The aftermath of Hurricane Katrina has kept trucking executives hopping. Even companies that did not have their own facilities situated in the storm's path have faced a nonstop challenge to locate and keep track of drivers, trucks, customers, highways and fuel stations that were still operating in the region. The trucking industry has pitched in with admirable generosity in delivering much-needed donations of cargo, trailers, and personnel.
All of that has left most executives with no time to consider the post-Katrina economic environment. Much of that landscape is hard to discern, but here are some guesses.
Fuel. Expect it to cost even more than it would have had Katrina not struck. Some crude-oil production in the Gulf of Mexico will be out of commission for months, due to missing and damaged platforms and pipelines. That means the U.S. will be importing more oil than ever, bidding against other countries such as China and India that had already helped push prices to record highs. In addition, a couple of major refineries will be offline for several more weeks at least, forcing the U.S. to import more diesel fuel and heating oil just as demand for the latter peaks in the Northern Hemisphere. That means both higher prices and greater vulnerability to supply-chain disturbances that will produce steeper price spikes when problems arise.
Equipment. Vehicles will have to log more miles to get around storm-damaged road segments and to serve customers who have had to relocate farther from their shippers or receivers. Thousands of trailers have been converted into temporary warehouses for displaced businesses, while other trailers are filled with relief supplies or serving as field offices-even shelters. The upshot: fleets will be ordering more equipment, just when it seemed truck and trailer makers were catching up with demand. That is likely to mean longer delivery times, especially if manufacturers can't come up with enough rubber or plastic for tires, insulation, and other components. New Orleans was a major import hub for rubber, and the Gulf supplies much of the nation's plastic resin from oil and natural gas, both of which are now in shorter supply.
Freight. A mix of factors will alter freight volumes. The most important is the growth path of the economy as a whole. It appears that the storm will knock growth down but not out. Consumers will spend far more this winter than last on driving and heating their homes, leaving them with less to spend on other goods and services. That will reduce the demand for freight.
But the effects will not be distributed evenly by region or sector. The hundreds of thousands of evacuees will add to freight volume in their new permanent, or even temporary, locations. Relocated businesses and travelers will also generate new traffic patterns.
Meanwhile, traffic into the area will pick up but won't reach pre-storm levels for general freight, movers, or some other segments for years. But heavy haulers, along with waste and remediation services, will be extra busy.
Hardest to predict is the pace of rebuilding, and the shipments of construction equipment and building materials that will accompany it. Unlike typical hurricane or flood recoveries, there will be much more demolition and waste removal, followed by a prolonged debate over where and how to rebuild.
The bottom line: No matter where your fleet operates or who your customers are, you'll be facing a variety of long-term, and perhaps permanent, changes from Katrina. Now is the time to think about how you'll handle the challenges to fuel, equipment, and freight.