Weathering the Storms

Despite major disruptions caused by the flooding, widespread wind damage and general chaos that followed Katrina, and to a lesser extent Rita, truck fleets not only rushed to shoulder the heavy loads for early relief efforts, but also managed to be among the first private businesses to get back into business. One day after Katrina passed through Louisiana and Mississippi, for example, Schneider National

Despite major disruptions caused by the flooding, widespread wind damage and general chaos that followed Katrina, and to a lesser extent Rita, truck fleets not only rushed to shoulder the heavy loads for early relief efforts, but also managed to be among the first private businesses to get back into business.

One day after Katrina passed through Louisiana and Mississippi, for example, Schneider National had six drivers and three tractors moving diesel fuel from a U.S. Navy tanker docked in New Orleans to emergency generators for hospitals and to refueling locations for U.S. Army trucks. Working for FEMA, the TL carrier quickly doubled its diesel delivery fleet as rescue efforts picked up speed, says Todd Jadin, vp-operations for Schneider National.

Even though the carrier had four terminals affected by the storm, it also resumed freight shipments into the area within a week. A combination of relief aid and business shipments, “well over 100 loads” had been delivered less than two weeks after the storm passed, according to Jadin. “The business is back up and running,” he told FLEET OWNER on Sept. 13. “It's not easy. The routes open to get in there change every day, but drivers are relaying changes to us, and we're staying up on which routes are open.”

Recognizing that many evacuated area residents have lost jobs as well as homes, Schneider National has also begun working with government job agencies in the area. “We have truck-driving jobs and training available, so we'll begin offering employment assistance,” says Jadin.

With roots deep in Louisiana, regional LTL carrier Saia lost the use of an 80-door terminal in New Orleans and a smaller facility in Gulfport. “We had seven feet of water in the yard at Gulfport and lost ten tractors,” says Rick O'Dell, president & CEO. “Our New Orleans terminal stayed dry, but it lost part of the roof.”

SHIFTING OPERATIONS

A 35-door facility in Baton Rouge was quickly expanded, with flatbeds pressed into dock use to handle much of the New Orleans freight, with another portion moved to Saia's Houma, LA, facility. Coverage for the Gulfport area was shifted to Hattiesburg, MS.

Although the Jefferson Parish location of its New Orleans terminal was closed to all under martial law, Saia was given permission to recover its equipment after it volunteered to make emergency deliveries for FEMA during the initial rescue efforts. “We took a busload of drivers in on Labor Day weekend, and got out all 50 tractors and the freight,” says O'Dell.

O'Dell reports that by the second week in September, Saia's salespeople were back and “talking to customers who are getting back into operation and who want transportation services.” While traffic congestion in Baton Rouge and intermittent power outages were creating difficulties, “the areas surrounding New Orleans are coming back up much more quickly than I would have thought possible,” he says.

At presstime, Saia was planning to reopen its New Orleans terminal once the roof had been replaced, which the carrier felt would happen shortly. While its Gulfport terminal escaped with just water damage, reopening there would have to wait until reliable power and communications services are restored, O'Dell says.

Disaster planning and quick response by Wal-Mart's logistics and private fleet operations received widespread coverage in the general press as the retailer quickly moved truckloads of water, food and other emergency supplies into New Orleans, in many cases arriving ahead of federal and other emergency-response agencies. It even turned some of its fleet into mini Wal-Marts, supplying diapers, toothbrushes and other personal items free-of-charge in Louisiana, Mississippi and Texas.

The same fleet network also helped Wal-Mart reopen within a week two distribution centers and 111 of 126 retail stores shut down by Katrina.

Another transportation giant, UPS, also offered its vast resources to relief efforts, delivering more than 2,000 tons of emergency supplies in just the first week. Its logistics arm, UPS Supply Chain Solutions, was also asked by the Salvation Army to set up a distribution center for hurricane relief supplies outside of Atlanta.

Smaller trucking operations also rushed to help, delivering among other things over 600 truckloads of donated food to emergency shelters for America's Second Harvest. Other relief efforts included Tyson Foods donating 25 truckloads of ice, water and meat, which it moved with its own fleet, and the donation of trucks and drivers by Hammer Express, A. Duie Pyle, Daley & Wanzer and Big G Express to move emergency supplies.

