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."
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."