The Impact of Hurricane Milton on the Logistics Market
Hurricane Milton has struck a fragile logistics market already reeling from recent disruptions, including the International Longshoremen’s Association (ILA) strike and Hurricane Helene. Making landfall as a Category 3 storm near Tampa, Florida, with winds reaching 125 mph. Milton is expected to have significant ramifications for supply chain operations throughout the region and beyond.
Immediate Disruptions in Port Operations
As Milton approached, Port Tampa Bay halted all inbound and outbound vessel traffic, while other major ports, including Jacksonville and Miami, either closed or operated under severe restrictions. These premptive measures have disrupted freight flows significantly, particularly in Tampa, which accounts for approximately 1.5% of the nation’s outbound freight and 2.7% of inbound freight. The repercussions are already being felt, with major freight corridors like Interstate 75 and Interstate 4 experiencing flooding, further complicating logistics operations.
Rising Tender Rejection Rates
The logistics market has seen an increase in tender rejection rates, a key indicator of capacity constraints, following the storm’s trajectory. The Outbound Tender Rejection Index (OTRI) surged above 5% for the first time since July, a notable shift considering this threshold has only been surpassed during significant holidays or extreme weather events. This spike suggests that carriers are increasingly rejecting loads due to capacity issues, pushing freight costs higher.
Impact on Trucking Operations
Hurricane Milton has had a profound impact on trucking operations in Florida and the broader Southeast, exacerbating challenges already faced in the logistics sector. Key highways, including Interstate 75, Interstate 4, and Interstate 95, have been severely affected by flooding and debris, critically disrupting the flow of goods. These highways are vital for freight movement, not just within Florida but also for connections to the rest of the Southeastern U.S. According to Jon Davis, chief meteorologist at Everstream Analytics, major trucking routes are likely to remain impassable for weeks, which can lead to increased transit times and higher transportation costs.
In the wake of the hurricane, many trucking companies are prioritizing the transportation of essential supplies such as food, water, and emergency building materials. This redirection of resources means that capacity for non-essential freight has dwindled, further complicating logistics for shippers who rely on timely delivery of goods.
Fuel supply challenges are also on the horizon. With fuel distribution points potentially damaged by the storm, disruptions in fuel supply chains could arise. A report from the U.S. Energy Information Administration indicates that limited fuel availability can significantly impact trucking operations, particularly in regions hardest hit by storms. As demand for fuel rises amid recovery efforts, prices may spike, putting additional strain on carrier operating budgets.
Finally, the long-term recovery process will likely impede trucking operations, as infrastructure repairs in heavily affected areas can take weeks or even months. This prolonged downtime complicates logistics for both local and national freight operations. For example, following Hurricane Harvey in 2017, infrastructure repairs took months, resulting in one of the longest-running freight market capacity shortages in recent history.
Following Hurricane Harvey in August 2017, the logistics and trucking industries faced significant capacity shortages that had lasting effects, a situation that draws parallels with the impact of Hurricane Milton. After Harvey made landfall, the Outbound Tender Rejection Index (OTRI) surged to over 25% in affected areas, indicating a severe tightening of capacity. In contrast, while Milton’s OTRI recently spiked above 5%, it remains to be seen whether it will escalate further as the full impact of the storm unfolds.
The American Transportation Research Institute (ATRI) estimated that freight capacity in Texas was reduced by approximately 10% due to Harvey’s devastating infrastructure damage and flooding. Similarly, Milton is likely to cause disruptions in freight capacity, particularly given that major highways like Interstate 75 and Interstate 4 are already experiencing significant flooding. After Harvey, spot market rates for trucking increased dramatically, with van freight rates jumping as much as 20% and flatbed rates increasing up to 30%. As Milton disrupts logistics operations in Florida, shippers may also face rising transportation costs.
FEMA and Relief Efforts
Compounding the challenges, FEMA is stretched thin managing multiple disaster response efforts, including those from Hurricane Helene. The agency’s freight operations are inherently more complex, requiring coordination with limited resources in disaster zones. The additional strain from Milton may exacerbate existing bottlenecks, as disaster relief freight often demands time-consuming logistics that typical supply chains are unprepared for.
Conclusion
Hurricane Milton’s arrival has intensified the existing strains on the North American freight market. With port operations disrupted, trucking routes flooded, and capacity tightening, the logistics sector faces a challenging road ahead. As recovery efforts begin, the true extent of the hurricane’s impact on logistics will unfold, potentially reshaping operational dynamics in the months to come. If you need help or want to se what Legacy provides, make sure to check out our services or contact us!
