Manufacturers, retailers likely to see supply chain ‘hiccup’ following Hurricane Harvey

Hurricane Harvey’s impact is expected to spread through many parts of the country thanks to supply chain disruptions for retailers and manufacturers that will range from minor to significant.

Major infrastructure damage in the Houston area – the fifth largest metro in the United States – includes the closing of three major seaports, interstate access to warehouse facilities near the ports and railroad operations.

Kevin Kelly, founder of Recon Capital Partners, said the retail sector will take some hit because of global shipping in and out of Houston-area ports. He said if the Port of Houston is closed longer than anticipated it will give trucking and rail industries more pricing power over retailers and manufacturers to get product moved.

Marty Shell, president of Five Rivers Distribution, which operates the ports of Fort Smith and Van Buren, said Hurricane Harvey will not have a direct impact on Arkansas River traffic, but did predict a “hiccup” in the supply chain because several manufacturers who containerize shipments do so out of the Houston area. He said much of the inbound traffic on the river comes from ports in New Orleans, Houston and Mobile, Ala.

“There will be a hiccup in the supply chain. It won’t be anything that’s really disruptive. … But this is going to come around again,” Shell said of predictions that the storm could go back into the Gulf and hit the Texas shore again with more rain. “I’m kind of seeing what happens when it kicks back out in the gulf and then comes back. That could make things a lot worse.”

‘EXTRAORDINARY’ DEMAND
And while trucking companies and railroads may see more business, Shell said they will pay much more for fuel in the coming weeks.

“We may see more (trucking business), but that’s going to come with higher fuel costs,” said Shell, who also owns a small trucking operation.

Jim Craig, executive vice president of Van Buren-based USA Truck and president of USAT Logistics, said shipping and logistics demand will be “extraordinary” in the near future.

“We have already been in contact with many of our customers to provide capacity for relief supplies and are providing some service already. We anticipate extraordinary on-going capacity demand for many months as the needs transition from relief supplies to materials needed to rebuild what has been lost,” Craig noted in a statement to Talk Business & Politics. “We have a lot of our company drivers who make their homes in South Texas and Louisiana and we’re seeing what their needs might be so we can support them in dealing with any disruptions they are facing.”

Officials with Lowell-based J.B. Hunt Transport Services declined comment on their response to Hurricane Harvey. Fort Smith-based ArcBest, which operates ABF Freight, one of the nation’s largest less-than-truckload carriers, said its Houston terminal is closed.

FOOD SUPPORT
While not in the shipping business, Springdale-based Tyson Foods is preparing to send help to Texas this week.

“We are preparing for a Wednesday deployment of our Meals that Matter disaster relief teams to Houston. Right now we¹re working on a specific location to set up and begin serving meals. Once a location is determined, cook teams from our Clarksville, Dardanelle and Texarkana facilities will be the first to arrive and begin serving, as well as volunteers from our corporate headquarters in Springdale. Responding to Houston and lending a helping hand is important to us, as we have about 12,000 team members throughout the state of Texas, in addition to poultry growers and cattle suppliers,” said Tyson spokesman Derek Burleson.

Tyson said it’s working with disaster relief partners, Bimbo Bakeries, Harris Banking Company, Hugg & Hall Equipment and Team Rubicon to provide relief as soon and as effectively as possible.

Trent Goins, president of Fort Smith-based OK Foods, said the company is waiting for details before sending relief teams.

“At this time we’ve talked to the authorities and they’ve asked us not to come into town. They are still having hard time trying to figure out how to react to such devastation,” Goins said.