Trucking analysts project freight rates will soar over the next few months, as the nation's already scarce truck drivers are called to haul loads for the government to areas ravaged by Hurricane Harvey.
It comes as the industry enters peak season -- the months leading up to the holiday shopping season -- when retailers stuff their shelves with merchandise.
Rates for spot freight -- the truckloads that are filled on-demand the same way an Uber ride is hailed -- are already up year-over-year by about 13.5 percent. These rates are expected to surge in the coming weeks as communities in the disaster zone begin rebuilding.
"It's hard to draw any perfect correlation of what we've seen before," said Stephens analyst Brad Delco, who covers the trucking industry. "I think the scary thing from a shipper's perspective is capacity has already been tight up to this point."
Much of disaster response involves logistics. A study by the Massachusetts Institute of Technology estimates that 80 percent of humanitarian efforts entail direct involvement from supply-chain managers -- the buyers, shippers and warehouse workers who acquire, move and store the goods. So the pressure is on the freight industry to synchronize and keep items flowing as efficiently as possible, to ensure the people who need help receive it in a timely fashion.
Freight brokers are trying to get their hands on goods bound for the affected areas, where federal and state officials are surveying the immense damage. Texas Gov. Greg Abbott has put recovery costs at $125 billion.
When Hurricane Isabel hit the Atlantic Coast in 2003, carrier U.S. Xpress' on-demand division made about $2 million hauling emergency freight for the government, said Craig Fuller, the founder of the division, called Xpress Direct.
A vast network of for-profit companies and volunteers has rapidly created a supply chain to produce transportation and space for the freight needed in the initial recovery and rescue efforts.
In the disaster's initial phase, government agencies and aid organizations like the Federal Emergency Management Agency, American Red Cross and the National Guard request support materials via government websites, like FedBizOpps.gov, and private-industry websites, where companies bid to earn the government's business.
On FedBid, one of the private online marketplaces, Harvey-relief delivery requests have been fulfilled in as quickly as a few hours, reflecting the urgency of the situation for the logistics industry.
Fuller said he is seeing an average pay of about $900 per day for drivers hauling relief freight. During disaster situations like Harvey, Fuller advises drivers to take the per-day rates rather than the rate per mile, the usual metric, so they can still make money if they become stranded. He said about $1.2 million of U.S. Xpress' $2 million made from Isabel accumulated from time drivers spent idle, waiting to be moved closer to their destinations.
Common supplies include water, groceries, sleeping cots, generators, chain saws, gas cans, batteries and flashlights. Jodi Navta, chief marketing officer for the Chicago-based Coyote, a brokerage firm owned by UPS, said the firm has moved hundreds of relief loads to the Houston area, and she expects the volume to remain heavy in the coming weeks.
The American Logistics Aid Network is among the volunteer groups trying to get emergency supplies to the disaster zone. Dozens of people in the organization communicate with nonprofit logistics groups and companies to learn what is needed, find drivers who can haul the goods and warehouses with the capacity to store them.
Kathy Fulton, the organization's executive director based in Central Florida, said the Aid Network is only taking donation-based services, and she noted the billions of dollars in donations from logistics companies that flowed to relief efforts along the Gulf Coast.
"The focus of our organization is to get business back to normal, so the commercial supply chain resumes functioning" she said, "We do not want to replace the supply-chain networks that have been put in place. All of us are simply supplementing the gaps right now."
SundayMonday Business on 09/04/2017
Print Headline: Disaster-zone needs to stretch truckers thin