As the Gulf Coast region picked through the wreckage left by Hurricane Laura, the logistics industry swung into action, swiftly seeking to determine how crazy it will get sending trucks into the region to rebuild infrastructure and restock shelves.
The most immediate impacts were on transportation, particularly a significant closure of Interstate 10 in western Louisiana that was implemented a day earlier. As Kohl Forrest, the national manager of sales at Summit Expedited Logistics, told FreightWaves TV’s Midday Market Update, he’s now having to tell drivers that what would have been a 215-mile journey is going to require a detour that will turn it into a 350-mile trip.
A chemical plant explosion in Sulphur, Louisiana, added to the woes on I-10.
Another risk: truck stops and other retail fuel outlets that have lost power so they cannot operate their pumps. Among the three biggest truck stop chains — Love’s, TA and Pilot — a total of 11 truck stops were reported to be out of power.
Representatives of other brokerage houses spoke to FreightWaves hosts on Midday Market Update about what they need to do to get ready for the rush that will take place after the storm. The storm itself was almost a period of calm as everyone waits to see how extensive the destruction will be and what is going to be needed out of the logistics sector.
Andrew Silver, the CEO of brokerage company MoLo Solutions, said the industry on Thursday was in a “little bit of a wait and see” mode. There has been “pre-positioning” of groceries and items such as generators, Silver said, “but right now we don’t know what the full damage looks like.”
“And then we’ll have a whole swath of orders that will be coming through in the next few days,” Silver said.
“The chaos hasn’t really hit,” he added. “There hasn’t been a need yet to have guys up until 5 a.m. quoting loads and doing positioning. The internal logistics storm that we’ll deal with, we’ll see that in the next several days.”
Silver looked back on the preparations last year for Hurricane Dorian, a storm that hugged the U.S. East Coast over Labor Day weekend but never created as much disruption as originally expected, given its erratic course. He said it had been a “prideful moment, getting 100 orders to support over the weekend.”
Drew Herpich, executive vice president of Enterprise Strategy of the Nolan Transportation Group and also a guest on Midday Market Update, said the first thing a lot of brokers do is race to a loadboard to see what freight is available. But the more proactive solution in dealing with a storm like Laura is to look toward the relationships the brokerage company has had in place already.
“You’ve had these relationships in place,” Herpich said. “You have the carriers who are used to hauling this. You’ve been in this situation before and this is something that you’ve prepared for,”
But while declarations of communication and using your experience are fine, the fact is, being a broker and dealing with the aftermath of a storm requires creativity.
Silver said the sheer volatility of routes to service customers rebuilding after a hurricane means that “with limited information, it’s so hard to set expectations for drivers and customers.”
A driver might be hired by a broker for a job that will take a week but at the same time, they might need to be prepared for two or three weeks on the road. “They have to be comfortable with what that might look like,” he said.
It’s particularly tricky in dealing with smaller carriers who might find that their trailer gets tied up for far longer than the original expectation, Silver said. Such an action can be handled by a bigger carrier, he added, but it could seriously hinder a smaller one that only has a handful of trailers.
Commodity diesel price takes another dive
In other Laura-related developments on Thursday, as the storm cleared out of Louisiana and moved into the Southeast:
— Oil prices continued to slide on initial indications that the refineries in the path of the storm had suffered little damage. U.S. Energy Secretary Dan Brouillette was reported by S&P Global Platts as saying that he was “very happy” with the first reports of damage, or lack thereof, to the refineries that closed and took 2.2 million barrels per day of capacity offline. “I think they’re going to be online very, very shortly,” Brouillette said. In trading on the CME, ultra low sulfur diesel settled at $1.2126 a gallon, down 3.4 cents. That is the second-lowest settlement for ULSD in August. As for production in the Gulf of Mexico, the Bureau of Safety and Environmental Enforcement reported the same amount of shut-in oil production Thursday as prior days, about 1.55 million barrels a day of crude output or 84.3% of capacity. Inspections of offshore platforms would be needed to determine whether any sustained long-term damage.
— LTL and parcel deliveries in the region were mostly shut on Thursday as the industry let the storm blow over before resuming operations.
— The key ports to the east and west of where Laura made landfall near Lake Charles, Louisiana — in Houston and New Orleans — were up and running Thursday. But in New Orleans, there were diversions of some cargoes.
— Union Pacific suffered “heavy damage” to its tracks in Louisiana. The railroad issued an embargo for 27 stations in the Lake Charles region. But its extensive operations in Houston were not damaged.
Due to disruptions to the freight market from Hurricane Laura, FreightWaves is providing free access to key features of SONAR through Friday, September 4. Click here to learn more. The URL to link to is: https://hubs.ly/H0vbzCg0