Hurricane activity in the Atlantic Ocean typically begins to ramp up in earnest around mid-August. But things had been eerily quiet without a single storm to be seen anywhere in August. After predicting an above-average hurricane season, many forecasters were left wondering about their initial predictions of a busy season. According to Phil Klotzbach, a hurricane researcher at Colorado State University, “It was really, really dead. We had no storms in August, which was the first time since 1997.”
That was until last week when the 2022 Atlantic Hurricane season made its presence known, with two hurricanes making landfall. Early in the week, the Canadian Maritimes was hit hard by Hurricane Fiona making landfall in Nova Scotia as a Category 2 hurricane just days before Hurricane Ian arrived in Florida and the Carolinas.
Hurricane Fiona Damage Assessment
Areas impacted the most in the Maritime Region include Prince Edward Island (PEI), Cape Breton NS, and Port Aux Basques, Newfoundland. The powerful storm Fiona slammed into the region’s eastern fishing and farm industries, smashing wharves, food processing plants, and potato storage facilities that will take months to repair. Fishing is a critical industry in Canada’s Atlantic provinces, which produce some of the world’s largest lobster exports and PEI, the largest potato-producing region in Canada, was especially hard hit.
Major potato growers on PEI, where Fiona left a trail of destruction, report their potato crop is about to be harvested. Besides being unable to get onto the fields to harvest, they report that crop damage should be minimal. The more significant issue is the power outages across the island, meaning processing plants won’t have the power to unload and store the crop.
According to Accuweather Founder and CEO Dr. Joel N. Myers, the total damage and economic loss from Fiona in Atlantic Canada is estimated to fall between $2-4 billion. This is in addition to the estimated $10 billion in damage and economic impact from Fiona in Puerto Rico before making its way along the U.S. East Coast.
Hurricane Ian Damage Assessment
Hurricane Ian’s impact is still being assessed almost a week after landfall. Many are still without power on top of the tragic loss of life from one of the most devastating hurricanes to hit the state. According to CoreLogic, a leading global property information provider, residential and commercial wind and storm surge insured loss estimates in Florida for Hurricane Ian are estimated between $28 billion and $47 billion. Corelogic’s Associate Vice President, Hazard & Risk Management, Tom Larsen, said, “This is the costliest Florida storm since Hurricane Andrew made landfall in 1992 and a record number of homes and properties were lost due to Hurricane Ian’s intense and destructive characteristics.” Corelogic also anticipates the recovery will be slow and challenging due to inflation at a 40-year high, interest rates nearing 7%, and labor and materials still in high demand.
The impact of Hurricane Ian on freight markets was immediate
The impact on freight markets was also evident in Florida last week, where outbound average linehaul rates increased by $0.07/mile to $1.20/mile after dropping for the three weeks prior. In Lakeland, FL, the most impacted Florida freight market where Hurricane Ian made landfall, dry van spot rates for outbound loads increased by $0.08/mile to $1.12/mile. In addition, outbound average linehaul rates in Atlanta (see Figure 1) and Savannah increased by $0.03/mile and $0.08/mile, respectively, in the two major markets that supply significant freight volumes into Florida. They had been dropping for three weeks before Hurricane Ian made landfall.
Inbound dry van load posts into Lakeland were only up 1% last week, with much more volume expected this week from nearby staging markets. In contrast, inbound volumes into Southeast freight staging markets, including Montgomery, Tallahassee, Macon, and Tifton, jumped by 20% w/w after dropping for the prior month. In other markets, reefer spot rates for outbound loads were up slightly by just $0.03/mile while flatbed capacity was very tight, resulting in linehaul rates outbound flatbed rates in southern Florida surging last week, increasing by $0.36/mile to $2.03/mile for outbound loads.
How long will the Florida freight take to recover, if at all?
We can expect considerable market instability in the coming weeks and based on past hurricane impact, inbound rates should remain elevated far longer than outbound rates given the large inbound freight volume in comparison to outbound.
Figure 1: Atlanta Outbound Dry Van Linehaul Spot Rates Over the Prior 7 Days to Top 25 Destinations