What happens when you put ELD’s, two hurricanes and a capacity crunch together? A triple threat. Industry insiders say that the combinations of these three variables are a threat to the transportation industry like no other. The aftermath of hurricanes Irma and Harvey are projected to cause disruption to the market for months to come in various ways. Capacity has been pulled in all different directions to help source supplies to aid in the rebuilding efforts in Texas, Louisiana, and Florida.
Demand of equipment across the country has sky rocketed as recovery of these impacted states begin. This shift in freight cycles along with the decrease of anticipated productivity due to the impending ELD (electronic logging device) mandate may lead to a swift capacity crisis. According to Noel Perry of FTR and Truckstop.com “only about 40 percent of the industry has adopted ELD’s”. The lack of preparation from transportation companies will cause great damage to the availability of equipment after December 18th.
The pulls on capacity set by hurricane Harvey and Irma have also led to perhaps the most impactful piece of it all – prices. Pricing in the spot and contract market alike have reached a two year high. Dry Van and Reefer spot rates have increased 11% year over year where the cost of Flatbed shipments has increased a staggering 15%. Adding fuel to the fire, fuel prices have also climbed showing a 4% increase just since last month. As fuel costs continue to climb towards a higher price tag, August has already shown a 10% increase compared to this time last year.
With creeping prices, a strain on available equipment and a looming ELD directive, the freight market has begun to shift in ways never seen before. The destructive effects from the hurricanes will last for months to come and in some regions, years.