Tight trucking market may hamstring Laura recovery effort

Most of the recovery efforts will be led by the Federal Emergency Management Agency (FEMA). They will bring in supplies like food, water and generators initially while they help those who have been displaced by the storm. Once they have evaluated the extent of the damage, they will start bringing in supplies for rebuilding. The extent of the damage helps define the timeline, but typically it takes several months for a full recovery. 

If carriers are having trouble servicing their existing customers, there will need to be a strong incentive outside of altruism to devote capacity to the relief effort, especially considering the fact many were concerned about staying in business earlier in the year. 

There are some reasons for optimism for the recovery process in regard to near-term capacity. Looking at the Houston market over the past week, there has been a surge of inbound freight while outbound slowed, indicating the market may be experiencing a surplus of trucks, depending on how quickly shippers ramp back up after many slowed in anticipation of the storm. 

The Port of Houston also shut down this week for safety concerns, which means it will also see demand for capacity resume next week. The recent influx is well timed regardless and could significantly aid with the critical near-term assistance. 

In the long run, however, carriers cannot afford to dedicate too much capacity to relief efforts as it could damage their existing relationships. Emergency loads are not your typical freight and require a lot of time sitting and waiting as none of these places typically have permanent dock or warehouse features. This means a lot of the freight is stored on trailers and hand-offloaded when needed. Many trailers will have to sit for weeks, some with power in order to move it when needed.

For this reason, hurricanes can cause major trucking capacity disruptions. Harvey and Irma are both good examples of infrastructure destroying systems that left their mark on the freight market for extended periods. It is difficult to isolate the full extent of what hurricanes can do to national capacity, but there is definitely a relationship in regard to the insurance estimates. Harvey was a $200 billion event that shut down a major freight hub. We are weeks from getting an estimate on Laura’s damage total, but it is safe to say it will not be on the scale of Harvey — hopefully far less.  

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