Freight and oil bounce back, but extent of Harvey damage still unknown

Dive Brief:

Despite a violent second hit from Hurricane Harvey, container terminals at the Port of Houston reopened this past Friday after being closed for a week, according to USA Today, and UPS and FedEx resumed flights to the Houston airport Thursday and restarted some ground operations, according to Reuters. Texas ports Arthur, Beaumont and Orange are still closed.
Reuters reported that Union Pacific and BNSF railways resumed some operations Thursday, and BNSF is currently conducting inspections and repairs to damaged rail infrastructure, according to Progressive Railroading. According to Material Handling & Logistics, supply chain risk management firm Resilinc reported that Harvey has affected 800 factories, warehouses and distribution centers.
As of Tuesday evening, the city of Houston and the EPA are investigating a "potentially dangerous plume" at a Valero oil refinery, which reported a benzene leak Aug. 27 as a result of hurricane damage, according to the Wall Street Journal. The Environmental Defense Fund found benzene in the air in the area Monday. According to Reuters, U.S. gas prices fell Monday as many refineries and oil pipelines restarted operations, but the movement of crude oil is still delayed.

Dive Insight:

While ports, rail, trucking and air freight are bouncing back more quickly than first expected, the local oil industry still struggles with severe hurricane damage and dangerous leaks, which may completely shut down their supply chains if the complications aren't contained quickly.

Not only are the leaks hazardous to the environment, they're also hazardous to the human population, as exposure to high levels of benzene are known to cause cancer. If refineries have to shut down to mitigate the risk of leaks or to contain Harvey damage, the oil supply chain may be delayed even more.

Although gas prices fell Monday, they're still likely to rise as crude oil operations still lag behind. Because there are so many moving parts to the oil industry, it is too soon to know how severe the damage will be, apart from periodic delays as the industry recovers.

Supply chain managers should still expect and plan for delays with regard to Texas operations and prepare for a potential fuel price hike. It's good news that freight and the oil industry are resuming operations quickly, but it will take some time before companies understand the full scope of damage and profit loss and the effect it will have on supply chains.