The trucking industry is being disrupted by Hurricane Harvey, and will be for a month or more. The fierce storm has left flooded and damaged roads, downed powerlines and other wreckage in its wake.
Harvey made landfall this past weekend near Houston, and is still lingering as a tropical storm expected to dump as much as three feet of rain in some areas this week. Experts say Harvey will strongly affect more than 10 percent of all U.S. trucking this week and 7 percent next week. After a month, the storm’s impact on trucking will have lessened considerably nationally, but, but the damage it leaves still is projected to hamper operations at about a quarter of the trucking operations in the affected Gulf Coast region.
Because Texas is home to about 30 percent of U.S. oil refining capacity – much of it centered around Houston – production of diesel fuel and other petroleum products is expected to be especially hard hit, according to an FTR analysis.
Houston also is a major intermodal shipping site and the storm may have a persistent impact on rail shipments as well as on trucking.
Severe weather impacts trucking in four principal ways:
- Idling trucks as they wait for water to recede from roads and loading docks;
- Prioritizing shipment of relief and emergency construction supplies over regular freight;
- Slowing overall operations due to congestion on roadways and in freight loading areas;
- Reducing productivity with out-of-cycle supply chain demands.
Hurricane Harvey to disrupt freight flow nationwide
Supply chain experts, Mark Montague and Eileen Hart of DAT Solutions say the damage Hurricane Harvey is inflicting in southeast Texas will crimp trucking industry capacity, alter the country’s freight flow and likely push rates upward in the coming weeks and months.
Houston is one of the country’s most prominent freight hubs, and ranking as one of the top inbound and outbound freight hubs for van and reefer segments. Given the damage and its historic rainfall and flooding thus far, the supply chain will need to compensate, and freight flow patterns nationwide will be altered. While the changes in freight patterns alone would tighten trucking industry capacity, there will also be an influx of inbound relief loads from FEMA and others, which will pull trucks out of circulation and thus tighten capacity further. As industry capacity tightens, rates will likely climb. The relief effort is likely to take months.
Other potential supply-chain impacts
Houston is critical in terms of its location – port freight will likely be rerouted to major southern California ports or ports up the East Coast. Freight from Mexico will be rerouted to other areas of Texas or other border states. And consumables usually shipped on a Houston-bound lane will shift to other cities within the region, such as Oklahoma City, Dallas or Memphis.
It will tighten the truck supply, which typically drives up rates. DAT maintains a seven-day rolling average of freight volume data. Volumes as of Monday — just one day of data into the storm’s effects — showed inbound and outbound freight volume for Houston already down 10-15 percent. Experts expect that number to hit 75 or 80 percent in the coming days.
Trucking research firm FTR predicts similar industry-wide effects and increases in rates. FTR says an obvious immediate disruption to industry capacity is that of trucks waiting for the storm to pass to resume operation. Other effects to capacity include the stream of relief loads and construction supplies, the extra shipments and reduced productivity due to freight shifts and greater congestion at loading docks caused by the supply chain disruptions.
Harvey to disrupt freight flow nationwide
(Top Photo: flooding of I45 near Houston – Reuters)