While at presstime it was still too early to predict the hurricanes' long-term impact on trucking in the region, national tonnage is not expected to be affected, according to Gov. Bill Graves, president & CEO of the American Trucking Assns. “ATA still anticipates that freight tonnage will grow between 2.25 and 2.75% this year, and does not at this time have plans to adjust those figures,” he says.

As for truck capacity, “Nationally we did see requests for our services increase, and I attribute some of that to carriers in [the Gulf Coast area] being incapacitated,” says Schneider National's Jadin. “But that's an artificial tightening of capacity, and I expect those carriers will be back up and running quickly. It's a short-term condition, not long term.”
— JIM MELE

KATRINA'S IMPACT: FUEL

Refineries take a big hit

The short-term outlook for the cost and supply of diesel fuel doesn't look good in the wake of Hurricane Katrina.

“How much the economy dips and trucking's fuel bill goes down hinges on how the energy infrastructure recovers along the Gulf Coast,” says Joe Silvoski, director of industry forecasting for International Truck & Engine Corp. “We expect diesel prices to step back but not drop significantly, falling from the $2.80-to-$3 level, down to around $2.65.”

That's largely due to falling oil prices on the global market, driven by the recent release of 30-million barrels of oil from the 700-million barrel Strategic Petroleum Reserve. The move was part of a 26-nation effort coordinated by the International Energy Agency to help mitigate disruptions in the global flow of crude oil as operations of offshore oil rigs and refineries along the Gulf Coast begin the long recovery process.

CRUDE PRESSURE

Red Cavaney, president & CEO of the American Petroleum Institute, says that reductions in the global price of oil are what's key to reducing gasoline and diesel prices here in the U.S.

“Before Hurricane Katrina struck, fuel prices were rising primarily because U.S. refiners were paying more for crude oil, the principal cost component of gasoline and diesel,” he explains. “The price of crude is the most important factor in the price of fuel.”

That's small comfort to truckers, as ATA reports that carriers are on track to spend $85 billion on fuel this year, a $23-billion increase over 2004.

The main concern now is how long it will take to restore capacity along the Gulf Coast, a critical step in turning oil into gasoline and diesel fuel.

According to the Energy Information Agency, although all major petroleum pipelines for both crude oil and refined product are back at or near pre-hurricane capacity, three refineries in Louisiana and one in Mississippi, representing 5% of total U.S. refining capacity, could be shut down for an extended period.

Research by the Oil Price Information Service (OPIS) indicates it could take between four and six months before those plants return to pre-Katrina production levels. Flood damage is expected to be significant, and the longer equipment sits in standing water, the more extensive the damage, OPIS reports. All electrical pumps, seals and compressors submerged for long periods will need to be replaced or rebuilt, and each of those refineries has hundreds of such pieces of equipment.

At the same time, ATA notes that the absence of a national diesel fuel standard generates further price disparities and heightens localized supply shortages and price spikes. ATA president & CEO Bill Graves adds that varying state diesel fuel requirements typically prevent diesel fuel from being transported from one jurisdiction to another in times of shortage. “Rapid escalation in the price of diesel fuel, like we've seen in 2005, is devastating to the trucking industry and will result in failures, lower capital investment, and negative employment trends,” warns Graves.
— SEAN KILCARR

KATRINA'S IMPACT: PORTS

Port drivers scarce

When looking for a way to sum up New Orleans' economic importance, many cite Peirce Lewis, emeritus professor of geography at Pennsylvania State University, who noted that the Big Easy was “an inevitable city built on an impossible site.” Quite simply, it's a city — and a port — that has to be there.

Situated on the mouth of the Mississippi River, a 15,000-mi. waterway that reaches the nation's midsection, the Port of New Orleans handles agricultural commodities such as soybeans, grain and corn that would be too expensive to haul by truck or rail and so travel by barge downriver, where they are exported to the rest of the world. The port also is the nation's premiere importation site for coffee and rubber. By overall volume, it's the world's third busiest port.

UP IN A WEEK

The facility also boasts that it's the nation's most intermodal port, handling 50 ocean carriers, 16 barge lines, 6 class-one rail lines and 75 truck lines.

