Editor’s note: This article contains outdated content but has been left up for anyone searching for this information. Check the EZ Invoice Factoring blog section to find our more recent content.
Hurricane Ida left a trail of destruction in its path as it worked across the US, claiming 98 lives along the way. Altogether it is estimated that Ida’s damage totals could reach $95 billion. Around 15% of the country’s oil production and refinement was shut down due to the hurricane, driving up fuel prices. Damages and fuel prices aren’t the only economic impact of the storm. Ida has also bumped up the already record-high trucking rates.
Ida’s Impact on Trucking Rates
Hurricane Ida has had an enormous impact on trucking rates in the areas hit hardest by the storm. Rates in the New Orleans area increased around 20% the week of the storm. In New York City, an area heavily affected by flooding from Ida, trucking rates increased by almost 80%!
These rate increases were felt across the country, not just the areas directly impacted by the hurricane. Across the country, demand for trucking increased the week of the storm. General trucking and flatbed trucking both increased by 17%, while refrigerated trucking demand increased 15%.
What’s Driving the Trucking Rate Increases?
While Hurricane Ida may have caused the most recent trucking rate increase, the increase is part of a longer-term trend. For example, rates for refrigerated trucks have increased 108% since September of 2019. Across the board, both the rates and the volume of goods are up. In fact, trucking spot rates are over 30% higher than last year and double the five-year average.
There are several drivers of these price increases apart from natural disasters. First, there is a massive trucker shortage that is showing no signs of ending. In 2019, the American Trucking Association estimated that the industry was short over 60,000 drivers. It predicts that the number will grow to over 160,000 by 2028. To combat this, many trucking companies have increased driver pay and benefits, passing the cost increases along to their customers.
While the supply of drivers is low, the demand is increasing. Lockdowns triggered by the pandemic led to a huge increase in online sales. With entertainment options low, many Americans turned to online shopping to cure boredom. Remote work also led many to order products for newly converted home offices. Businesses like Walmart and Amazon were shipping record levels of goods, further stressing driver supply.
Will Rates Return to Normal as the Storm Recedes?
While the price spike from Hurricane Ida will be temporary, the overall high trucking rates are estimated to continue. By the time the refineries are back to work and all the roads are back in running order, the trucking industry will be beginning deliveries for the holiday season. This will ensure that trucking supply will have a difficult time meeting demand. Ironically, businesses like Amazon and Walmart that need the most shipping capacity are hiring people who may have been ideal driver candidates.
Natural Disasters Compound the Problem
Not only do natural disasters like Hurricane Ida increase the gap between supply and demand, but they also serve as a driver deterrent. According to a recent Convoy survey, natural disasters are causing drivers to turn down loads they see as risky. Half the drivers surveyed stated they would avoid taking loads in areas affected by wildfires. 45% said they’d avoid areas that were either flooded or under a flood watch and 35% would avoid places under a hurricane warning. Even heat waves could deter drivers, with 21% saying they would turn down loads in areas with excessive heat. If you’re a driver undeterred by these disasters and are looking to help out while making money, read our related article to learn more about hauling FEMA loads.
Cash In on These High Rates With Truck Invoice Factoring
For truckers, these higher rates can be a great benefit but could lead to businesses taking longer to pay your trucking invoices. Customers sometimes wait 30, 60 or even 90 days to get their payment out to you. If this sounds familiar, truck invoice factoring can save the day. Fill out this form or give us a call today to learn how to avoid that payment delay and get paid within 24 hours for the loads you’ve hauled.