Georgia's Mid-American Arc project is a big bet on a profound shift in the country's goods-moving network. But some believe it may have overplayed its hand.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In September 2016, the Georgia Ports Authority (GPA), the operator of the containerport of Savannah and the break-bulk and roll-on/roll-off port of Brunswick, announced it would construct an arc-like rail network stretching across the country's midsection. By building 97,000 feet of track linking the two rail yards at its Garden City container terminal, GPA would offer the two railroads that serve Savannah—Norfolk Southern Corp. (NS) and CSX Corp.—sufficient scale to assemble 10,000-foot unit trains to routinely run from Savannah's docks to markets as far west as St. Louis.
Nearly a year later to the day, the largest containership ever to call on the East Coast, the 14,000-TEU (20-foot equivalent unit) CMA CGM Theodore Roosevelt, docked at Savannah after sailing through the widened and deepened locks of the Panama Canal, which accommodates vessels nearly three times the TEU capacity of the canal's original design. (See photo above.)
The two events are interconnected. The $128 million "Mid-American Arc" project, expected to be fully operational by 2020 with the first phase set for completion in 2019, is GPA's attempt to get ahead of what some believe is a secular shift in U.S. goods movement. As larger containerships hit the water and the expanded canal handles more cargo bound for destinations east of the Mississippi, the reasoning goes, East Coast ports can expect to see steady increases in volumes. As a result, the landside infrastructure will face greater productivity pressure as more boxes hit the docks; GPA expects Garden City to annually handle 1 million rail lifts (each container moving on or off a railcar constitutes one lift) by the time the Arc is completed. Meanwhile, there will be challenges making timely deliveries off the ports by truck amid increased road congestion and a growing shortage of qualified commercial truck drivers. Overarching all of this is the task of providing efficient and timely freight movement to a U.S. population inexorably headed toward the 400 million mark.
The confluence of these trends will force massive change on the transport ecosystem, says Walter Kemmsies, head of the North American ports practice at Chicago-based real estate and logistics services giant JLL Inc. The freight network will morph into what will resemble a power grid composed of gateway and inland ports, railroads, and intermodal truckers, all tied together by advanced IT (information technology) systems that maritime users today can't begin to fathom, Kemmsies says. The ports, he adds, will serve as the "generating plants."
The Arc represents an opportunity for GPA to attract more Asian import business transiting the canal and to capture traffic that historically flows to Chicago, St. Louis, and other Midwest points from the Ports of Los Angeles and Long Beach, which remains the nation's busiest port complex but which is plagued by persistent congestion and delays. As GPA Executive Director Griff Lynch sees it, the canal is the catalyst for much that is yet to come.
"Five or 10 years ago, a project like the Arc would not have had legs" because Savannah then didn't have the volumes to justify the need, Lynch said in a recent interview.
Lynch says the Arc is less about capturing market share from East and West Coast ports than it is about minimizing supply chain friction amid growing freight volumes nationwide. "We want to insert ourselves into the supply chain—not as a chokepoint but as an accelerant," he said.
WEST COAST'S ENDURING STRENGTH
GPA is not the only port authority inserting itself into the 21st century transport mosaic. This summer, the Port Authority of New York and New Jersey completed a $1.6 billion project to raise the Bayonne Bridge—which spans the two states—to 215 feet from 151 feet; the rise provides clearance for ships with 18,000-TEU capacities, doubling the maximum vessel size that could be handled before. The Virginia Ports Authority, which runs the Port of Norfolk among other facilities, has been involved for seven years with Norfolk-based NS's "Heartland Corridor" project that expedites double-stack intermodal traffic moving between Norfolk, Chicago, and Columbus, Ohio. In September, the port announced that CSX would link Norfolk and Pittsburgh in what would be the last step in the Jacksonville, Fla.-based railroad's decade-old "National Gateway" double-stack initiative.
Out west, Omaha, Neb.-based Union Pacific Corp. and Fort Worth, Texas-based BNSF Railway operate double-stack services on double-tracked infrastructure from the Southern California ports into the Midwest. Today, 16 unit trains, some two miles in length, run daily from Los Angeles to Long Beach and from there to Dallas, St. Louis, and Chicago.
Joshua Brogan, vice president at consultancy A.T. Kearney & Co., says the Los Angeles-Long Beach complex remains the most cost-effective way to move Asian imports into the U.S. heartland. Freight from Shanghai to Chicago transiting the West Coast arrives at its final stop in as little as 15 days, and 21 days at the very outset if there is significant congestion at the U.S. gateway, Brogan reckons. By contrast, freight on the same vessel transiting the Panama Canal, calling on Savannah, and trans-loaded onto rail for movement to Chicago takes 24 days to arrive, he says. The pricing differential between the two routes isn't significant enough to move the needle, he says.
