Seattle to LA and LA to Dallas spot rates both up 35% in 7 days
Overall accepted loads from LA to Seattle drop 60% in a week
The conditions creating a perfect storm for the out-of-control fires burning through Southern California began last winter, with one of the wettest winters in state history. “All that rain caused a large amount of vegetative growth, and when you combine that with the extremely dry fall that we just experienced, you get a huge fuel source for wildfires,” Jon Davis, chief meteorologist at Riskpulse, told FreightWaves by phone. “The third factor was an unusually severe Santa Ana wind event that caused fires to spread rapidly. When the Thomas fire [in Ventura County] started, it was spreading at an incredible rate of an acre per second.”
Three major fires—the Thomas fire in Ventura County, the Valencia fire in Santa Clarita, and the Creek Fire just east of San Fernando—have caused abrupt, unpredictable interstate closures and major disruptions to the movement of freight. Portions of Highway 101 were closed in both directions, Interstate 405 was temporarily shut down, and Interstate 5 also suffered closures. Portions of Highways 150 and 33 were closed. Emergency firefighting forces are reporting that all three of these fires are 10% contained or less as of Thursday afternoon. Riskpulse’s meteorologists expect the Santa Ana wind activity to continue for up to three or four more days based on the current disposition of the jet streams.
“It’s almost textbook. It’s the end of the summer drought, there has not been a lot of rain this year, and we’ve got Santa Ana winds blowing,” says Alexandra Syphard, an ecologist at the Conservation Biology Institute. “Every single year, we have ideal conditions for the types of wildfires we’re experiencing. What we don’t have every single year is an ignition during a wind event. And we’ve had several.”
If fires shut down the 405 and 101 simultaneously, north-south traffic will shift to Interstate 5, which will be over capacity and also threatened by the Valencia fire. If Interstate 5 closes, north-south freight traffic will be diverted even further east, to the 395 into Bakersfield, or onto the 15 all the way into Nevada.
By shutting down north-south highways, clogging local thoroughfares with tens of thousands of evacuees, and keeping workers from their jobs, the southern California fires have already strained the Los Angeles metro area’s supply chains. FreightWaves has seen major impacts to spot rates for freight coming in and out of Los Angeles.
In the past seven days, spot rates for freight going from Seattle to LA have jumped 35%. Spot rates for freight northbound, from LA to Seattle, have increased by 22% in the past week. The spot rate for San Francisco to LA went up 22%. The spot rate from LA to San Francisco exploded from $2.58 to $3.14, a gain of 21%. The one major Los Angeles freight lane that has not been impacted is Dallas to LA—the east-west routes have not really been affected by fires and trucks are moving into Los Angeles to take advantage of high outbound rates. But rates outbound from LA to Dallas went up 35% because of a lack of capacity—with north-south traffic disrupted by road closures and evacuations, there are fewer trucks in the city to move freight.
Turndown rates for LA drops and pickups were stable—they have hovered around 20% or north of that number for several months, and the spot rate increases did not move them. But the stability in turndown rates conceals a major disruption to the LA outbound freight lane: overall accepted loads from LA to Seattle dropped an astonishing 60% from the week prior. Los Angeles, of course, is a major port and we are currently in the middle of the Christmas retail season. We could see a capacity crunch in Los Angeles that extends well beyond the current fires as the port unclogs and imported goods are rushed out of the city.
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