Freight backlogs inevitable from Hurricane Harvey devastation

9/2/2017

Significant freight backlogs and supply chain disruptions are inevitable in and around the US Gulf Coast states of Texas and Louisiana and will take some considerable time to clear following the devastation caused by Hurricane Harvey.

Cathy Roberson, founder and head analyst at US-based Logistics Trends & Insights, told Lloyd’s Loading List that with so many roads and railways flooded, the region’s logistics industry could take a long period of time to clear freight backlogs once waters recede and stevedores and logistics professionals are able to return to work.

“It’s bad; the storm is moving back into the Gulf and is expected to hit land again,” she told Lloyd’s Loading List. “All the ports are closed. Houston’s airports are closed, roads are flooded, rail lines are closed, so nothing is moving. It’s going to take quite a while for Houston to recover from a city and logistics perspective.”

On top of the disruption to supply chains and logistics networks, there would also be cost implications.

“Truck spot rates will likely go up once the waters recede and folks look to move goods in and out of the area,” said Roberson. “There are indications that up to 10% of the US’ trucking capacity could be affected by Harvey, and that prices to book big rigs have jumped anywhere from 5% to over 20% after other large-scale weather events.”

She also said fuel prices were already surging, which could add additional costs to supply chains. “Refineries are severely impacted and gas prices have jumped as a result,” she added. “Here where I live in Atlanta it has increased by over 20 cents and will probably go up the longer the refineries stay down.”

As reported today in Lloyd’s Loading List, shipping lines are urgently scrambling to re-route US Gulf services unable to call at the port of Houston as Tropical Storm Harvey edges towards Texas and Louisiana again. The Port of Houston remained closed today due to the impact of Hurricane Harvey, which started to inundate the region with rain on Friday, before being downgraded to a Tropical Storm.

An alert from the port earlier today said it was it was continuing to monitor weather conditions to determine when operations could safely resume. One source reported that the Port of Houston may not allow sailings until Saturday, leaving several cargo ships still waiting out the storm in the Gulf of Mexico.

OOCL said that one vessel on its Trans-Atlantic ATG1 service, which was scheduled to call Houston on 25 August, had now been diverted to Tuxpan, Mexico. The carrier said export shipments for loading at Houston would be rebooked onto alternative ATG1 services, while imports for discharge would be reloaded at Tuxpan as soon as possible.

Maersk Line’s latest customer update said its best-case scenario for a Houston call on its MECL loop was now 2 September.

Roberson said the US port options for shipping lines were limited. “Container ships can be redirected to New Orleans, which is the nearest major port to the area, but that area and to the west of it in the Lake Charles area, is receiving rain from the tropical storm as well, and the potential for flooding in South West Louisiana is strong. So, the Gulf alternatives are Mobile, Tampa or, further afield, Miami.”

She continued: “Maersk has a couple of ships waiting to dock in Houston and as of yesterday had said they were taking a wait and see approach. However, I expect Houston port is going to stay closed for the rest of this week because of the rains.”

Many of the afflicted region’s roads and railways also remain impassable or clogged, while Houston’s two main airports – George Bush Intercontinental Airport and William P Hobby Airport – were closed again this morning.