By Eric M. Johnson
(Reuters) - Major trucking and logistics firms like XPO Logisitcs Inc, Daseke Inc and United Parcel Service Inc (NYSE:UPS) said capacity will shrink due to a rush of construction and repair shipments to big-box retailers and households across the storm-crippled U.S. Southeast, as analysts warned of higher shipping prices.
The demand for lumber, generators, cleaning supplies and appliances for households and home improvement retailers such as Lowe's and Home Depot (NYSE:HD) in Florida, Georgia, Alabama and the Carolinas as a result of damages from Hurricane Irma will fill trailers and containers not already claimed by shipments for the holiday shopping season.
"Already capacity was tightening. This magnified it," XPO Chief Operating Officer Troy Cooper said in an interview. "I think we will see it continue to be tight as the recovery process comes on board. You will see that into early 2018."
Tighter capacity means higher shipping prices for freight that is not already under longer-term contract, a revenue boost for trucking companies that could be partly offset by higher diesel prices and the cost of time spent navigating damaged roads.
Prices were already rising due to freight demand as emergency relief transitions to rebuilding in the Houston area following Hurricane Harvey, IHS Markit researchers said on Wednesday.
"The impact is being felt nationwide," IHS said.
A dozen XPO less-than-truckload terminals in Florida have resumed receiving shipments bound for destinations such as Savannah and Charleston, South Carolina, Cooper said. But delivery and pickups in those markets, particularly in the "last mile" to households, remain limited by road closures, power outages and flooding, he said.
"We are partnering with customers on relief loads and trying to set up a potential supply-chain opportunity with warehousing," Cooper said.
Daseke, the largest owner of flatbed equipment in North America, moved freight out of likely disaster areas in advance of Irma and readied hundreds of shipments of goods such as wheelchairs, diapers, portable toilets, lumber and concrete, said Phil Byrd, chief executive officer of Daseke subsidiary Bulldog Hiway Express.
Those trucks already helped BMW keep its manufacturing line humming in Greer, South Carolina, this week, Byrd said. Drivers picked up three import containers stuck at the Charleston port because of delays on a Norfolk Southern (NYSE:NSC) railroad line and brought them directly to BMW's plant, he said.
YRC Worldwide Inc resumed limited operations in multiple Florida locations including Miami and Jacksonville, the company said on Wednesday.
Atlanta-based UPS has resumed package delivery, ground and air freight operations in all but three hard-hit locations - Islamorada and Key West, Florida, and Brunswick, Georgia, said Mark Wallace, a UPS senior vice president.
UPS used generators to re-open sorting and distribution facilities and routed shipments around flood zones. Drivers have started trying to deliver packages to debris-strewn neighborhoods in Orlando, Miami and Charleston.
"If you think about how people are going to recover, they are going to recover by ordering and getting things delivered to their homes," Wallace said. "It is a sign of getting people back to normalcy."
