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."
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”