The uncontrollable external forces of Mother Nature are costing the trucking industry a lot of money. A Federal Highway Administration study assessing the impacts of weather on freight estimates that weather events are costing the freight industry billions of dollars each year.
A more detailed follow-up to a 2012 FHWA study that provided a national estimate of weather-related delay affecting the trucking industry, “Regional Assessment of Weather Impacts on Freight” took a close look at 13 regions. Within those 13 regions alone, weather events cost the freight industry $3.8 million a year.
However, the selected regions account for approximately 1,500 miles, which is less than 1 percent of the National Highway System, according to the report. The initial 2012 national estimate was calculated at $8 billion to $9 billion annually. The most recent report suggests that estimate could be lower. However, several limitations – including not reporting on catastrophic events that shut down highways – should be accounted for.
Categories of ice and snow, fog, flood, wind, rain and extreme temperature contributed to the vast majority of traffic speed decreases in connection with weather events. Ice and snow accounted for more than half of those speed decreases and are considered the most costly of the weather events.
In the context of an individual weather event, the study found the largest impact on speeds within the first two hours of the event. Small decreases were found in the hours leading up to the event, with moderate decreases occurring up to four hours after the event.
Regions studied include:
- Atlanta: The I-285 Beltway.
- Chicago: I-57 from I-94 to the north and the Kankakee/Iroquois county line to the south.
- Columbus, Ohio: I-70 from I-75 to the west and the Licking/Muskingum county line to the east.
- Denver: I-70 from State Route (SR)-191 in Grand, Utah, to the west and the Elbert/Lincoln county line to the east.
- Lake Tahoe, Calif,: I-80 from I-5 to the west and the California/Nevada border to the east.
- Lexington, Ky.: I-64 from I-265 to the west and the Bath/Rowan county line to the east.
- Newark, N.J.: I-78 from I-476 to the east and I-95 to the west.
- Oklahoma City: I-35 from I-44 to the north and U.S. 70 to the south.
- Pittsburgh, Pa: I-79 from I-80 to the north and the Pennsylvania/West Virginia border to the south.
- Raleigh, N.C.: I-40 from the Davie/Forsyth county line to the east and the Johnston/Sampson county line to the west.
- Rapid City, S.D.: I-90 from the Wyoming/South Dakota State line to the west and SR-45 (Kimball) to the east.
- Salt Lake City: I-80 from the Nevada/Utah border to the west and the Utah/Wyoming border to the east.
- Seattle: I-90 from I-5 to the west and I-82 to the east.
The study measured travel-time data, weather data and freight data. However, the study noted that catastrophic events that shut down roads entirely were not included since no traffic was flowing. That aspect of extreme weather could be rather significant, albeit rare.
Mark Montague, industry pricing analyst at DAT Solutions, highlighted this issue in a blog on the company’s website. Essentially, extreme weather – especially winter weather – shuts down the movement of trucks and businesses. This results in spot market rates moving up and down.
“If you own a home improvement store in New Jersey, you don’t want to be out of stock on snow blowers right now, so you’re willing to pay a premium for that truck,” Montague wrote. “That rate goes up. But there is not much freight available to load up that van for the return trip, and the trucker doesn't want to drive empty. That rate goes down.”
However, the overall effect of weather delays on spot market rates tends to go in favor of truckers, according to Montague. Although disruptions in shipping will lower rates in the short term, heightened demand once the storm clears moves rates up.
“During disasters like hurricanes, tropical storms (Sandy), or tornadoes, the devastation results in post-storm surges of freight,” DAT Solutions told Land Line. “Katrina resulted in months of heightened demand as FEMA tied up significant capacity, moving relief supplies.”
Copyright © OOIDA