According to spokesman Chris Bonura, a week after Katrina struck, even with many rail lines still damaged or under water and the Public Belt Railroad closed, the port resumed limited operation, with trucks able to detour around ruined sections of I-10 and reach the port via Highway 90 and the Crescent City Connection bridge. The Clarence Henry Truckway, a major commercial roadway within New Orleans that feeds the port, was also passable soon after the hurricane.

That truck traffic was able to find a route to the port at all, albeit circuitous, speaks to the redundancy of the nation's highway infrastructure. Carriers such as J.B. Hunt and private fleets like Wal-Mart used mapping software to find ways around damaged roads and to locate stations with available diesel.

Bonura also noted that the port's Napoleon Gate Entry Management System, with RFID technology to control truck passage, remained up and running during the hurricane.

What presented a challenge, however, was the lack of truck drivers to service the port, as well as port workers to handle cargo. “There is little overall information on where drivers are,” said Curtis Whalen, executive director of ATA's Intermodal Conference.

“The port of New Orleans could be up, but without people we could be in trouble,” he said as the port was getting back into action. He suggested that until the Port was in full operation, other ports such as Galveston, Everglades and Houston might take up the slack, and they appeared to have plenty of capacity.

It's unclear if workers dislocated by Katrina will relocate to be near these facilities or remain in the New Orleans area hoping to regain their jobs. Particularly hard hit were Jefferson and Orleans parishes, but it was unknown how many drivers make it their home or where they were evacuated. Labor union officials say they were having some luck locating workers, and were encouraging members to call in.

One encouraging note was that as word leaked out that the port was revving up, officials were beginning to hear from drivers, says Bonura. The port set up a telephone number for truck drivers to call first and receive credentials so they could pass roadblocks. In addition, to help accommodate port workers and drivers in the New Orleans area, several ships provided temporary housing.

Whether drivers can find housing, schools and other necessities for themselves and their families may determine the fate of the Port of New Orleans to a greater extent than getting the cranes running and fixing water damaged roadways. “I'm impressed by how far we've come,” notes Whalen, “but labor is the real issue.”
— LARRY KAHANER

KATRINA'S IMPACT: HIGHWAYS

The hard road ahead

The harm caused by Hurricane Katrina is expressed in very big numbers: thousands of displaced people, billions of dollars worth of damage, years and years to rebuild. The list of catastrophic infrastructure damage alone includes more than 40 miles of U.S. Highway 90 buried under sand or otherwise destroyed, giant sections of the eight-mile Twin Span Bridge connecting New Orleans to Slidell, LA, collapsed into Lake Pontchartrain, a 70-foot section of the causeway over Mobile Bay (U.S. Highway 98) that dropped about 10 feet and severe damage to I-10 Bridge in Pascagoula. The Bay St. Louis-Gulfport and Biloxi-Ocean Springs Bridges are also gone.

Repair and reconstruction will happen slowly, but the good news is that the work has already begun. By Sept. 9, for example, DOT was already awarding contracts and issuing progress reports. “We are working to make sure that the people in Mississippi and Louisiana begin to see real progress in rebuilding roads and restarting railroads,” DOT Secretary Norman Y. Mineta announced. “Finding a way to get people and goods moving again throughout the Gulf Coast is the best way to get residents back on their feet and back on their way to rebuilding.”

At this point, projects are being sorted into short-term efforts to restore access and longer-term projects to redesign and rebuild for the future. Three Mississippi firms were among the first to be officially put to work. DOT announced that Mallette Brothers Construction, Warren Paving and Huey Stockstill were selected to build a temporary road to handle U.S. 90's two-way traffic, one lane in each direction. Work began on Sept. 9 and is expected to be completed within 90 days. A $5.1 million contract was also signed to repair the I-10 Bridge in Pascagoula within 31 days, with a $100,000 per-day bonus for finishing sooner.

According to WWL TV (www.wwltv.com), a $30.9 million, “fast-track” contract was awarded on Sept. 9 to New Orleans-based Boh Brothers Construction to rebuild the I-10 Twin Span Bridge, as well. The two-phase contract calls for one-lane, two-way traffic to be restored within 45 days and two-lane, two-way traffic to be restored within 120 days. As costly as it is, this is only a temporary fix, however. The state plans to field bids next year to construct an entirely new six-lane bridge, this time at a higher elevation.

