For those living in coastal communities, the good news: hurricane season activity will be virtually nonexistent this year. Pretty much all predictive variables, from sea surface temperatures to wind shear, suggest the current hurricane season will not be nearly as powerful as last year’s crazy season in the Atlantic Basin. Bad news in the short term for FEMA and relief truckers.
For whatever the varied reasons, there’s a meteorological yen-and-yang, push-and-pull between the Atlantic and Pacific. “A very active Pacific is one of the themes we’ve had this year, and much of the time we see a correlation: when the Pacific is very active, the Atlantic Basin is not,” Riskpulse Chief Meteorologist Jon Davis told FreightWaves last week.
Tropical Storm Lane hitting Hawaii last week, and deluging the big island with some 30-inches of rain in a matter of hours, was also abnormal. Hawaii has historically been protected against hurricanes because sea surface temperatures near the islands are typically too cold to support a significant tropical cyclone. That’s not expected to be the case in the future as the ocean warms in response to increasing amounts of greenhouse gases in the air, according to Axios.
Now, the bad news: sea level rise is no longer the seemingly far-off threat it once was. A growing number of new studies, including one out Thursday, show that analysts are finally waking up to a real estate reality check. According to the nonprofit First Street Foundation, housing values in New York, New Jersey and Connecticut dropped $6.7 billion from 2005 to 2017 due to flooding related to sea level rise. Combined with their prior analysis of five southeastern coastal states with $7.4 billion in lost home value, the total loss in eight states since 2005 has been $14.1 billion.
First Street’s Steven A. McAlpine and Columbia University’s Jeremy R. Porter analyzed over 9.2 million real estate transactions, encompassing about 20 million properties in New York, New Jersey, Connecticut, Florida, Georgia, South Carolina, North Carolina and Virginia.
The study relies on a vast real estate database maintained by Zillow, combined with sea level rise projections from the National Oceanic and Atmospheric Administration, in order to quantify each property’s sea level rise exposure. The main sample used for the study has 460,000 sales of residential properties between 2007 and 2016.
Long or short term, what does this mean from a freight perspective—and from the consumers who don’t want a disruption in their supplies for any amount of time?
From a short-term perspective, flooding usually means a boost to freight because of the increase in capacity to a given region. Things have to get hauled out, and as buildings and residences are rebuilt, supplies must be brought in. However, in the longer-term, as FreightWaves chief economist, Ibrahiim Bayaam, says, “Longer term, there are issues with freight patterns and home-building preferences will change where the freight is going.”
SONAR consultant, Zach Strickland, takes a look at where some serious density disruption could occur. “New Jersey is action packed with warehousing because there needs to be some sort of hub. There’s rail service there. You have to serve the population. The further out your transportation companies—your carriers and logistics providers—have to invest, the greater the costs. You want your warehouse to be as centrally-serviced to your customers as possible.”
“When you have to move away from the coast, these flood-prone areas are going to pay less for the warehouse, but your insurance costs are going to go up. Think about all the freight you have to value. Your insurance isn’t the building, it’s what’s in the building,” says Strickland.
Climate change is going to give carriers an extra layer of insurance operating costs. By moving further inland you save in both insurance costs and real estate, but your increased costs are simply the length of haul, and potential more challenges in getting in and out the giant city populations.
As for port operations, costs will certainly go up. First, of course, they can’t go anywhere. They simply have to absorb the cost of damages and supply disruptions. The math is simple: the more value in an area, and the more likely the damage, equals the increase in insurance cost.
For now, the only major storm to hit landfall this season, Tropical Storm Lane, has subsided, and all ports but Lanai have been opened since Saturday according to the Coast Guard’s most recent update.
“Restoring this vital commerce has been a top priority,” said Capt. Michael Long, Coast Guard Captain of the Port. “Cargo vessels and barges offshore can bring in their cargo, cargo already at the port can be processed and distributed to Hawaii. We are continuing damage assessments. Opening the ports on Hawaii Island was a positive first step,” Long said. “We’re pleased we were able to speed our other assessments along and appreciate the strong relationship with our partners to restore commerce. Lanai is pending assessment but should be open soon.”
With rising sea-levels and warming oceans, the chances of weather-related freight costs is also growing. This season may just be the calm before the storm.