Brogan says that despite the original canal's smallish size (5,500-TEU capacity), there wasn't much pent-up demand to shift business from the West to the East Coast even before the expansion. Other than a two-month dip in early 2017 for West Coast loaded box traffic, there hasn't been a meaningful decline out west since the expanded canal opened for business in June 2016, according to Kearney data gathered from the ports. This lends credence to the belief that there wasn't any latent demand for the expanded canal to satisfy, he says.
Comparisons between Savannah and the Los Angeles/Long Beach complex rarely arise in discussions with shippers and beneficial cargo owners (BCOs), Brogan says. "It's just not a major issue for them," he says.
ODDS-ON FAVORITE
If one believes, however, that competition among East Coast ports for burgeoning "neo-Panamax" traffic will be fierce, then Savannah holds a strong hand, experts say. Its 1,200-acre Garden City terminal is considered a model for landside operations, and it still has room to expand. All rail traffic exiting Savannah leaves from its docks. Even at Los Angeles and Long Beach, less than one-third of box traffic departs via on-dock rail, according to Jon Slangerup, former executive director of the Port of Long Beach and now executive chairman and chief executive officer of American Global Logistics, an Atlanta-based third-party logistics services and technology provider. The balance is still trucked to urban, near-dock truck-to-rail transload facilities, he says.
Slangerup says the Port of New York and New Jersey has issues in strengthening its IT systems connecting vessels, ports, rails, and trucks. It is also hobbled by the congestion that accompanies being in the country's most densely populated market. Savannah has the technology, it has the space, and it has a multimodal powerhouse just 250 miles to the west in Atlanta, which boasts the world's busiest airport for passenger volumes and is a major aircargo gateway.
While Virginia has components such as multimodal connectivity and inland port operations to optimize its network and keep pace with trade growth, it "doesn't have the infrastructure or push-pull effect of Atlanta to compete on the scale of Savannah," Slangerup says. The Port of Charleston, S.C., meanwhile, needs to get its "arms around the required capital" to position itself as a competitor to Savannah, he added.
Savannah also has another factor in its favor: its ownership. As one of four port-owned and -operated facilities—the others being Charleston, Norfolk, and Houston—it has the full support of the state, as well as access to state funding. By contrast, Los Angeles/Long Beach and New York/New Jersey, being so-called landlord ports, have to deal with often-conflicting objectives of terminal operators as well as multiple political masters.
At Savannah, the dearth of red tape means faster decisions and less time wading through the bureaucratic muck, says Kemmsies of JLL. The GPA's operational structure, he says, means it "can fix things before they're broken."
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
That challenge is one of the reasons that fewer shoppers overall are satisfied with their shopping experiences lately, Lincolnshire, Illinois-based Zebra said in its “17th Annual Global Shopper Study.”th Annual Global Shopper Study.” While 85% of shoppers last year were satisfied with both the in-store and online experiences, only 81% in 2024 are satisfied with the in-store experience and just 79% with online shopping.
In response, most retailers (78%) say they are investing in technology tools that can help both frontline workers and those watching operations from behind the scenes to minimize theft and loss, Zebra said.
Just 38% of retailers currently use AI-based prescriptive analytics for loss prevention, but a much larger 50% say they plan to use it in the next 1-3 years. That was followed by self-checkout cameras and sensors (45%), computer vision (46%), and RFID tags and readers (42%) that are planned for use within the next three years, specifically for loss prevention.
Those strategies could help improve the brick and mortar shopping experience, since 78% of shoppers say it’s annoying when products are locked up or secured within cases. Adding to that frustration is that it’s hard to find an associate while shopping in stores these days, according to 70% of consumers. In response, some just walk out; one in five shoppers has left a store without getting what they needed because a retail associate wasn’t available to help, an increase over the past two years.
The survey also identified additional frustrations faced by retailers and associates:
challenges with offering easy options for click-and-collect or returns, despite high shopper demand for them
the struggle to confirm current inventory and pricing
lingering labor shortages and increasing loss incidents, even as shoppers return to stores
“Many retailers are laying the groundwork to build a modern store experience,” Matt Guiste, Global Retail Technology Strategist, Zebra Technologies, said in a release. “They are investing in mobile and intelligent automation technologies to help inform operational decisions and enable associates to do the things that keep shoppers happy.”
The survey was administered online by Azure Knowledge Corporation and included 4,200 adult shoppers (age 18+), decision-makers, and associates, who replied to questions about the topics of shopper experience, device and technology usage, and delivery and fulfillment in store and online.
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.