Harvey Devastation to Impact Trucking Nationwide
More than 10 percent of commercial transport is expected to experience disruption in the days following the storm.
Hurricane Harvey has produced a record amount of rainfall (51.9 inches) for the contiguous U.S. when it hit Texas late last week, producing extreme flooding, damage to infrastructure, and loss of life. Current estimates point to the storm being the costliest natural disaster in American history, with a potential price tag of $190 billion.
Industry analysts expect an increase in long-term trucking contract prices as well. Transportation forecasting and consulting firm, FTR Transportation Intelligence has studied the effects of weather events on transportation since Hurricane Katrina in 2005 and stated in a recent report that 10 percent of trucking throughout the country would feel the ripples of the hurricane for the first week after the storm. The impact could reduce to 7 percent by next week.
Within a month, FTR expects much of the industry to return to business as usual, though approximately a quarter of commercial transport in the Gulf Coast region will still be affected as efforts are made to recover.
Along with shipment disruptions and equipment loss, there will likely be an increase in pricing. During their study of Katrina, there was a jump of 7 percentage points in annualized pricing nationally for five months after Katrina, and spot pricing climbed 22 percent year-over-year after the crippling winter storms in 2014. According to FTR partner, Nöel Perry, Texas could see a spike in spot pricing of 5 percentage points in the coming weeks.
Fuel and energy will also be affected since almost 30 percent of American oil refining capacity is in Texas, especially Houston which along with the surrounding communities suffered some of the most severe flooding.
Weather events like Hurricane Harvey affect commercial trucking in 4 major ways:
- Road and loading dock inaccessibility due to flooding or debris;
- Shift in focus to transporting relief and emergency building materials;
- Reduced operational efficiency resulting from crowded roadways and freight loading zones;
- Diminished productivity due to disrupted supply chain demands.
The influence of Hurricane Harvey on fuel and area infrastructure combined with the federal Electronic Logging Device mandate rolling out in December, “could be the catalyst to a pricing spiral” for trucking contracts, stated Perry.