Businessweek

Planes, Cranes, and Barges: How America Is Adapting to Supply Chain Chaos

With global cargo lanes clogged, businesses are turning to new ways to deliver goods.

Mississippi River cargo traffic near Luling, La.

Photographer: Ryan Dickinson/U.S. Coast Guard/ZUMA Press/ZUMA Press Wire Service

By

Brendan Murray

February 17, 2022, 12:01 AM EST

On the outskirts of Columbus, Ohio, where the remains of a 200-year-old canal built to connect Cleveland with Cincinnati snake around new warehouse parks, a modern tributary of the global economy widens a little more with each planeload of goods that roars down its runways. Rickenbacker International Airport was a bustling hub for air freight well before the pandemic—a day’s truck drive to half of the U.S. population, so the slogan goes. In the past two years, another role emerged: economic relief valve for auto parts, consumer products, and pharmaceuticals to flow around the more prominent but clogged arteries of U.S. trade.

The former wartime airbase handled a record 1,655 international cargo arrivals in 2021, a 73% jump from 2019, and overall tonnage rose 18%. Freighters and reconfigured passenger jets fly in from Asia and the Middle East, operated by the cargo units of Cathay Pacific Airways, Emirates, Korean Air, Qatar Airways, Turkish Airlines, and several other carriers. Nearby are distribution centers for companies ranging from Macy’s Inc. to Goodyear Tire & Rubber Co. And 25 miles north, Intel Corp. is building a $20 billion plant to make semiconductors in the heart of the Rust Belt to alleviate domestic chip shortages.

“We had a good cargo business before the pandemic. It’s been booming since”

As Covid-19 writes another chapter in the airport’s history—the Tuskegee Airmen unit of Black aviators once called it home, as did the Women Airforce Service Pilots—Rickenbacker illustrates how the old architecture of globalization is absorbing shocks and changing shape. “We had a good cargo business before the pandemic. It’s been booming since,” says Joseph Nardone, president and chief executive officer of the Columbus Regional Airport Authority, which operates Rickenbacker.

Although it’s not what economists would call structural change just yet, Nardone is optimistic that the additional business during the pandemic won’t disappear as the virus fades. The big question, he says, is what happens when passenger travel returns to normal, allowing international air cargo to use commercial capacity again through traditional channels such as coastal air hubs plus the bellies of passenger jets. He’s expecting this year will be “very similar to 2021,” and “we’re pretty confident that we’ll continue to grow.”

International freight being unloaded at Rickenbacker airport.

Photographer: Megan Jelinger/Getty Images

The U.S.’s industrial heartland is dotted with examples of how some links in the supply chain have been adapted to keep the wheels of commerce turning while others seized up.

“Supply chain planners appear to be becoming more accepting of the need to price in flexibility and not just lowest cost,” says Chris Rogers, an economist in London with Flexport Inc., a digital freight forwarder. Part of that idea includes embracing “rerouting behaviors” that can include nontraditional hubs such as Rickenbacker, he says.

Although air cargo is usually the priciest mode of transport, it became the only way to ensure timely delivery given the dismal state of ocean reliability during the pandemic. The shipping industry, which accounts for 80% of world merchandise trade, had a record year in 2021, with volume totaling 179.1 million units of 20-foot containers, up 6.6% from 2020 and a 5.4% increase over 2019, according to figures released in early February by Container Trades Statistics Ltd. in the U.K.

Share of Global Shipping Vessels Arriving on Time

Data: Sea-Intelligence

The upswing was largely driven by trade between Asia and North America, where the volume of containers jumped 33% from the average level for the five years preceding the pandemic. The boom was great for shipping lines’ profits, but port congestion sent on-time reliability to all-time lows. U.S. imports from Asia are still overwhelming some of the nation’s biggest ports, especially in Los Angeles, Long Beach, and Oakland.

U.S. exports have slumped as the shipping lines prioritize moving imports, causing an imbalance that until recently might have crippled gateways such as the Port of New Orleans, which handles more outbound containers than inbound cargo. But something happened during the crunch of 2021 that the Big Easy hadn’t seen since the 1990s: Importers started using carriers known as bulk and break-bulk ships to ferry goods that used to move in containers—and New Orleans is equipped to handle both modes. The result: Bulk and break-bulk volumes for New Orleans jumped 46% in 2021 from the previous year, a boost that helped cushion a 15% drop in container volume. “We’re moving massive amounts of plywood and coffee through break-bulk because they can’t get containers,” says Brandy Christian, CEO of the New Orleans port. “The more flexibility we can build in, the better.”

So New Orleans is erecting the Louisiana International Terminal, an estimated $1.5 billion infrastructure project expected to open in 2027, and the Mississippi River is being dredged to a depth of 50 feet to accommodate the world’s biggest ships. Among the goals is to leverage the terminal’s access to nearby railroad lines and help New Orleans better compete with rival ports on the East, West, and Gulf coasts vying for shipments to and from customers in the center of the U.S. “That battleground for the future of trade—the growth in population where a lot of manufacturing and distribution is occurring—is a real opportunity,” Christian says, referring to the Midwest.

Efforts are also under way to increase trade along the Mississippi, though its almost 100-year-old system of locks and dams limits the potential. And a 2021 report by the American Society of Civil Engineers estimated that the almost $20 billion in infrastructure spending needed over the next decade to ensure navigation on inland waterways faces a $12.6 billion shortfall.

That hasn’t stopped a group of businesspeople from planning to offer a new waterborne trade option along the Mississippi starting in April 2024. Importers and exporters in Chicago, Kansas City, and other Midwestern cities have traditionally relied on railroads connected to ports on the West Coast to haul their containers. But the pandemic backlogs have highlighted the inefficiencies along those routes and the need for alternatives.

In late 2021, American Patriot Container Transport LLC asked seven shipyards for bids on four river-going vessels each designed to haul about 1,800 containers between Plaquemines Port near New Orleans to terminals in Memphis and St. Louis. Containers currently travel along the river on barges that can carry only about 300. “The opportunity here is to create a new north-south trade lane,” says Sal Litrico, American Patriot’s CEO. “When you start looking at the forecasts for the next 10 years, there’s significant growth.”

Unlike Europe’s inland waterways, those in the U.S. aren’t well-traveled routes for containerized cargo. The desire to avoid a repeat of pandemic-era supply chain snarls could change that. “Not only are new gateways warranted,” says Brian Harold, managing director in Mobile, Ala., for APM Terminals, a unit of container shipping giant A.P. Moller-Maersk A/S that’s part of American Patriot’s project, “but usage of the river is something that people are willing to do now.”