Freight Companies Scramble to Reroute Goods in Wake of Harvey

By Paul Page and Brian Baskin Features Dow Jones Newswires

Trucking fleets, railroads and shipping lines are scrambling to reroute cargo and set up alternate supply lines as Tropical Storm Harvey promises to disrupt freight traffic across southeast Texas for days.

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The region has experienced days of heavy rains, strong winds and catastrophic flooding since Harvey made landfall Friday night. Seaports in Houston and Corpus Christi have been closed to most ships since Friday, and rising waters threaten stretches of highways and railroad tracks, bringing freight transportation to a virtual standstill.

Many freight companies say they have no idea when they will resume operations. The storm is expected to linger over the Texas coast until later in the week. Even after the weather clears, it could be days before floodwaters recede enough to allow dockworkers back into ports, or trucks to resume normal routes.

The storm's impact will quickly radiate outward through the nation's transportation network, affecting retailers and manufacturers far from Texas. Other cities could see a shortage of trucks because big rigs aren't making their scheduled trips from Houston, and railroads could see backlogs as far away as Arizona, said Noël Perry, chief economist at Truckstop.com, an online load board.

Mr. Perry said nearly 10% of the nation's 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.

"This may be unprecedented when all is said and done," said Mark Rourke, chief operating officer at Schneider National Inc., a large trucking company. He said it could be three days before Schneider employees can even access some terminals in the city and potentially two weeks before normal operations resume.

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Darren Hawkins, president of YRC Freight, said the trucking company's terminal in Houston has remained closed since Friday, when workers were sent home, and the company hasn't decided when it will be able to reopen.

"We have about 3 feet of standing water in the parking lot," he said.

YRC has been holding freight bound for Texas near the origin point since the middle of last week, adding trailers to keep goods at sites throughout its nationwide network.

Mr. Hawkins said YRC is bringing some critical shipments needed for relief, including generators and bottled water, to staging areas authorities have set up around the city. But it could be some time before operations get back to normal, he said.

"By the time the city is open again, there is going to be a tremendous amount of tonnage going in," Mr. Hawkins said. "This is looking like a multiday event, and so it's not over, and means the recovery will be that much longer. With Katrina, we had almost immediate access [after the storm surge] to the area. That's not the case with Houston."

The storm's impact rippled out across the region. Kansas City Southern Co. canceled cross-border service at Laredo, Texas. The city is outside the storm's path, but the railroad had to suspend service on a key route that comes within 30 miles of the coast. United Parcel Service Inc. said it was suspending freight service in Houston and Beaumont, Texas, and offering limited service as far west as San Antonio.

Union Pacific Corp. on Sunday halted all freight rail traffic bound for Houston and surrounding areas.

BNSF Railway routed some freight trains around the coastal region. The railroad's major facilities handling intermodal and automotive shipments in Pearland, south of Houston, were open but access to the sites by road was limited and train loading and unloading operations there were on hold.

Numerous ships scheduled to stop in Houston, including oil tankers, cruise ships and container carriers, are anchored well outside the storm's path in the Gulf of Mexico. Port Houston appears to have avoided major damage, but some carriers said they could be waiting offshore even after the weather clears because flooded roads will keep dockworkers from reaching the port, or trucks from carrying cargo out.

"We've diverted to New Orleans and are waiting for instructions," said Aristos Pitsilis, the executive officer of a Greek-owned oil tanker. "We are supposed to load up in Houston, in Corpus Christi, early Sunday, but nothing still goes in or out. We've been told that maybe tomorrow we'll make our way."

Maersk has two container ships waiting for Houston's port to reopen so they can unload their cargo. The company hasn't decided whether to divert them to other ports, a spokesperson said.

Flooding could also lead to rising levels of silt in the Houston ship channel, said Paul Bingham, a trade economist with Economic Development Research Group Inc. Port pilots, who board incoming ships and navigate them up the channel, will likely be hesitant to run vessels through a shallower channel until the Coast Guard has had a chance to test the depth.

The solution for the time being, Mr. Bingham said, will be to load ships lighter -- meaning they may end up having to carry less than their capacity of petroleum products, bulk goods and containers. For container cargo, that could mean shipping companies would have to unload more goods at other ports before visiting Houston.

--Erica E. Phillips, Paul Ziobro and Costas Paris contributed to this article.

(END) Dow Jones Newswires

August 28, 2017 14:15 ET (18:15 GMT)