Expected to be the strongest storm to hit the East Coast in decades, Hurricane Florence may majorly impact the transportation and logistics industries. Industry experts speculate that Florence will likely upset freight markets by messing up spot rates and market capacity.
A Category 4 storm, Florence is predicted to strike the U.S.’s East Coast this Thursday or Friday. We won’t know the extent of its impact on supply chains until we see where it strikes, how far it travels inland, and where it causes flooding.
“If there is extensive flooding in the area, as there was during Hurricane Harvey, the disruption could cause rates to remain elevated for weeks,” said DAT analyst Peggy Dorf in an interview with SupplyChainDive.
A lot depends on what areas get damaged in the hurricane said Dorf. “If the damage is confined to the coastal areas, the supply chain impact of Florence will likely be less severe than Harvey” because “the major Southeast regional hubs — Atlanta, Charlotte, Memphis — are not in Florence’s path”.
However, if the hurricane redirects sea traffic it could still raise rates. Shipments that can’t be unloaded at the expected dock because of a damaged port add to logistics costs since they have to be transported, unloaded, and stored somewhere else. This may also cause spot market inflation. Flooding may lead to rail shipments having the same issues.
Another effect may be fuel supply. “A storm of this magnitude is likely to cause localized diesel supply and price disruptions, as extreme weather impacts the downstream distribution of refined products to fuel stations and truck stops,” said the senior manager of applied knowledge for Breakthrough Brett Wetzel in an interview with FreightWaves .
Demand for freight services is already at a record high. The increased freight demand caused by hurricanes like Florence can disrupt supply chains and unbalance the market. What do you think will be the biggest impact of the storm?