As we sift through the aftermath of Hurricane Harvey, Truckstop.com’s data is continuing to provide fresh insight on its effects. This is our third report in the series. You can read our first report here, and our second report here.
There are three interesting outcomes following last week’s landfall, all reflecting supply chains and trucking operations thrown out of normal routines by this long and powerful storm.
The first effect is a steady decrease in volumes in and out of Houston. Surprisingly, freight has fallen more in the last seven days than at the height of the storm. During the storm, volumes were buoyed by the streams of emergency supply moving to the city. Now that flow has been reduced and we’re seeing the performance of the “normal” Houston transport market.
But it’s clearly a heavily-wounded market, with truck transportation volumes down 50% outbound, and down an astounding 80% inbound. These changes have turned the market’s normally strong inbound bias to a strong outbound bias.
Clearly, both Houston’s consumers and producers are injured, but the consumers are worse off. We have probably reached the nadir of this drop. Still, don’t expect a rebound to normal trucking activity for some time, probably into October. We also note that Texas, as a whole, has plenty of inbound freight, only down 7% from pre-storm levels, while outbound is down 38%. Apparently, supply chains are still pushing goods toward South Texas, but are holding them upstate. It’s difficult to tell if this is voluntary or not.
The second big effect we see is in pricing. Rate changes have displayed a strong directional bias, interestingly, in the opposite direction to the volume bias. Truckers are reluctant to go inbound to this risky environment, even with more so outbound spot loads than inbound. Inbound rates are up 12%, while outbound rates are down 5%. This might be the market reclaiming its normal inbound rate bias through habit. We also note that rates are very volatile, especially outbound, with daily averages varying by $1.42/mile. Of course, individual rates are much more volatile, depending on many factors. One should expect this volatility to continue for a month or more, until the supply chain settles enough for truck circuits to stabilize.
The final effect is the national one, a phenomenon that previous storms have taught us to expect. The first post-Harvey results are in, and the Truckstop.com market demand index 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. We don’t know yet what the final settled effect will be, but the national numbers are consistent with the direction we expected: tight markets with higher prices.