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."
As holiday shoppers blitz through the final weeks of the winter peak shopping season, a survey from the postal and shipping solutions provider Stamps.com shows that 40% of U.S. consumers are unaware of holiday shipping deadlines, leaving them at risk of running into last-minute scrambles, higher shipping costs, and packages arriving late.
The survey also found a generational difference in holiday shipping deadline awareness, with 53% of Baby Boomers unaware of these cut-off dates, compared to just 32% of Millennials. Millennials are also more likely to prioritize guaranteed delivery, with 68% citing it as a key factor when choosing a shipping option this holiday season.
Of those surveyed, 66% have experienced holiday shipping delays, with Gen Z reporting the highest rate of delays at 73%, compared to 49% of Baby Boomers. That statistical spread highlights a conclusion that younger generations are less tolerant of delays and prioritize fast and efficient shipping, researchers said. The data came from a study of 1,000 U.S. consumers conducted in October 2024 to understand their shopping habits and preferences.
As they cope with that tight shipping window, a huge 83% of surveyed consumers are willing to pay extra for faster shipping to avoid the prospect of a late-arriving gift. This trend is especially strong among Gen Z, with 56% willing to pay up, compared to just 27% of Baby Boomers.
“As the holiday season approaches, it’s crucial for consumers to be prepared and aware of shipping deadlines to ensure their gifts arrive on time,” Nick Spitzman, General Manager of Stamps.com, said in a release. ”Our survey highlights the significant portion of consumers who are unaware of these deadlines, particularly older generations. It’s essential for retailers and shipping carriers to provide clear and timely information about shipping deadlines to help consumers avoid last-minute stress and disappointment.”
For best results, Stamps.com advises consumers to begin holiday shopping early and familiarize themselves with shipping deadlines across carriers. That is especially true with Thanksgiving falling later this year, meaning the holiday season is shorter and planning ahead is even more essential.
According to Stamps.com, key shipping deadlines include:
December 13, 2024: Last day for FedEx Ground Economy
December 18, 2024: Last day for USPS Ground Advantage and First-Class Mail
December 19, 2024: Last day for UPS 3 Day Select and USPS Priority Mail
December 20, 2024: Last day for UPS 2nd Day Air
December 21, 2024: Last day for USPS Priority Mail Express
Measured over the entire year of 2024, retailers estimate that 16.9% of their annual sales will be returned. But that total figure includes a spike of returns during the holidays; a separate NRF study found that for the 2024 winter holidays, retailers expect their return rate to be 17% higher, on average, than their annual return rate.
Despite the cost of handling that massive reverse logistics task, retailers grin and bear it because product returns are so tightly integrated with brand loyalty, offering companies an additional touchpoint to provide a positive interaction with their customers, NRF Vice President of Industry and Consumer Insights Katherine Cullen said in a release. According to NRF’s research, 76% of consumers consider free returns a key factor in deciding where to shop, and 67% say a negative return experience would discourage them from shopping with a retailer again. And 84% of consumers report being more likely to shop with a retailer that offers no box/no label returns and immediate refunds.
So in response to consumer demand, retailers continue to enhance the return experience for customers. More than two-thirds of retailers surveyed (68%) say they are prioritizing upgrading their returns capabilities within the next six months. In addition, improving the returns experience and reducing the return rate are viewed as two of the most important elements for businesses in achieving their 2025 goals.
However, retailers also must balance meeting consumer demand for seamless returns against rising costs. Fraudulent and abusive returns practices create both logistical and financial challenges for retailers. A majority (93%) of retailers said retail fraud and other exploitive behavior is a significant issue for their business. In terms of abuse, bracketing – purchasing multiple items with the intent to return some – has seen growth among younger consumers, with 51% of Gen Z consumers indicating they engage in this practice.
“Return policies are no longer just a post-purchase consideration – they’re shaping how younger generations shop from the start,” David Sobie, co-founder and CEO of Happy Returns, said in a release. “With behaviors like bracketing and rising return rates putting strain on traditional systems, retailers need to rethink reverse logistics. Solutions like no box/no label returns with item verification enable immediate refunds, meeting customer expectations for convenience while increasing accuracy, reducing fraud and helping to protect profitability in a competitive market.”
