Skip to content
Search AI Powered

Latest Stories

Forward Thinking

Harvey moves on, leaving U.S. transportation network with formidable challenges

Trucking operations to resume out of balance, with many truckload carriers, drivers chasing high-margin "FEMA Freight." LTL carriers may see major cost hit.

There are countless unforgettable images capturing Hurricane Harvey's destructive path across Houston, the Texas Gulf Coast, and Louisiana. But for folks who ship and move stuff for a living, and who face the daunting prospect of returning a key part of the U.S. economy to working order, two are particularly poignant.

One was a photo of a stretch of I-10 in Texas that was transformed into a raging sea by days of record rainfall. The other was a deserted, flooded-out road near a spaghetti bowl of highway in Houston where all that was visible was a mostly submerged tractor-trailer. Both were stark reminders to those who manage the nation's supply chain of what lies ahead as months, if not years, of rebuilding get underway.


After regaining strength for the past 24 hours over the warm waters of the Gulf of Mexico, Harvey made landfall again yesterday morning east of Houston, sparing the nation's fourth most populous city further misery after dumping an almost biblical 52 inches of rain in some areas in just the past five days. Instead, Harvey turned towards Louisiana, but not before effectively drowning Port Arthur, Texas, home to the nation's largest oil refinery, on its way to swamping Baton Rouge and New Orleans, among other Louisiana cities.

Little has changed at this point in the transport ecosystem. The Port of Houston, as well as the city's two major airports, George Bush Intercontinental and William P. Hobby, remains closed until further notice. Omaha-based rail giant Union Pacific Corp., whose network feeds into the affected areas, continues to suspend service from Brownsville, Texas to Lake Charles, La. Most areas of east of downtown Houston are still inaccessible, UP said. The railroad has begun inspecting most of its infrastructure in Houston and west of the city, using helicopters and drones to view the damage in areas where there is no road access.

Rival BNSF Railway, which also serves the region, said Tuesday that it continues to suspend all Houston originating and destination traffic, as well as all traffic scheduled to route through Houston. BNSF's Houston-area rail yards and facilities, such as those that house intermodal and automotive operations, remain closed until further notice, the Fort Worth, Texas-based railroad said. "Given the size and scope of the flooding, normal train flows in the area are not likely to resume for an extended period," and customers should expect continued delays, BNSF said.

UPS Inc., the nation's largest transportation company, said that 574 zip codes in Texas and four in Louisiana are experiencing some level of service disruption. "There continue to be many locations where no pickup and deliveries are being made," the company said in an online service alert.

Companies shipping into the Houston area will experience extensive delays, though operations have resumed in Austin, Atlanta-based UPS said. UPS advised shippers to contact their customers prior to shipping to see if their locations have been impacted by the flooding. Rival FedEx Corp., based in Memphis, said it continues to monitor the situation but provided no details on service issues.

Not surprisingly, trucking networks are likely to find themselves out of balance once the region's highways, state, and local roads become sufficiently passable for the rigs to roll. Truckload carriers chasing so-called FEMA Freight, shipments of emergency supplies that are priced at a premium, will descend on south Texas, siphoning off capacity from elsewhere and raising spot, or noncontract rates, in the region and, for the short term, nationwide. Commercial truckload shipments bound for Houston or for south Texas may be delayed or re-routed due to a compromised infrastructure, creating a ripple effect as markets like Dallas, San Antonio, and Austin become de facto staging points and themselves become congested.

Less-than-truckload (LTL) carriers may face added pressure because they operate costly and complex hub-and-spoke type networks, part of which have been idled for days.

Re-balancing the typical LTL network will likely be expensive in terms of additional manpower needed to get loads back on their way, as well as the costs of possibly relocating personnel, cleaning up terminals, and paying freight claims.

C. Thomas Barnes, president of Chicago-based logistics technology provider project44 and a veteran of more than 20 years in the LTL, truckload, and third party logistics (3PL) segments, estimated that it will cost LTL carriers in aggregate, as much as $250 million to restore their networks to pre-Harvey conditions.