Even though infrastructure repair has started in earnest, cost estimates continue to change almost daily as the flood waters recede and engineers are able to get a better look at the actual damage done. Most recent DOT estimates put the total bill for Louisiana at about $1.3 billion and for Mississippi at about $1.1 billion. All this comes on top of the $286.4 billion highway bill recently approved for the country as a whole. Clearly, the road to the future will be costly as well as difficult.
— WENDY LEAVITT

KATRINA'S IMPACT: REGULATIONS

Rules lifted to aid relief

Although federal and state authorities were roundly criticized for an anemic at best initial response to the devastation wrought by Hurricane Katrina, a number of federal agencies and state governments actually responded very quickly to temporarily roll back certain regulations.

These rollbacks, which covered such regs as hours-of-service (HOS) and fuel specifications, were intended to ease relief work conducted by truckers and to help truck operations directly impacted by the storm stay in business. Most of these emergency measures were in effect for a two-week period that expired on or around Sept. 15.

But once President Bush declared the disaster zone a federal emergency area, the “Relief from Regulations” section of the Federal Motor Carrier Safety Regulations (49 CFR 390.23) kicked in.

DISASTER RULES

According to the American Trucking Associations (ATA), this section provides automatic relief from most truck safety regulations including HOS for any motor carrier and driver providing “emergency relief during an emergency.”

To review this special provision, go to: http://www.fmcsa.dot.gov/rules-regulations/administration/fmcsr/390.23.htm.

The Federal Motor Carrier Safety Administration (FMCSA) itself issued emergency declarations right after the storm that gave regulatory relief through Sept. 14 for those transporting gasoline, diesel fuel, jet fuel, propane, natural gas/CNG and ethanol.

Once the original measure ran out, the agency extended it through Oct. 5, but only for carriers and drivers operating in FMCSA's Eastern and Southern regions.

RULES IN PLACE

The Truckload Carriers Assn. (TCA) has cautioned that a declaration of emergency and the resulting regulatory relief does not exempt drivers from CDL, insurance or drug and alcohol testing requirements. It also does not apply to any carrier or driver placed out of service.

According to ATA, EPA extended its waiver of the highway diesel sulfur requirements through Oct. 5 — but only for specific states from the disaster zone west into the Southwest and east on up the East Coast.

Among actions taken right off the bat by individual states, Pennsylvania instituted a temporary waiver of the 11-hour HOS driving-time limit for petroleum haulers to help speed fuel deliveries in the Keystone State. On top of that, Gov. Edward Rendell issued a 90-day waiver of state regs governing the transport of oversized loads to expedite shipments of manufactured homes to aid persons left homeless by Katrina.

However, the limited waiver applies only to government contractors transporting manufactured housing for Katrina relief efforts.

Another state that was quick off the blocks was Georgia. Gov. Sonny Perdue signed an Executive Order calling for a temporary moratorium on state collection of motor fuel taxes, which was to be in effect till the end of September.

The IRS declared it will not impose a tax penalty when dyed diesel fuel is sold for use or used on the highway due to the shortages of “clear” diesel caused by Katrina. This relief was in effect through Sept. 15.

All the waivers and exemptions mentioned here are emergency measures that are temporary and may or not by renewed or extended. Be sure to verify all regulations with the appropriate federal or state agency before proceeding.
— DAVID CULLEN

Financing relief

OEMs are offering existing customers directly affected by Hurricane Katrina some flexibility with their truck finance payments.

DaimlerChrysler Services Truck Finance, which provides financing for Freightliner, Sterling and Western Star vehicles, is offering “special circumstance” extensions and deferrals. Call 800-222-4221.

Navistar Financial, a subsidiary of International Truck and Engine Corp., is offering a two-month deferral of loan or lease payments. Payments will be moved to the end of the contract; and all processing fees and deferral interest will be waived. Customers should contact their regional finance office to see if they qualify.

Volvo Truck North America and Mack Trucks, owned by Volvo Group, are offering a payment assistance program through Volvo Commercial Finance and Mack Commercial Finance, respectively, to skip payments until Jan. 1, 2006. Customers residing in counties designated as disaster areas by FEMA have been automatically enrolled in the program. Skipped payments will be added to the end of the contract without additional interest or penalty. Call 877-865-8623 ext. 4026.

Although Paccar has no official comment on Katrina-related financing programs, it's believed to be making similar arrangements.
— TERRENCE NGUYEN

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