Noel Perry, chief economist of Truckstop.com and partner at FTR, analyzed early data on Hurricane Harvey’s impact to the trucking industry spot market in a recently released report, examining how the market is predicting conditions on the ground.
Interestingly, in the week leading up to Harvey, incoming truck traffic decreased by nearly 20%, which Perry says was the result of truckers not wanting to get stuck in the region. However, even as the storm made landfall, the trend reversed somewhat as emergency supplies began moving into the region in the first few days.
The storm's effects on the ground were undeniable, as all goods leaving the area came to a virtual standstill. Again in the early part of the storm there was a burst of outbound activity, but for now, it seems, nobody is producing anything in the Gulf region until there is some guarantee that traffic will be able to carry it.
“Early in the storm, there were two days of aggressive outbound moves in dry van, when people seemed to realize it was now or never," Perry wrote. "Currently? Loads are very hard to come by. As a result, outbound prices have fallen, down 16% overall for the last week."
Because of the lack of outbound traffic, inbound freight is coming at a premium, with prices currently up 25% moving into Texas. Because of the likelihood that there will be no freight to take out of the region, freight companies are adding cost to the front end, according to Perry.
With the waters finally receding from Houston and the recovery and rebuilding effort getting set to begin, the dry van market has been hot because of the trailer’s versatility in transporting multiple types of goods. On the opposite end, reefers are way down as perishable goods producers are still not sure that their time-sensitive loads can be stored safely at the destination with the lack of power in some areas. Flatbed operators are currently anticipating the influx of rebuilding supplies and equipment.
Ultimately, it’s not just roads that need to be cleared in order for normal activity to return to the area. Weather also disrupts supply chains, says Perry, and it could be months before those supply chains recover. Until then, freight haulers will be less productive and more expensive. Also, because of the size and scope of the affected region, and its importance to several industries, national prices are expected to react more strongly to the storm than would normally occur for such a localized event.