Wednesday, February 12, 2014

Snow Days - Not Done Yet

‘Polar Vortex’ winter weather causing billion-dollar ‘chilling effect’ on economy.

The frigid winds of January, which brought snow, ice and unusually cold temperatures to a large swathe of the United States, could have a longer lasting chilling effect on the economy and overshadow the first quarter.

Four separate periods of severe winter weather in January directly cost the U.S. economy $3 billion , with insured losses exceeding $1.4 billion, according to the catastrophe model of Aon Benfield, a reinsurance intermediary and capital advisor, reported the Journal of Commerce.

The storms have been blamed in part for disruptions in manufacturing, drayage chassis shortages in the Northeast and at Midwestern rail terminals, slower freight trains in the West and trucking delays throughout the country. Winter weather has slowed work at the Port of New York and New Jersey and inland rail ramps, and reduced turnover of equipment has tightened supplies of intermodal chassis.

New York-New Jersey container terminals have lost several days to storms this year, and icy conditions continue to slow operations. Terminals closed due to snowstorms or operated on short schedules. In a mirror image of 2013’s “long hot summer,” frigid truck queues on streets outside the terminal have stretched more than two miles on recent mornings. Snow and ice removal has been complicated by a regional shortage of rock salt that also has affected many cities and towns.

The winter weather revealed systemic weaknesses in supply chains that will still be present after the last snow pile melts. Any “equilibrium” in over-the-road truck capacity simply vanished in the storms, with nationwide implications. Trucks that can’t move out of one region have a domino effect, backing up deliveries throughout the system. Damage to that interconnected network isn’t confined to any one mode. Railcar, intermodal, port and air cargo operations are all thrown into disarray along with truck fleets.

For shippers, it’s important to know what your options are and keep them open, even when your DCs might have to close. Snow days are more fun for kids.

Kirk Shearer
1-800-989-0054 x103

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