Shippers freight haulage costs in the US soared by tens of millions of dollars last winter as the bad weather and shortage of railcars led to a frenzy of truck bookings, fuelling a capacity squeeze, according to Shipping Gazette.
Customers turned to trucks because they "lost confidence in the ability of railways to meet their inventory needs," said Genesee & Wyoming railway CEO Jack Hellmann.
Spot market rates for truck haulage services surged by up to 20 per cent to new highs in the first three months of the year as shippers sought to minimise sometimes weeks-long delays in rail service.
Shippers sending metals or lumber on flatbed trucks, for example, saw costs rise as much as 20 cents a mile from January to March (US$1.55-$1.75) on the spot market, according to DAT Solutions, which runs a matching service for carriers.
Demand to ship freight on flatbeds outpaced the number of available trucks by a ratio of 37 to 1 in March and kept rising in April, an unusually steep seasonal spike, data showed.
With the passing of a chilly spring and unusually cold winter, quarterly corporate results are only now laying bare the tens of millions of dollars of added freight costs for shippers, Reuters reported.
That said the high levels of demand are not likely to last as shippers will return to more affordable rail.
But the spike has shone a light on a critical capacity squeeze in the North American freight system that could push up transport costs as the trucking industry lags behind a pick-up in the economy.
Industry leaders said they did not have enough drivers or trucks to meet the demand earlier this year, and long-term, trucks are an inadequate stopgap for the problems of rail.
"I'm not going to call this a once in a decade-type winter, but boy ... it (had) a very unusual effect on transportation," said Dow Chemical CEO Andrew Liveris, adding that Dow blamed a $100 million loss in sales to the bad weather.
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