Logistics Planning: How weather in the Gulf of Mexico could affect your supply chain

Logistics Planning: How weather in the Gulf of Mexico could affect your supply chain

An historic weather event

As you have likely seen on the news we have Tropical Storm Laura  expected to make landfall in the Florida panhandle AND Tropical Depression 14 (nee Tropical Storm Marco) expected to make landfall in Texas/Louisiana.  Both storms are expected to make landfall in the same week.  A similar event hasn’t occurred since 1959.  While we don’t yet know how significant either of these storms will be, it won’t take much to add to the challenges in the US transportation network right now.  And that means your logistics planning has to be a step ahead.

On Top of Covid

Our nation’s transportation networks have been working hard through Covid to keep everything moving.  But with massive channel adjustments, widely varying demand from week to week, sick or laid off workers, and a number of other contributing factors we are seeing some developments for you to keep in mind:

• Ocean freight capacity continues to be tight as maritime companies have removed sailings and ships to match reduced demand and hold or raise pricing.  In fact, they initially reduced capacity so much that prices initially jumped significantly.  Two of the largest maritime operators reported good profits last week….because of their capacity reductions.  And they do not expect to bring capacity back on line THIS YEAR from their remarks.
• Truckload capacity has shrunk and spot market prices have risen over the last month.  Initially with Covid the demand reduction produced lower prices as trucks fought for freight.  Now we are seeing a rising number of tender rejections by contract carriers as they deploy trucks into the spot market.  If next weeks tropical storms are significant, truckload capacity will be further stretched by demand for emergency response.
• LTL capacity is recovering….slowly.  LTL carriers furloughed workers as freight volumes dropped and many were surprised by an uptick that began mid-July.  Struggling to call dock workers back to work with the Federal Unemployment bonus in-place many LTL networks have become   “plugged up” in places with reduced staff and “whack-a-mole” covid infection pop-ups.  Workers are now returning but some carriers are struggling to either dig-out or find the right balance between staff and freight volume.  If the storms next week reduce freight entering the networks it may help some (unaffected) hubs clean up and get back on track.

Bottom Line for your Logistics Planning

Transportation networks are under strain like many other industries right now.  Plan ahead, ship early, be flexible if you can.  When setting expectations, keep in mind that many networks are not running as tightly as they were a year ago.  At Customodal, we’re working overtime to keep things moving and continually balance cost, timeliness, damage, and everything else.  Please let us know when a shipment is particularly hot or critical so that we can route it appropriately given today’s dynamic conditions.

If you’d like to learn more contact us.