Ike’s Impact on Shipping Minimal

Five days after Hurricane Ike blew through town, crews have cleared most of the roads in downtown Houston, power has been restored throughout most of the city, and businesses are gradually re-opening.

In the outlying areas, the recovery process has been going a little more slowly: millions still without power in the greater Houston area, and tens of thousands, most of them from the hard-hit Galveston area, still in shelters.

But for shippers UPS, FedEx and DHL, things are getting back to normal quickly. All three companies report that Ike resulted in minimal disruption and they are now operating at near-full capacity (although it should be pointed out there is little demand in the Houston/Galveston area right now).

Kevin Connelly, a vice president for DHL overseeing “area one,” including Southeast Texas, reports that the company’s approximately 60,000 sq. ft. facility in Beaumont (just east of Galveston) is without power and still shut down.

“That facility serves all of the southern tier of Galveston, TX area -- and all of the coastal areas east into Louisiana,” Connelly says. “There’s no damage to the facility, it’s accessible, but the two power plants that deliver energy into that area are both still under water today. And unfortunately, due to curfews and restrictions moving in and out of that area, we’re unable to operate out of that facility at this point in time.”

Connelly says as part of DHL’s contingency planning, which kicked into gear last Tuesday, before Ike arrived, the company cleared as much product as possible from its Beaumont facility and other coastal DCs and moved it to inland locations prior to Ike’s arrival.

He adds that the company “had made a decision by the end of the week that we wouldn’t be operating on Friday and Saturday.”

“So we allowed all of our people, direct and indirect, to move out of harm’s way – that includes all of our contractors who drive trucks -- and we pulled our aircraft out of harm’s way as well,” he says, adding that the aircraft had to be parked at “remote locations outside of the impacted areas.” In addition, DHL planned ahead by sending generators into the area to power up its facilities, as well as fuel to power up its vehicles.

“By Saturday afternoon we were already evaluating the facilities that we operate out of to see what our capabilities would be,” he says, adding the company had already started calling employees back.

One thing that continues to be a problem, Connelly says, is that “you still have some pretty strict curfews in the area: 9 p.m. to 6 a.m., at least through Saturday.” This, combined with a lack of available hotel space, he says, has created a challenge for the air contingencies.

UPS spokesperson John Manning says service levels in the area are almost back to normal for Big Brown as well. He says all of the company’s facilities in the area were operational – although some in the Houston area were still running on generator power as of Tuesday evening.

Like the other major shippers, UPS also made efforts to keep volume away from its coastal DCs as Ike approached ashore.

“We divert the volume away from the buildings that are going to get hit the worst, so as to protect it,” he explained. “That way if a building goes under water, the packages aren’t destroyed.”

Manning says UPS used its large sorting center in Dallas to house most of the parcels destined for the coast. Those centers, he says, were “taking work that would’ve normally been done in Houston, which closed on Friday due to mandatory evacuations.”

“Workers sorted parcels in Dallas to get them ready for delivery,” he explained. “So that minimizes the backlog that Houston has to deal with – and all we have to do is get that volume back down to Houston when they’re ready to go with it.”

One reason the major shippers tend to get their facilities up and running quickly is because they play a key role in the recovery process in that they work with FEMA and other relief agencies to get emergency supplies into the area.

Manning says when UPS resumed operations on Monday its two main priorities were to deliver emergency supplies and get all the overnight packages out. “We delivered relief supplies from FEMA, as well as hospital supplies,” he says, “So we’ve already played a role in the restoration efforts.” He added that FEMA has such a strong need for UPS’ services “that we actually got approval for our employees to be out after curfew -- we got authorization letters.”

Manning says as of Tuesday UPS had most of its employees back to work in the region and “ready to go.”

“The only barrier we have is that a lot of businesses are still closed,” he says. “But we don’t have any closed zip codes right now. There might be cases, like on Galveston Island – and we saw this with Katrina – where you’re going to try and make a delivery and find that that address doesn’t exist anymore, unfortunately.”

He adds that closed businesses “are going to result in a delay – and of course, as long as there are power outages, there will be closed businesses.”

FedEx spokesman Jim McCluskey says the shipper had two facilities closed as of Tuesday: One in Beaumont and another in the Houston metro area. But he says FedEx was in the process of getting both facilities back on line and that operations were almost back to normal.

“There are some access issues -- and some service issues that continue -- but due to our contingency efforts, we were able to resume as of Monday,” McCluskey says. “Now there are some areas, Beaumont for example, which have some issues. But if you look at the Houston market itself, we are resuming service there.”

“That doesn’t mean it’s going to be full service to everybody,” he says, adding that it will probably take a week before everything gets completely back to normal. “But at least we have the presence there -- and we didn’t sustain any serious damage to speak of.”