Freight Booms in Houston, as Oil Prices Tumble

Houston is increasingly a critical freight hub for van and reefer, as well as flatbed. You may have heard that new drilling has been curtailed due to low oil prices, and you might expect a decline in energy-related cargo, but that hasn’t happened yet — at least not in the Gulf Coast region.

VAN – Petrochemicals, Plastics Rolling Out of Gulf Region

Houston is coming on strong, and other Gulf Coast markets also offer a lot of freight. This could be due to an increased volume of petrochemicals, including plastics and resins that are more economical now because of falling oil prices. A lot of this van freight moves on intermodal-competitive lanes, so you may not see a huge change in rates to accompany the increased demand. Certain rail freight commodities increased by double digits year over year in the last week, including chemicals, metals and auto parts. Meanwhile, oil and fracking sand are still among the top cargo types on the railroads. Similar freight trends of chemicals, metals, and auto parts also drive the truck spot market. The Pacific Northwest — including Eugene, Spokane, Pendleton and Boise — also currently offers a lot of van freight. Port issues could be a contributing factor to the Gulf Region. The labor issue at all seven West Coast ports has not been resolved since the union contract expired in July, and shippers continue to divert freight to other ports.

FLATBED – Steel and Autos Dominate, in Great Lakes and Southeast

Houston is the largest flatbed market by volume, but as steel and auto-related cargo take over leadership in growth, the focus is shifting to the Great Lakes region, as well as some key Southeastern markets. Cleveland shows the biggest increase in outbound volume, followed by Pittsburgh, Birmingham and Memphis. All four markets are active in steel production. Auto sales are increasing, meanwhile, which is a positive indicator for the economy. The automotive industry also boosts flatbed traffic outbound from the Great Lakes region — including Detroit, of course, but also markets in Indiana, Ohio and Western Pennsylvania — as well as some Southeastern states.

REEFER – Houston Leads, as a Regional Hub in Winter

Houston is emerging as a winter season hub for refrigerated (“reefer”) cargo, as well as van — and H-Town dominates the reefer segment, too. A large portion of these loads remain within the Lone Star State. Produce grown in the Rio Grande Valley travels from McAllen to Houston or to the Dallas area for processing. Beef from Amarillo and Lubbock also finds its way to Houston, for local consumption and regional distribution. As a result, Houston’s outbound load volume is consistently high, but load-to-truck ratios linger below the national average.

Reefer traffic in Houston is more balanced than in agricultural areas of Texas along the Mexican border, as depicted in a recent DAT Hot Market Map. At the Southern edges of the Longhorn State, outbound loads far outnumber trucks, but Houston is a hub, acting as both destination and origin for produce, meat and processed foods.

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