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FTR Analysis: L.A. Fires Currently Providing Limited Impact on Overall California Freight Market

12.20.17

2017 has seen several severe weather events impacting freight movements. The two major events were hurricanes Harvey and Irma. Yet just in October, California was hit by the Sonoma Fire. The most recent fire situation around Los Angeles, and the southern and central California coast, led FTR, in partnership with load board Truckstop.com, to look at the spot market dynamics in California to see how the current situation is developing in comparison.

Insights into concentrated weather event impacts

The detailed spot market analysis that Noël Perry, Partner at FTR, performed following hurricanes Harvey and Irma gives some background on understanding supply chain effects from concentrated weather events.

  • Truckers are reluctant to go inbound to ‘risky environments’, even if outbound loads are available.
  • Inbound rates rise to incentivize truckers to the area.
  • Individual rates become very volatile, depending on many factors. This pricing volatility continues until the supply chain settles enough for truck circuits to stabilize.

Fire Insights: Sonoma Fire (October ’17)

Another useful history lesson comes from the highly destructive Sonoma Fire from October of this year. During that event, outbound volumes for van freight in California took a significant hit but were close to being back to ‘normal’ within 3 weeks.

Outbound van rates were below the pre-fire level for at least 4 weeks and were well below normal seasonal gains in pricing for that time of year. In this case, inbound rates were likely up to incentivize truckers that knew it would be more difficult to get a load coming out.

Current Event: L.A. Fires (December ’17)

The L.A. Fires have quickly passed the size scale of the Sonoma event from 2 months prior.

“The fact that we are in the midst of the holiday and end-of-year freight season causes us to view any results with a skeptical eye,” commented Jonathan Starks, COO of FTR. “We are early in this analysis; however, volumes so far are holding up much better than during the Sonoma event.”

California outbound van volumes look to be at a ‘normal’ level for early December. Part of the answer may lie in the fact that produce moves are going very strong right now and they are generally outside of the immediate L.A. region. In addition, port activity is staying healthy and most (if not all) of that activity is away from the fires. Extra miles may be needed to stay away from the affected areas, but overall freight activity is holding up.

On the rate side, outbound spot van rates have held up slightly better than normal for California during the early December holiday push. This is in contrast to the modest hit that outbound rates took during the Sonoma event.

Although there are clearly disruptions in the LA area to the trucking circuit, the overall impact to California freight has been limited and looks set to quickly return to normal.

About FTR | Transportation Intelligence

For more than two decades, FTR has been the thought leader in freight transportation forecasting in North America. The company’s national award-winning forecasters collect and analyze all data likely to impact freight movement, issuing consistently reliable reports for trucking, rail, and intermodal transportation, as well as providing demand analysis for commercial vehicle and railcar. FTR’s forecasting, specially designed reports, and custom consulting have resulted in advanced planning and cost-savings for companies throughout the transportation sector.

For more information about the work of FTR, follow on Twitter @ftrintel, sign up to receive the State of Freight TODAY monthly eNewsletter, or call Helen Lile at (888) 988-1699, ext. 1.