Our thoughts and prayers are with all those who have been devastated by the relentlessness of Hurricane Harvey. We are inspired by the strength and bravery shown by the first responders, volunteer rescuers, and residents who are helping in the wake of this landmark event.
Along with the visible damage left by Hurricane Harvey, supply chain networks have been thrown out of wack and the storm is expected to cost the economy tens of billions of dollars. Below are some key points you should be aware of as relief efforts in the area continue.
I’m not in Texas, why is my capacity impacted?
Houston is one of the biggest cities in the country, and because of that, the supply chain the city serves has the market in a state of flux. Trucks have been unable to get empty and the ability to find a reload has been very challenging and will continue to be so for the immediate future.
Shippers will need to understand this and implement certain procedures to make this scenario less problematic in the coming weeks. We encourage shippers to offer longer lead time, give drivers flexibility when it comes to shipping hours and ship dates, be flexible with equipment requirements if at all possible, avoid unrealistic expectations and show empathy for carriers as they battle through the change and devastation left by Harvey.
One thing we have seen as a course of action from shippers to continue to serve their respective markets is changing the origin points in the southwestern United States. This will help goods reach those who need it most but will have an immediate impact on several markets.
To combat this, storm relief is being sent into the area from FEMA-designated points. FEMA sets the market for transactional transportation in these lanes, but this also impacts the transactional market rates to all destinations from those origins.
Along with the issues facing the trucking industry, people across the country will feel the economic impact left by Harvey. Houston is a massive hub for the oil and gas industry, producing half of the petroleum and gas exports in the United States. Harvey has forced 13 refineries to completely or partially shut down, which will lead to nearly two million barrels of lost production. That means higher gas prices around the country.
Harvey will also have a major impact in the plastics industry. Houston is responsible for 70 percent of the nation’s ethylene, which is the main ingredient in plastics. Experts are saying 37 percent of U.S.-based ethylene production will be disrupted by the storm. This will impact the economy but to a lesser extent than the oil and gas industry.
All told, Harvey has and will continue to leave a lasting impact on the trucking industry and the economy as a whole. Time and patience dealing with these changes will be necessary and beneficial to all. Feel free to call the AM Transport team if you would like our feedback in what we’re seeing in the market and what we expect to see in the coming weeks.