Harvey and Irma’s Effect on the Logistics Industry
Hurricanes Harvey and Irma caused billions of dollars in property damage. The catastrophic storms did more than just flood homes and knock down trees, they impacted logistics in a variety of ways. It will be a long time before anyone can measure the two storms’ impact on logistics and the economy.
Trucking Already Tight Before Hurricanes
Even before hurricanes Harvey and Irma, there was limited commercial vehicle availability due to the following factors:
- Consumer confidence and e-commerce creates increased tonnage. Tonnage rose 4.8 percent in May. DAT Trendlines reports spot market loads were up 100 percent from the year before with 109 percent dry van and 98 percent reefer increases.
- Electronic Logging Device (ELD) implementation causes challenges. Some experts predict ELDs that make it impossible to falsify logbooks will reduce current capacity between 2.5 percent and 10 percent. Many carriers are scrambling to improve route planning and cut layovers to adjust to recent implementation.
- Retiring drivers are creating a shortage. The American Truckers Association estimates there are more than 48,000 unfilled positions across the U.S.
FEMA Reroutes Trucks
When hurricanes Harvey and Irma devastated Texas and Florida, the Federal Emergency Management Agency (FEMA) rerouted thousands of trucks to supply food and materials to the areas hardest hit. While trucking companies and drivers were happy to help, trucks sent to hurricane-devastated areas were not available for their regular routes.
Disaster exacerbated current trucking shortages. Since there were fewer available trucks and a greater need for goods, supply went up. FEMA pulled drivers from across the nation by offering attractive pay, so the entire nation felt the impact.
Houston is a Major Transportation Hub
Harvey flooded Houston, turning the fourth largest city in the U.S. into a lake. Here’s why Houston is so significant to transportation:
- Most goods transported from Mexico and South America go through Houston before being routed to their end destinations. The flooding required organizations to divert loads to facilities in Dallas, Arkansas and Oklahoma, areas not accustomed to processing that level of traffic.
- Texas supplies half of the United States’ petroleum and gas, with 30 percent of oil refineries in the state. Most of Houston’s refineries shut down during the storm. Gas prices surged by more than 15 percent.
- Steamship lines, transportation companies, railroads and warehouses had to shut down due to high water levels and multiple failures. Large amounts of rail freight had to be diverted to trucks, further tightening availability.
The Port of Houston handles more than two thirds of the Gulf region’s container traffic. Facilities shut down and stayed that way for several days. Carriers had to reroute freight, and some companies said they would skip Houston altogether as they made their Gulf-Caribbean loop.
Crops Destroyed by Irma
In southwest Florida, many crop suppliers reported a total loss in hurricane Irma’s wake. The Sunshine State supplies more than just oranges. Specialty peppers, eggplants, tomatoes and summer squash all come from the region. Waiting for replanted crops to reach maturity will take months.
Logistics companies should expect truckload capacity to remain tight into 2018. Some parts of the country will continue to see rates increase as much as 30 percent. A transportation management system that automates processes can help cut costs and maximize the effectiveness of their current fleets.