Winter weather gives truckers another reason to avoid the Northeast

Punxsutawney Phil was not wrong when he predicted six more weeks of winter. Unfortunately, even he didn’t expect winter to be so brutal on the northeast this season. In march alone, the northeast has experienced four major storms impacting freight flows, service, and rates.

Boston has numerous measures in place to prevent transportation disruption and has reduced activity to skeleton crews as feet of snow have been dumped in short periods of time. 

One major winter event can usually be handled without much disruption, but the frequency of major events will have an impact to freight networks. Trucks have been stalled in the New England area either from making final delivery and having to shut down as traffic delays deliveries.

Many carriers, both in the truckload and less-than-truckload markets have experienced higher than normal weather-related service issues due to the recent frequency of major weather events. This is showing up in the the spot market, as the Atlanta to New York van spot rate is going for $3.24 per mile which is the highest level in over a year. Rates typically average $2.95 in February. Even more telling is that the national average has been relatively stable at $2.14 per mile since the beginning of March. Bottom line- few carriers want to go into the Northeast this time of year.

In fact, in looking at FreightWaves’ proprietary tender index, inbound shipments to Philadelphia were rejected 28% of the time from March 1st to March 7th, up 700 bps. They have stayed elevated since.

In recent days, numerous winter weather advisories in the Northeast including the DC area and metro New York City. Meteorologists have named the most recent storm “Toby”, which  is slated to drop a 18 inches of snow across portions of Maryland, Pennsylvania, and New Jersey.

Capacity issues are already prevalent across the country as fleets settle into the new ELD regulations and deal with record freight volumes. The North Atlantic Oscillation that is credited with the brutal winter activity only exacerbates capacity shortages in the region.

While carriers deal with short-term impacts due to winter driving conditions, the unusual winter conditions will also reverberate throughout the economy. When weather is poor, consumers tend to stay indoors and at home and avoid spending money at retailers and restaurants. Because of the disproportionate size of the consumption economy in the affected region, it will have an impact on freight flows in other parts of the country. You can anticipate this to show up in data in coming months. And never underestimate public CEOs to mention weather as a mitigating impact on their first quarter earnings.

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