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Hurricane Harvey Could Disrupt Trucking for Some Time

<p><em>Photo: Texas Army National Guard/ Lt. Zachary&nbsp;West</em></p>

Hurricane Harvey, whose heavy rains brought devastating flooding to Houston and much of south Texas, may yet cause more trouble for the region--  the National Weather Service is predicting an additional 25 inches of rain through the end of the week in certain areas.

Some parts of Texas have already seen as much as 30 inches of rainfall, with flood waters covering freeways, homes, and neighborhoods across south Texas in an area the size of Lake Michigan, a Red Cross administrator told National Public Radio.

It will be a while before the totality of the damage is realized in the fourth largest city in the U.S., but some are estimating that 30,000 are currently without a home. Many key roads in the area are impassable or washed away and that is also impacting businesses, including trucking operations. 

Trucking research and analysis firm FTR estimates that Hurricane Harvey could strongly affect over 7% of U.S. trucking with up to 10% of all U.S. trucking being affected during this first week.

FTR attributed this disruption to trucking to a few broad effects. Trucks will have to wait for the water to recede from roads and docks in the region before freight begins to move. Extra shipments of relief construction supplies will take precedence, so overall productivity could decrease due to out-of-cycle supply chain demands. Then, most obviously, there is the infrastructure nightmare due to congestion and backed up loading docks.

The hurricane will also have significant pricing effects on the spot market based on observations made after similar storms, such as Hurricane Katrina in 2005, according to FTR. Ports and railways are also jammed with traffic waiting just outside the affected area, falling behind schedule.

“Look for spot prices to jump over the next several weeks with very strong effects in Texas and the South Central region,” said Noël Perry, partner at FTR. “Spot pricing was already up strong, in double-digit territory. Market participants could easily add 5 percentage points to those numbers.”

Fuel prices are also expected to jump as Texas provides 30% of U.S. refinery capacity. Regional diesel prices are expected to be strongly affected with national prices increasing as well. The storm could cause temporary shortages for the Gulf Region and increase prices in the Northeast, which supplies some of its oil from the region, according to the Washington Post.

While Harvey is no longer a hurricane, having been downgraded to a tropical storm as it weakened over land, it could still deliver buckets of rain that could cause more congestion and problems for transportation along its path.

The storm is expected to stall over the Gulf region, near Louisiana, before eventually moving northeast through the Mississippi River region into parts of Arkansas, Mississippi, Alabama, Tennessee, Missouri, and Kentucky.  There are also reports that another tropical storm, named Irma, is being tracked off the coast of Florida could bring additional problems to the East Coast.

 

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