What's more, LTL rates are considered "static" in that they don't change frequently and become embedded in a shipper's or 3PL partners' transportation management systems (TMS). Attempts by LTL carriers to boost rates to offset rapidly escalating and extraordinary costs would require shippers or 3PL's to spend hours manually loading carrier rate information into a TMS, Barnes said. This becomes problematic when natural disasters create major imbalances in LTL carrier networks, he said.

According to consultancy FTR, Harvey will "strongly affect" more than 7 percent of U.S. trucking, with about 10 percent of all trucking operations affected during the first week of operation. A portion of the country's trucking network will be impaired for as long as two weeks, FTR said. After a month, about 2 percent of the national network and one-quarter of the regional system—skewed heavily towards the Gulf—will be impacted. Regional services will absorb most of the dislocation, FTR said.

Recent

More Stories

image of AMR factory robot and IOT data

North American manufacturers embrace “factory of the future”

Manufacturing enterprises in North America are breaking with tradition to harness the power of artificial intelligence (AI) and machine learning (ML) as they seek to compete amid new technologies, consumer demands, and economic shifts, according to a report from the research and advisory firm Information Services Group (ISG).

That changing landscape is forcing companies to adapt or replace their traditional approaches to product design and production. Specifically, many are changing the way they run factories by optimizing supply chains, increasing sustainability, and integrating after-sales services into their business models.

Keep ReadingShow less

Featured

NMFTA to release proposed freight classification changes this week

NMFTA to release proposed freight classification changes this week

The less-than-truckload (LTL) industry moved closer to a revamped freight classification system this week, as the National Motor Freight Traffic Association (NMFTA) continued to spread the word about upcoming changes to the way it helps shippers and carriers determine delivery rates. The NMFTA will publish proposed changes to its National Motor Freight Classification (NMFC) system Thursday, a transition announced last year, and that the organization has termed its “classification reimagination” process.

Businesses throughout the LTL industry will be affected by the changes, as the NMFC is a tool for setting prices that is used daily by transportation providers, trucking fleets, third party logistics service providers (3PLs), and freight brokers.

Keep ReadingShow less
Jump Start 25 conference opens in Atlanta

Jump Start 25 conference opens in Atlanta

Artificial intelligence (AI) and the economy were hot topics on the opening day of SMC3 Jump Start 25, a less-than-truckload (LTL)-focused supply chain event taking place in Atlanta this week. The three-day event kicked off Monday morning to record attendance, with more than 700 people registered, according to conference planners.

The event opened with a keynote presentation from AI futurist Zack Kass, former head of go to market for OpenAI. He talked about the evolution of AI as well as real-world applications of the technology, furthering his mission to demystify AI and make it accessible and understandable to people everywhere. Kass is a speaker and consultant who works with businesses and governments around the world.

Keep ReadingShow less
trends in robotics

IFR: five trends will drive robot growth through 2025

As the global market value of industrial robot installations passes its all-time high of $16.5 billion, five trends will continue to drive its growth through 2025, according to a forecast from the International Federation of Robotics (IFR).

That is important because the increased use of robots has the potential to significantly reduce the impact of labor shortages in manufacturing, IFR said. That will happen when robots automate dirty, dull, dangerous or delicate tasks – such as visual quality inspection, hazardous painting, or heavy lifting—thus freeing up human workers to focus on more interesting and higher-value tasks.

Keep ReadingShow less
graphic of cargo in motion

Disruption events to global supply chains rose 38% over 2023

Overall disruptions to global supply chains in 2024 increased 38% from the previous year, thanks largely to the top five drivers of supply chain disruptions for the year: factory fires, labor disruption, business sale, leadership transition, and mergers & acquisitions, according to a study from Resilinc.

Factory fires maintained their position as the number one disruption for the sixth consecutive year, with 2,299 disruption alerts issued. Fortunately, this number is down 20% from the previous year and has declined 36% from the record high in 2022, according to California-based Resilinc, a provider of supply chain resiliency solutions.

Keep ReadingShow less