel prices are up by an average of $0.20/gallon since the storms hit. This can impact freight rates. Pricing The combination of production impacts, capacity constraints, and fuel hikes will drive up rates. In the first week of September, spot truckload rates rose sharply. According to DAT Solutions, rates will likely remain elevated through the holiday freight season, which now runs from October through December.