Irma Threatens Supply Chains Across the U.S.

The most recent forecasts for Hurricane Irma now predict the Category 5 storm will make landfall in Florida tomorrow morning, after which Irma is expected to continue her trajectory, diminishing in size and severity throughout her journey along the Southeast coast of the U.S.

In anticipation of Irma’s disastrous path, numerous ports along the Southeastern seaboard have either ceased operations or have plans to do so shortly. The port of Miami ceased operations yesterday afternoon, while the ports of Jacksonville, Port Everglades and Savannah all plan to close by 5 PM today. The port of Charleston is expecting to remain open throughout the weekend, but has implemented a tentative work stoppage for early next week.

With resources and equipment already quite scarce as a result of Hurricane Harvey, the combination of Harvey and Irma has the potential to affect supply chains in a magnitude that is far greater than the ground covered by either storm. Capacity in the Gulf Coast is heavily depleted as truckers have been rushed out of the area. According to the JOC, “Longhaul spot market prices tripled, reportedly between $5,000 and $10,000, in the immediate aftermath of Harvey, driven by the capacity shortage but also rising diesel fuel prices, after Harvey crippled U.S. oil supplies traveling through the US Gulf Coast.” In light of this, many shippers have turned to rail as a viable alternative. However, Irma’s current trajectory would likely devastate major rail arteries and hubs of the Southeast, immobilizing rail moves in the region and beyond. If trucking rates continue their exponential hike, exacerbated by Irma, and the regional rail network becomes paralyzed, then shippers’ hands will be forced and they will need to seek alternative ports of entry. The result will be a surge of cargo to West Coast and Northeastern ports that, in combination with the impending Holiday season, is sure to cause massive backlogs and delays.

Despite the disastrous impacts Irma could have on shippers, supply chains mean nothing without the people behind them, so please stay as safe as possible.

Shapiro will continue to monitor the situation and provide updates as they become available.