How have the after-effects of Hurricane Harvey affected trucking? FTR has quantified the numbers, gauging the impact on the overall trucking market and the Texas and Houston markets in particular.

During the first week, almost 10% of all U.S. trucking was affected in some manner. That number jumps to near 100% for the Gulf Coast region west of the Mississippi. After a month, the numbers will ease but still remain significant. The largest effects were regionalized, but transportation managers across the entire U.S. were scrambling.

As we moved into the second week of the Hurricane Harvey drama, we saw three things happening, all reflecting supply chains and trucking operations thrown out of normal routines by this long and powerful storm.

  1. Volumes fell more in the seven days after the end of the storm than at the height of the storm.
  2. Inbound rates were up, as truckers were reluctant to go into this risky environment, even though there were more outbound spot loads than inbound.
  3. The Market Demand Index (MDI) jumped 10% and prices jumped 3%. This is just what one would expect when a storm takes 5-10% of trucks out of normal patterns.

Looking to Recovery

It’s apparent that people are working very hard in Houston, because the spot market trucking statistics are showing strong positive moves, in some cases to levels above pre-storm benchmarks.

Beginning with day 13 (Tuesday, Sept. 5), the recovery clearly had started. Outbound volumes in Houston were up for the week and would have been back at pre-storm levels if not for Labor Day. Outbound prices still lagged pre-storm levels. The outbound volume situation was very good news, because it implies that the Houston manufacturing sector, so important for U.S. fuel and chemical supplies, had begun to roar back to life.

On the inbound side we saw clear evidence of the beginning of the rebuild efforts. Volumes during Labor Day week were up 10% over pre-storm levels. Prices had stabilized as well, almost exactly at pre-storm levels.

As to differences by trailer type, the inbound reefer sector was the early recovery winner, as retailers were busy restocking shelves. Flatbeds were weakest – apparently, construction is still depressed. It is the hardest to restart, given the need to acquire capital, secure permits and draw up plans.

Potential to Shift the Market

We stand at a moment where the freight economy is looking relatively strong. We’ve already weathered two large-scale disruptive events (Harvey and Irma), the full effects of which have only begun to be felt, and another is on the doorstep with the electronic logging device mandate.

Market watchers have been wondering when trucking contract rates would begin following spot rates up. The combination of regional and fuel effects from Harvey/Irma, coupled with the ELD mandate in December, could be the catalyst to a pricing spiral.

The potential clearly exists for a capacity shortfall as bad or worse than that seen in 2014. It’s by no means a certainty, but if it were me I sure would be laying out contingency plans.