Hurricane Milton Poses ‘Big Ripple Effect’ for Supply Chains
More than 3 million people are without power in Florida after Hurricane Milton thrashed across the state Wednesday night into Thursday morning, with the Category 3 storm flooding streets and barrier islands and killing as many as 12 people.
The storm had spawned a tornado outbreak ahead of its 9:30 p.m. landfall Wednesday in Siesta Key, 70 miles south of Tampa, with the combination of heavy rainfall and damaging winds dealing a blow to central Florida’s supply chain.
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The ports of Tampa Bay and Jacksonville remain closed as of Thursday morning. Both ports are scheduled to reopen Friday, pending damage and safety assessments. Port Everglades’ landside operations resumed Thursday morning and waterside operations are expected to resume Thursday, pending channel and berth damage surveys.
According to BlueGrace Logistics, a Tampa-headquartered third-party logistics (3PL) provider, the days leading up to Hurricane Milton saw Florida-bound freight diverted elsewhere, with food and beverage and produce customers being the most prominent to send their freight to alternate destinations.
Total Quality Logistics (TQL), a Cincinnati-based freight brokerage and 3PL provider, worked with a variety of shippers to divert freight out of Florida, and in some cases, into the state to distribute recovery goods.
“Diversion is only part of the story,” said Kerry Byrne, president of TQL. “There is a lot to consider when major storms occur—protecting freight, ensuring critical recovery goods are positioned in a safe area, recovering loads that become distressed and caught in the storm and long-term disruptions due to infrastructure damage.”
There is significant flooding on surface streets in many areas on the west coast of Florida, with many roads still closed. Some areas in Florida have shelter-in-place orders, likely limiting available trucking capacity and shipper operations throughout the end of the week. Additionally, many less-than-truckload (LTL) terminals are closed or have limited operations, according to a Thursday advisory from C.H. Robinson.
Bryce Williford, senior vice president of 3PL services at BlueGrace Logistics, said all the company’s carrier partners either closed or limited operations in the impacted areas.
“At this time most companies are still assessing damage and determining if/when their operations can come back online if they are in an affected area,” said Williford. “There will at some point be heavy congestion from people returning to Florida coming southbound on both highways [I-75 and I-95].”
These impacts to the road infrastructure and expected congestions are already presenting delays and disruptions for retailers.
“A major general merchandise retailer we work with has delayed all non-perishable inbound freight into Tampa for a week,” Byrne told Sourcing Journal. “Distribution centers are not open and current roadway conditions are unclear. If issues persist longer than a week, other parts of the retailer’s network will absorb that freight.”
Ahead of the storm, TQL moved emergency supplies, including bottled water, to major retailers’ stores in the impacted area, and provided warehousing and temporary trailer storage for diverted inventory.
And BlueGrace, a Federal Emergency Management Agency (FEMA) partner, is currently assisting the agency with relief aid in Florida amid the road closures and affected parts of central Florida.
As FEMA leads relief efforts in the area, flatbed open deck trucks that can haul construction materials, generators and water jugs—all of which can be unloaded by hand—are in much higher demand. Since more out-of-state carriers are providing services and taking routes outside of their standard area, that takes capacity out of the market and can drive up prices, according to Williford.
“The whole supply chain is one big network. You have a hurricane in Florida, and freight rates in Seattle are affected three or four days later,” Williford told Sourcing Journal. “Some of that capacity that was going to be up in Seattle, originally coming from the midwest or the southeast, never left. It stayed, and it’s helping. Now those trucks are not where they thought they were going to be, so now we have to find other trucks there. It has this big ripple effect throughout the economy.”
According to data from supply chain visibility tech provider Project44, Florida will see a decline in truckload performance due to the damage and flooding, but rates leading up to Milton’s landfall were stable. Though on-time performance remained high, there was an 80 percent decrease in shipment volume when compared to the week prior. As shipment volume increases again, it is likely performance rates dip.
On-time inbound shipment performance for last-mile deliveries to warehouses has dropped to levels seen during Hurricane Helene, falling from nearly 90 percent on Sunday to just 58 percent on Wednesday, Project44 said. Last-mile on-time outbound shipment performance to consumers and retailers is even lower than during Helene, at 73 percent prior to Milton’s landfall. These rates are likely to remain low as road cleanup continues and residents return from evacuation.
Byrne said TQL optimizes performance by using techniques like creating trailer pools, networks of trailers strategically stationed at different warehouses to be used on demand, in passable spots to get supplies to heavily impacted areas.
Williford noted that the current state of the supply chain is typically equipped to handle, and recover from, a major disruption. But the proximity to Hurricane Helene and the ensuing three-day East and Gulf Coast port strike complicates matters and creates more costs and challenges.
“We didn’t see a ton of disruption from the port strike. It didn’t last very long. A lot of companies had prepared for it. We didn’t see a ton of disruption from Helene on its own. But you start stacking these events on each other—you add in another hurricane and there’s a few other things from seasonality going on—those issues compound themselves, and it creates additional disruption within the supply chain space,” Williford said. “Fortunately, the logistics industry is relatively calm. There’s a generally well available capacity for transportation today.”
According to Williford, the added capacity enables the system to better absorb these changes than if it had occurred during late 2021 during peak supply chain congestion. However, full recovery from a major storm like Milton will still likely take weeks.
“Typically, based on our experience with other major storms, like Hurricane Harvey, it takes a market about 30 days to return to normalized freight flows,” said Byrne.
As the local supply chain awaits a rebound, rail terminals in the impacted area remain closed. CSX was the only Class I railroad that had to adjust operations due to Milton’s path, having relocated all locomotives and cars from low-lying areas in Tampa on Wednesday and rerouting them from areas expected to be affected.
CSX said Wednesday to expect some service delays across the region.
“Based on what we know now, the shift should not cause a meaningful delay,” said Byrne. “As along as locomotives and cars are moved back to Tampa within a week, we do not expect to feel the impact for more than two weeks.”
All routes north of Jacksonville are open with no anticipated issues. Work is ongoing in central Florida, with efforts focused on addressing washouts on two of its service lines.
Milton has since mostly passed Florida, having weakened to a Category 1 before turning into a post-tropical cyclone on Thursday, according to the National Hurricane Center. A storm surge warning remains in effect for portions of Florida’s east coast and the southern coast of Georgia.
On Thursday, AccuWeather experts estimated that the total damage and economic loss from Hurricane Milton would be $160 billion to $180 billion.