Freight Rates Remain Steady Despite Cold Snap

A nationwide cold snap this week has many bundling up, but for the logistics industry, it’s been business as usual. Data from DAT Freight & Analytics comparing outbound dry van spot rates for the top 25 destinations from Chicago during the 2021 polar vortex and this week’s current view shows lower rates in 2024 for almost all routes.

According to Ken Adamo, chief of analytics at DAT Solutions, cold weather alone isn’t enough to cause significant lasting impacts.

“A lot of folks tend to equate these cold snaps to material increases in freight rates,” said Adamo in a LinkedIn post. “That can be true in some cases, but most often the impact is short-lived and regionalized.”

Unlike weather events like hurricanes and tornados, he added, “once it warms up, the effect is largely gone. There isn’t much to clean up or rebuilding that needs to happen.”

Disruptions to the supply chain are dependent on many factors, and in the case of cold weather, it often must be accompanied by another underlying problem before the outcome is noteworthy.

For example, in February 2021, a major polar vortex wreaked havoc on supply chain and freight networks. Adamo said these disruptions were thanks to “a one-two punch of cold weather and the delta variant that whipped markets back into a frenzy for the balance of the year.”

The south was also hit hard, blanketed by snow and ice, leaving the ERCOT power grid unable to support the demand for electricity in Texas. This double threat resulted in blackouts that shut down important logistic infrastructure like warehouses and terminals.

Refrigerated cargo is the exception

While we are not seeing major disruptions to freight networks during this current cold snap, Adamo said he expects there still will be big impacts in areas with very little national freight impact, such as Portland, Oregon. Like much of the country, Portland is experiencing unusually severe winter weather, which has resulted in at least 10 deaths, loss of power for hundreds of thousands of people, and encased the area’s roadways and transportation infrastructure in ice.

He also expects to see a spike in demand for refrigerated trailers, which is often heightened when temperatures plummet.

“There’s one small wrinkle in there with refrigerated trailers, which sounds counterintuitive,” he said. “When we get bad cold snaps, you’ll see a supercharged demand for reefer trailers because a lot of carriers will use them for protection from freeze loads.”