The aftermath of Hurricane Harvey in southeast Texas is causing calamitous complications for the entire U.S. trucking industry. Houston, one of the areas hardest hit by the storm, is an important inbound and outbound freight hub in the U.S., particularly for van and refrigerated trailers. It is a key transfer point for freight that is coming in from Mexico as well as the location of a critical and dynamic deep water port.
The devastation caused by the hurricane will alter the country’s freight flow and likely cause rates to increase in the coming weeks and months. The commercial freight supply chain will need to compensate and flow patterns will need to be altered. The changes that will be required will stress trucking industry capacity throughout the U.S. There will also be an increase in incoming freight loads bringing relief and construction supplies to the area from FEMA and other emergency assistance agencies, which will pull trucks out of circulation, adding to the tightening capacity issues.
In response to the record-breaking flooding in the area, the Federal Motor Carrier Safety Administration (FMCSA) has declared Texas and Louisiana officially “states of emergency” and has exempted certain commercial truck drivers who are responding to the crisis from hours-of-service and other federal regulations. Drivers who are hauling supplies, equipment or helping evacuate people, or assisting in disaster relief in other ways, are covered under the declaration.
The location of the disaster area is what is causing such a major impact on the industry as a whole. During the four day deluge, more than 50 inches of rain fell in the Houston and surrounding area, affecting more than 4.5 million people in an area larger than New York City and Chicago combined.
While it’s too soon to know the full impact of the storm on key trucking market conditions, re-routing of roadway and port freight will tighten up the truck supply, which will ultimately drive up rates. Freight volume data has already started to show the impact, with volume down for the Houston area by 10-15 percent. Experts predict this number to reach 75 to 80 percent reduction from normal volumes in the days, and possibly weeks, ahead. In addition, commercial freight prices are expected to climb in response to the disruption caused by the storm. In comparison, rates gained in the five months following Hurricane Katrina jumped by 7 percentage points on an annualized basis.
No matter your location, Encompass Risk Solutions encourages you to be safe and require drivers to follow prudent safe driving practices and protocols. Learn more about Encompass Risk Solutions and how to improve your fleet’s safety.