BLOOMINGTON, Ind. — The devastating flooding being caused by Hurricane Harvey in Texas and Louisiana potentially could disrupt 7 to 10 percent of U.S. trucking activity in the coming weeks, according to FTR Transportation Intelligence, a transportation industry consultancy.
Depending on the severity of damage caused and the speed of recovery activities, the impact could fall to 2 percent nationally, FTR said in an analysis of the situation.
"Look for spot prices to jump over the next several weeks with very strong effects in Texas and the South Central region," according to Noël Perry, partner at Bloomington-based FTR. "Spot pricing was already up strong, in double-digit territory. Market participants could easily add 5 percentage points to those numbers."
Due to the already tight nature of the truck environment, FTR said the disruption means that loads could be left on the docks. The largest effects will be regionalized, but transportation managers across the entire U.S. will be scrambling.
According to FTR, there are four broad effects of these disruptions:
- idle trucks waiting for water to recede from roads and loading docks;
- extra shipments of relief and construction supplies;
- extra shipments and lower productivity due to out of cycle supply chain demands; and
- slow operations due to congestion, circuity and backed up loading docks.
FTR also noted that since Texas provides 30 percent of U.S. petroleum refinery capacity, regional diesel supplies will be strongly affected, with national prices jumping as well.
"With companies such as ExxonMobil and Phillips 66 closing down their refineries, we are talking about impacts to fuel and energy," said Larry Gross, Partner at FTR. "In addition, Houston is a big interchange point for rail and intermodal, so it's not just trucking which will be disrupted. Freight cars are sitting idle outside of Houston. Will they wait out the storm or be re-routed? Of course, those final miles from the railyards are still dependent on trucks. Freight transportation is an integrated system, and this becomes more obvious during major weather events when disruptions occur."
FTR said it's basing its predictions on its study of previous major weather events, starting with Hurricane Katrina in New Orleans in 2005.