Northern Distribution Network to shore up Afghan supply chain
Escalating threats to Afghan supply routes spurred U.S. military officials to begin searching for alternatives back in 2008. It took some doing—and some help—but they found another way.
Steve Geary is adjunct faculty at the University of Tennessee's Haaslam College of Business and is a lecturer at The Gordon Institute at Tufts University. He is the President of the Supply Chain Visions family of companies, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly.
The U.S. military may be winding down its operations in Iraq, but it's a whole different story in Afghanistan. Shortly after taking office in 2009, President Obama ordered the deployment of an additional 21,000 troops to Afghanistan. That number swelled to more than 30,000 over the following months, and in December, the president ordered another 30,000 troop bump by the summer of 2010. That will push the total to an estimated 98,000 U.S. troops, almost triple the number stationed in that country when President Bush left office.
The troop increase in Afghanistan might look manageable compared with the peak deployment in Iraq, which has been estimated at 170,000. But there's a lot more to the story than the numbers. In fact, looked at from a purely logistics perspective, military officials say, Afghanistan in many ways represents a worst-case scenario.
To begin with, there's the sheer volume of material that has to be brought in to support Afghan operations. Because Afghanistan offers little in the way of basic infrastructure, the military has to build things like housing. That means that in addition to moving people and their equipment into the country, it also has to bring in construction materials, food, medicine, and munitions, along with support contractors and everything else needed to survive in one of the most difficult environments on earth.
Then there's the challenge of finding a way to bring all that stuff into the country. Afghanistan has only 16 airports with paved runways, and only four are capable of handling international cargo traffic. There are no seaports—it is a landlocked nation. And there are no railroads in.
Under the circumstances, it's little surprise that military logisticians consider providing support to troops in Afghanistan to be the ultimate test. "If you [were asked] where's the last place you'd like to be fighting a war, other than Antarctica, you might well pick Afghanistan [for its] landlocked, very austere environment," said Dr. Ash Carter, under secretary of defense for acquisition, technology, and logistics, at a recent conference on defense logistics modernization in Washington, D.C.
No entrance
In the absence of solid alternatives, the U.S. military has been forced to rely mainly on roads to bring supplies into Afghanistan. But the situation there isn't much better. Because the United States is barred from moving goods through Iran, points of entry into Afghanistan by ground are limited to a handful of mountain passes.
Until very recently, the only ground route judged usable by the United States and NATO was one that went in by way of Pakistan. After the fall of the Taliban government in 2002, the United States began sending truckloads of supplies picked up at Pakistan's Port of Karachi into Afghanistan through the Khyber Pass. At the time, the Khyber Pass was considered to be much safer than the alternative, a crossing in the Hindu Kush mountains at a town called Spin Boldak.
But the military has since been forced to revise its assessment of security on the Khyber Pass route (as military leaders often quip, "The enemy gets a vote."). In December 2008, 12 percent of the Afghanistan-bound freight crossing Pakistan's Northwest Frontier Province en route to the Khyber Pass disappeared, most of it in flames, according to Vice Adm. Mark Harnitchek, deputy commander of the U.S. Transportation Command.
The attacks on the freight convoys led logisticians to reroute shipments destined for the southern part of Afghanistan to the crossing at Spin Boldak. But Spin Boldak hasn't proved much better where security is concerned. On Aug. 30, 2009, a NATO convoy was attacked, and 20 fuel tankers and other supply trucks were destroyed.
The search for Plan B
Given the risks presented by the Pakistan ground routes, it's probably no surprise that the U.S. Central Command (CENTCOM) has been actively seeking other options. In 2008—well before the surge—Gen. Duncan McNabb, the commander of the U.S. Transportation Command, handed down orders directing the Surface Deployment and Distribution Command (SDDC) to start working with CENTCOM to find alternatives.
To understand what happened next, you have to know something about how military logistics has changed since the end of the Cold War. What many people don't realize is that the military is no longer in the business of moving freight. When it has cargo to move, it does exactly what a lot of its private-sector counterparts do—it hires a common carrier. "We have a worldwide presence without owning a truck, or a train, or a ship," says Maj. Gen. Jim Hodge, the commander of SDDC. "We do it all through our commercial partners."
So when it came time to get the project rolling, the military's first move was to get in touch with some of those commercial partners. "We decided to call in the guys who do this for a living and leverage them the best we could," says Col. Stan Wolosz, the SDDC's chief of staff. Military personnel quickly began contacting some of their primary carrier partners—including Maersk Line Ltd., APL, and Hapag-Lloyd—to solicit their help. As Kevin Speers, Maersk's senior director of marketing and administration, recalls, the central question the military posed to them was: "How can we bring in cargo overland to Afghanistan without touching Pakistan or Iran?"
The New Silk Road
What the military and its partners came up with is what's now known as the Northern Distribution Network (NDN), a set of multimodal routings that enter Afghanistan from the North, bypassing Pakistan completely. In some cases, these journeys incorporate parts of the old trade routes used for centuries by merchants, explorers, and warriors—routes collectively known as the Silk Road.
Although the partners identified nine options in total, most are variations on two basic approaches. One route crosses the Baltic Sea to Riga in Latvia, where the freight is loaded onto rail for the journey through Russia, Kazakhstan, and Uzbekistan, where it's offloaded onto trucks and hauled into Afghanistan.
The other route goes east through the Mediterranean and up the Dardanelles into the Black Sea, with the freight offloaded to rail at Tbilisi in Georgia. The cargo then moves overland through Georgia, Armenia, and Azerbaijan, before being loaded onto ships again at Baku for passage across the Caspian Sea to Kazakhstan. In Kazakhstan, it's loaded back onto rail for movement to Uzbekistan, where it's ultimately offloaded to trucks and hauled into Afghanistan.
The main destination hubs for cargo rolling into Afghanistan from the north are Bagram Air Force Base, Kabul, and Kandahar. In total, there are 32 direct delivery locations in Afghanistan.
As daunting as it might sound, coordinating the various legs of these complex multimodal moves is only part of the challenge. The other part is working with the various jurisdictions involved to make sure the shipments comply with each country's rules and requirements. "You have to tie together the governments, the carriers, the shipper, and the ground force," says Col. Wolosz. To help smooth the process, SDDC has taken the step of placing liaison officers in consulates and embassies across the NDN.
Mission accomplished
The first shipment to move via one of the northern routes departed in February 2009 and was delivered in May. Based on the success of that venture, the NDN was declared operational in May 2009, less than a year after the project began. As of the end of March 2010, over 10,000 containers had moved through this new set of routes.
The primary user of the NDN, which is reserved for non-lethal supplies, is the Defense Logistics Agency (DLA). So far, that agency alone has moved more than 8,000 containers through the network. "I think it has gone very well," says Air Force Col. Deirdre Mahon, the DLA's division chief for combatant command support. "Through time, the NDN has proven to be very reliable. We've seen the transit time continue to decrease and the capacity continue to increase. It's doing the job it was intended to do."
One of those jobs, of course, was to reduce the volume of freight brought in through Pakistan. And on that count, the project has been an unqualified success. Today, less than half of all Afghanistan-bound freight moves through Pakistan.
Alan Estevez, the principal deputy assistant secretary of defense (logistics & materiel readiness), credits the private sector with much of that success. "We could not do this without the great support we have from the contractor community, our partners, and transportation providers through some third-party logistics providers," he says.
The military has come in for its share of praise as well. "It's worked very well because whenever we've had an issue, we've been able to go right back to SDDC for help," says Rick Boyle, vice president, U.S.-flag transportation services at Maersk Line Ltd. "Together, we have an ability to get things done very quickly."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."