The research came from two complementary surveys conducted this fall, allowing NRF and Happy Returns to compare perspectives from both sides. They included one that gathered responses from 2,007 consumers who had returned at least one online purchase within the past year, and another from 249 e-commerce and finance professionals from large U.S. retailers.
The “series A” round was led by Andreessen Horowitz (a16z), with participation from Y Combinator and strategic industry investors, including RyderVentures. It follows an earlier, previously undisclosed, pre-seed round raised 1.5 years ago, that was backed by Array Ventures and other angel investors.
“Our mission is to redefine the economics of the freight industry by harnessing the power of agentic AI,ˮ Pablo Palafox, HappyRobotʼs co-founder and CEO, said in a release. “This funding will enable us to accelerate product development, expand and support our customer base, and ultimately transform how logistics businesses operate.ˮ
According to the firm, its conversational AI platform uses agentic AI—a term for systems that can autonomously make decisions and take actions to achieve specific goals—to simplify logistics operations. HappyRobot says its tech can automate tasks like inbound and outbound calls, carrier negotiations, and data capture, thus enabling brokers to enhance efficiency and capacity, improve margins, and free up human agents to focus on higher-value activities.
“Today, the logistics industry underpinning our global economy is stretched,” Anish Acharya, general partner at a16z, said. “As a key part of the ecosystem, even small to midsize freight brokers can make and receive hundreds, if not thousands, of calls per day – and hiring for this job is increasingly difficult. By providing customers with autonomous decision making, HappyRobotʼs agentic AI platform helps these brokers operate more reliably and efficiently.ˮ
RJW Logistics Group, a logistics solutions provider (LSP) for consumer packaged goods (CPG) brands, has received a “strategic investment” from Boston-based private equity firm Berkshire partners, and now plans to drive future innovations and expand its geographic reach, the Woodridge, Illinois-based company said Tuesday.
Terms of the deal were not disclosed, but the company said that CEO Kevin Williamson and other members of RJW management will continue to be “significant investors” in the company, while private equity firm Mason Wells, which invested in RJW in 2019, will maintain a minority investment position.
RJW is an asset-based transportation, logistics, and warehousing provider, operating more than 7.3 million square feet of consolidation warehouse space in the transportation hubs of Chicago and Dallas and employing 1,900 people. RJW says it partners with over 850 CPG brands and delivers to more than 180 retailers nationwide. According to the company, its retail logistics solutions save cost, improve visibility, and achieve industry-leading On-Time, In-Full (OTIF) performance. Those improvements drive increased in-stock rates and sales, benefiting both CPG brands and their retailer partners, the firm says.
"After several years of mitigating inflation, disruption, supply shocks, conflicts, and uncertainty, we are currently in a relative period of calm," John Paitek, vice president, GEP, said in a release. "But it is very much the calm before the coming storm. This report provides procurement and supply chain leaders with a prescriptive guide to weathering the gale force headwinds of protectionism, tariffs, trade wars, regulatory pressures, uncertainty, and the AI revolution that we will face in 2025."
A report from the company released today offers predictions and strategies for the upcoming year, organized into six major predictions in GEP’s “Outlook 2025: Procurement & Supply Chain” report.
Advanced AI agents will play a key role in demand forecasting, risk monitoring, and supply chain optimization, shifting procurement's mandate from tactical to strategic. Companies should invest in the technology now to to streamline processes and enhance decision-making.
Expanded value metrics will drive decisions, as success will be measured by resilience, sustainability, and compliance… not just cost efficiency. Companies should communicate value beyond cost savings to stakeholders, and develop new KPIs.
Increasing regulatory demands will necessitate heightened supply chain transparency and accountability. So companies should strengthen supplier audits, adopt ESG tracking tools, and integrate compliance into strategic procurement decisions.
Widening tariffs and trade restrictions will force companies to reassess total cost of ownership (TCO) metrics to include geopolitical and environmental risks, as nearshoring and friendshoring attempt to balance resilience with cost.
Rising energy costs and regulatory demands will accelerate the shift to sustainable operations, pushing companies to invest in renewable energy and redesign supply chains to align with ESG commitments.
New tariffs could drive prices higher, just as inflation has come under control and interest rates are returning to near-zero levels. That means companies must continue to secure cost savings as their primary responsibility.