Logistics Nightmare Follows in Harvey’s Wake
Arthur Friedman, Sourcing Journal Online, August 30, 2017
The catastrophic flooding caused by Hurricane Harvey hasn’t just meant the loss of life and homes for many people, but has also led to impassable stretches of highways and railroad tracks, bringing freight transportation in southeast Texas to a near standstill.
The Port of Houston remained closed on Tuesday, as did the Port of Galveston and Corpus Christi’s smaller port.
Houston’s port had just broken ground on a new container yard to increase stacking capacity by as much as 80 percent. It will also allow for increased container freight station activities and improved maintenance and repair operations. The new container yard is slated to open in July 2018.
Container volumes have been growing at the Port of Houston and were up 14 percent in the first half of the year compared to last year. Growth is expected to continue for the foreseeable future as petrochemical facilities along the Houston Ship Channel expand and produce more plastic resins for export.
Major imports flowing through the Houston and Corpus Christi ports include retail consumer goods, food, construction materials and machinery. Galveston is a key cruise ship port and Carnival Cruise Lines said it had cancelled several departures this week.
FedEx suspended some services in Houston and other areas devastated by Hurricane Harvey and said some service delays and disruptions were anticipated because of the storm, which closed George Bush Intercontinental Airport, grounding FedEx Express flights linking Houston to Memphis, Dallas and Fort Worth.
There were reports that Houston’s William P. Hobby airport could reopen Wednesday, but it and Bush Airport remained closed at press time.
FedEx Ground temporarily suspended service over the weekend to more than 500 Texas communities including Houston, plus another 39 in Louisiana. On Monday, FedEx Ground was offering partial service, dependent on local conditions, in southeast Texas.
USA Today reported that Memphis companies Dunavant Logistics and IMC Companies, which have Houston operations associated with the city’s major ports, were also affected.
Dunavant was running limited operations east of Houston but was shut down within the city. Dunavant’s 600,000-square-foot warehouse in Pasadena, Texas, and truck terminal in La Porte hadn’t sustained storm damage, but some employees’ homes had been struck, executives told USA Today.
The number of Houston-area trucking runs requested plunged 80 percent on Sunday, according to the most recent data from DAT Solutions, an online load board.
Union Pacific Corp. said it suspended all freight rail traffic along the Texas Gulf Coast from Brownsville through Corpus Christi to Houston and east to Lake Charles, Louisiana. Union Pacific said it was conducting track inspections, where possible, in anticipation of resuming operations.
UPS has suspended freight service in Houston and Beaumont, and is offering limited service as far west as San Antonio. Two Maersk Line container ships remain anchored in the Gulf of Mexico, joining oil tankers and cruise ships waiting for Houston’s port to reopen.
The UPS Foundation announced more than a $1 million pledge in support of recovery efforts in Texas and Louisiana. The pledge is a combination of cash grants, in-kind transportation movements and technical expertise to provide urgent relief, as well as support for long-term needs ranging from rebuilding to personal and financial recovery assistance.
“In this time of enormous need, it is critical to establish and support extensive networks of public-private partnerships to get aid to those who need it, as quickly as possible,” said Eduardo Martinez, president of the UPS Foundation and chief diversity and inclusion officer. “At the same time, setting aside funding and other resources for long-term recovery efforts is also important, and we are laying that groundwork as well.”
The UPS Foundation is working with FEMA, the American Red Cross, the Salvation Army and other humanitarian aid partners to assess longer-term needs, and will commit an additional $500,000 in cash and in-kind assistance for recovery needs that will be specified during the post-crisis recovery phase in the coming months. In addition, UPS will transport the Toolbank Disaster Services tool trailer to assist volunteers with clean up and rebuilding, and the Hewlett Packard Connection Spot Trailer communication trailer to provide Wi-Fi internet access, printers and charging stations to help expedite flood claims processes.
The hurricane and flooding also caused store closings throughout the region. On Tuesday, Walmart Stores listed more than 100 Walmart and Sam’s Club units closed, but said it was working on getting as many stores as possible back open in short order. The Walmart Foundation had also pledged at least $1 million toward relief efforts.
Union Pacific pledged $250,000 to support relief efforts, $100,000 to the American Red Cross and $50,000 to Houston Mayor Sylvester Turner’s Hurricane Harvey Relief Fund.
Hurricane Harvey forced Invista to stop production and declare force majeure on its Victoria plant that primarily manufactures nylon 6,6 intermediate chemicals that are used in the manufacture of its consumer brands Stainmaster, Antron and Cordura. Ascend Performance Materials was also forced to stop nylon chemical production at its Chocolate Bayou facility in Alvin, Texas.
Karl Kuykendall, manager of U.S. regional economics at IHS Markit, said, the Greater Houston region generates $10.7 billion a week in gross domestic product and if economic activity this week were cut in half from its normal pace, that would result in $5.4 billion of lost output.
However, Kuykendall said, “The rebuilding efforts will be a positive force for economic growth as structures, roads and other infrastructure are rebuilt or repaired and why disasters tend to have just a short-term economic impact. The local construction industry, reeling from more than 8,000 job losses in the past year, will get a much-needed boost.”
But what can’t be ignored , he noted, is that “Houston is a major downstream energy and export hub, and extensive damage to energy, transportation or port infrastructure would have broad ramifications,” with more than 30 percent of U.S. refining capacity in the storm track.