Wine country wildfires impacting shippers, future wine shipments

This is one of the fires burning over Sonoma Valley in California. The wildfires are threatening wine production in the region, having destroyed several wineries already. (Photo: California Department of Forestry and Fire Protection)

This is one of the fires burning over Sonoma Valley in California. The wildfires are threatening wine production in the region, having destroyed several wineries already. (Photo: California Department of Forestry and Fire Protection)

The deadly wildfires raging in Northern California regained their vigor on Wednesday as winds picked up and helped spread fires, threatening historic Sonoma County wineries. The fires have left at least 17 people dead and more than 2,000 buildings destroyed.

They have also impacted shipping in the region, although to date, they have not impacted Interstate 80. According Stephen Bennett, COO of supply chain risk analysis firm Riskpulse, hundreds of shipments have been impacted so far. For instance, one food and beverage shipper Riskpulse works with has had over 150 shipments altered while another is dealing with half-a-dozen customers and vendors who have been affected. Three Walmart stores are within the fire zone.

“Major F&B shippers have closed operations entirely in the Santa Rosa, Sonoma, Napa, Fairfield region,” Bennett told FreightWaves. “Wholesalers and retailers are also closed - affecting delivery schedules from shippers that are not located in the impact zone.”

The risk of the fires growing continues for the next few days, potentially putting more businesses and residents in harm’s way.

“Increasing northerly winds and drying conditions are forecast to return to the region later today and persist through Thursday,” Bennett says. “Low humidity and gusty northerly winds will combine with dry fuels to produce critical fire weather conditions, especially in higher elevations of the north and east bay hills/mountains from tonight through tomorrow.  These new Diablo Winds could exacerbate any fires that are not yet contained, as the weather conditions would favor further spread of existing fires and the potential growth of new fires.”

From a supply chain perspective, Bennett says that impacts have been limited to origins and destinations in Fairfield, Napa, Sonoma and Santa Rosa.

According to DAT, outbound lanes in the region may be showing some effects of the fires. The top lane is to Los Angeles, with flatbed rates from San Francisco to L.A. down from $1.99 per mile to $1.84 per mile over the past seven days (over the 15-day rate), suggesting that lumber and logging shipments are being impacted. Reefer freight along that same lane is also down over the 15-day average, from $2.56 per mile to $2.52 per mile.

Van rates has risen from Sonoma to Los Angeles, going from $1.60 to $1.68, but van rates nationally rose 12 cents last week to settle at $2.09 per mile, so measuring the fires’ actual impact is tough.

“The immediate impact has been negative for reefer and flatbed freight,” Eileen Hart, vice president of marketing & corporate communications for DAT, told FreightWaves. “The San Francisco market had been enjoying a strong fall harvest of grapes and other area crops; much of the grape crop was in but some may have been in storage/shipping facilities.”

In wine country, more than 70,000 acres have been burned by two fires, as of Wednesday morning. The Napa Valley Vinters (NVV), an association representing wineries in Napa Valley, issued a statement on the current condition of vineyards in the area.

“Our top priorities remain the safety and wellbeing of our colleagues and our neighbors here in Napa County and in the surrounding areas also facing similar challenges,” the organization said. “Our hearts and condolences go out to the hundreds who have lost their homes, businesses and personal property. We are saddened by the news that there has been loss of life and pray that those numbers will remain small.”

The group said that at least five wineries have suffered “total or very significant losses due to the fire.” In addition, at least 11 more NVV members have reported damage to their winery, but there are still a number of NVV members in some of the most vulnerable areas of the valley that have not reported yet.

Communications in the area has been greatly affected by the fire. NVV has 120 members in all.

“It is too early to estimate the economic impact of the fires on the Napa Valley wine industry,” NVV said. “Complicating matters is the fact that it is harvest season in Napa Valley. However, we estimate that 90% of the grapes were picked before the fires started on Sunday night. Wineries able to assemble crews and safely get to their vineyards are continuing to harvest grapes.”

NVV added that it remains too soon to determine the impact on this year’s vintage overall, but that of the grapes still remaining on vines, almost all are Cabernet Sauvignon. “Our winemakers report that this thick-skinned variety, fully-developed and ready to be picked for the 2017 harvest, is not expected to be impacted by the smoke from the fires,” the group said.

The wineries that remain could be impacted for years as the large amounts of smoke could affect taste, potentially impacting future harvests and taste.

Alex Andrawes, a wine broker in Texas and owner of PersonalWine.com, told Fortune.com the impact could be felt across all wines.  “The smoke taint thing will be global — both valleys; no pockets spared, I fear,” he said.

Napa Valley wineries shipped $1 billion of wine in 2015 directly to customers, according to the Wine Shipping Report. That represents 32% of the total volume of wine shipped in the U.S. Nearly 80% of all wine shipped in the U.S. comes from California.