On Thursday, March 30, a bridge collapsed in Atlanta. In the middle of March, a snowstorm affected the East Coast for two days. One of these events boosted shipping rates, the other barely moved the needle.
Can you guess which one affected rates? The answer, surprisingly, is the snowstorm. And therein lies the volatility question that brokers, carriers and shippers deal with on a daily basis. What event is going to impact their rate structure?
Let’s start with the I-85 bridge collapse in Atlanta, which Georgia DOT officials hope to have the bridge open by June 15. According to DAT’s Ken Harper, the collapse due to a fire that melted structural beams, has had almost no impact on spot truckload traffic in the area. The reason, he wrote in a company blog, is because most trucks running in the area avoid this stretch of highway because it runs through the city of Atlanta. Most trucks running through the area travel I-285 to go around Atlanta.
Also keeping rates in check is that while Atlanta is currently the second busiest market (LA) for outbound truckload freight, “the impact on truckload freight is likely to be limited to freight going to and from Charlotte and the Carolinas and other points north. That accounts for about 10% of Atlanta's truck traffic,” Harper writes.
Similarly, shipments out of Atlanta west to Birmingham and northwest to Nashville won’t be impacted. Loads to Florida typically come from warehouses on the south side of Atlanta, an area also not affected by the bridge, Harper notes.
Truckload rates, already elevated in the Atlanta region from a one-year average of $255, are up to 7-day average of $310, up from the 30-day average of $282.
Even though travel will be restricted, the Atlanta bridge collapse is not expected to have the same impact on rates as Blizzard Stella had in March and continues to have to this day.
According to data compiled by FTR, Stella had an impact in an area that covered parts of 12 states in in which an average of 660,000 trucks operate (23% of the U.S. total) on a daily basis.
Stella’s impact showed a 5-6% increase in spot loads, FTR said, but also affected contract business which moved some capacity into the spot market to deal with a capacity squeeze due to stranded and out-of-position equipment. A third effect was higher rates, call it a “weather surcharge” FTR said, due to carriers charging premiums, again because of a capacity squeeze.
“Finally, there will be a longer-term effect,” FTR writes. “Carriers’ baseload business will still move mainly under already negotiated rates despite the temporary cost increases indicated above. As such weather events become more common, carriers are being forced to include small fudge factors in their contracted rates to cover such eventualities.
In the end, Stella caused a slowdown of 3-5 days for freight movement, but the storm’s impact on rates is felt for much longer. Conversely, the Atlanta bridge collapse is an inconvenience but because it is not along a major truck route, the impact is minimal at best.
And these are two examples why it’s difficult to forecast what impact any single event will have on shipping rates.