Hurricane Harvey Could Disrupt Trucking for Some Time

September 1, 2017

By Eugene Herbert

We watch on TV and , to some degree,  empathise  with the lives of those who see and feel firsthand what disasters do to those at the forefront of nature’s might. Such is the case with Hurricane Harvey, whose heavy rains brought devastating flooding to Houston and much of south Texas, and Louisiana

It will be a while before the totality of the damage is realised in the fourth largest city in the US 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. Estimates say up to 10% of all U.S. trucking will be affected during this first week.

FTR attributes 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. This is according to observations made after similar storms, such as Hurricane Katrina in 2005. 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,” says Noël Perry, partner at FTR. “Spot pricing is already up strong, in double-digit territory. Market participants could easily add 5 percentage points to those numbers.”

Fuel prices are also likely to jump as Texas provides 30% of U.S. refinery capacity.  There may be a strong affect on regional diesel prices  with national prices increasing as well. The storm can cause temporary shortages for the Gulf Region and increase prices in the Northeast. This area supplies some of its oil from the region, according to the Washington Post.

Of course we know that when the US sneezes the world catches a cold. So, quite possible this distant disaster may still reach out and touch us here in SA.

Till next time drive safe and watch the road.


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