By Dan Glass, October 2, 2014
A storage yard at Garden City Terminal, at the Port of Savannah.
SAVANNAH, Ga.—Breakfast in Atlanta, as in many other U.S. cities, is a global affair. While the eggs may be from a farm 100 miles away, the pan and spatula used to cook them could be from Germany, and the refrigerator that kept them fresh was most likely manufactured in China, as was the toaster, flatware, and Swedish-designed table. The fruit salad alone probably represents four or five different countries, and the morning paper (they still exist) was printed on stock made from Indonesian wood pulp. The one breakfast item that might stand out as clearly "foreign" might be the coffee from Ethiopia.
Regardless of national origin, pretty much all of it came from outside Atlanta, by means ranging from 1,200-foot-long container vessel to oxcart. And that's just breakfast. For all of our activities, the average American requires the movement of 57 tons of cargo per year.
The scale of the infrastructure that moves our stuff is staggering, yet we hardly notice it beyond appreciating how fast a book has arrived or growing agitated with double-parked delivery trucks. But the ships, trains, trucks, ports, rails, roads, and support structure that facilitates the metabolism of our society will soon be more visible. The Census Bureau estimates a nearly 20 percent population increase by 2040—that's one new person every 12 seconds who needs and wants stuff.
If we don't figure out how to manage the influx, not only will our freight traffic slow to a standstill, so will we.
Shipping companies like big ships. Ninety percent of the world's freight goes by sea, and the vessels that transport it are the largest vehicles on Earth. Tankers and other bulk carriers are the largest ships by tonnage, but container ships carry higher-value density, and the boxes they transport are easy to handle. The more containers that can fit on a ship, (measured in twenty-foot equivalent units, or TEUs), the cheaper it is to move them.
In 1956, the first container ship, the Ideal-X, carried 58 containers from Newark to Houston on a converted World War II oil tanker. By the late 1980s, 4,500 TEUs were being transported on Panamax class ships that were able to fit—just barely—through the Panama Canal. Post-Panamax ships, too big for the canal, soon began plying other routes, and by the 2000s were carrying 8,000-plus TEUs. Today, the Triple E class container ships built for Norwegian Maersk Lines are the world's largest ships, first brought into service by the shipping giant in 2013. The Triple E class can hold 18,000 TEUs. That's enough to transport 111 million pairs of sneakers, or enough to shoe over one-third of the United States in a single trip. The Triple E is 1,300 feet long (a quarter of a mile), 194 feet wide, and 240 feet high. It is a floating Empire State Building.
There's a lot of money to be made shepherding goods through one's turf, and American port authorities and associated governments are investing billions to accommodate the larger ships they hope to see more of once the Panama Canal expansion is completed. Currently, only the ports of Norfolk and Baltimore have the 50-foot deep harbors to accommodate the draft of Post Panamax ships. In addition to Savannah, New York/Newark, Charleston, and Miami are also preparing port expansions, which include raising bridges and purchasing bigger ship-to-shore cranes. No North American port has the capacity to accommodate the Post-New Panamax Triple E, which is still too big for the canal even after expansion.
But bigger ships have their drawbacks. They make fewer calls to port, meaning a longer time between shipments, and result in less efficiency, as they're harder to run at the necessary capacity. The bigger shipments "create these peak bubbles of goods that then have to be swallowed by the rest of the system," says Genevieve Giuliano, a professor at University of Southern California and director of the affiliated METRANS University Transportation Center. They require more landside capacity in the form of storage, rail, truck, and drayage facilities, and other infrastructure necessary to avoid congestion.
So is the future of shipping all about bigger? Giuliano doesn't think so. "Every port wants to be the next LA/Long Beach, because ports have such a large economic effect," she says. "They all think they're going to get these big ships, but they're just not. Probably one port or maybe two will get the big ships."
As ships bring bigger swells of goods and ask for quicker turnaround times, the ports are focusing on how to get those goods off the ship and on the roads or rails faster. So while ships are maximizing economies, ports are focusing on efficiency. "We are using less to move more," said Curtis Foltz, executive director of the Georgia Ports Authority, echoing the company tagline ("we use less to move more"). The authority recently converted as much equipment as possible from diesel to electric, including cranes that generate 30 percent of their own power from gravity, and efficient rack systems for growing numbers of "reefers," or refrigerated containers.
The "moving more" part shows itself in the integration of freight transport systems. Intermodal efficiency is the biggest theme in freight right now, as the industry seeks the most efficient combination of modes for a load of cargo across the supply chain. Savannah has two freight rail lines located on-terminal for long-distance or heavy cargo, and a three-mile direct link to Interstate 95 is being built at a cost of $73 million to shave 11 minutes off travel times to and from the port. So bigger is leading to faster, with increased efficiency—less to move more—both a cause and a reaction.
The DOT estimates an 88 percent increase in rail freight demand by 2035, and Forbes recently predicted that rail will become the most important logistics system of the 21st Century. The reliability and efficiency of rail is already eating into trucking's market share, as trains are increasingly used for hauls as short as 500 miles, formerly only the domain of trucks. But increasing capacity of the country's 140,000-mile rail network and its upkeep will require huge capital expenditure, estimated by the Federal Railroad Administration to reach $149 billion over the next 20 years.
Once on the brink of collapse, freight rail made a major rebound after the Staggers Rail Act of 1980 removed many regulatory controls on pricing, the ability to cut redundant or light-density lines, and passenger service obligations. Now the industry is a financial and service-providing success, sustaining itself without taxpayer help. Steady rate increases of 5 percent per year have prompted some lawmakers to call for re-regulation due to claims of monopolistic practices by the big four rail companies—Union Pacific Corp., BNSF Railway, CSX, and Norfolk Southern Corp.—which handle 90 percent of U.S. freight. But rail owners say re-regulation could lead to "deferred maintenance" and bring expansion to a halt.
Simply put, building and maintaining a railroad is expensive. About 17 percent of freight railroad revenue is spent maintaining and building capital infrastructure—the tracks, locomotives, bridges, tunnels, cars, communications, and electronics needed to run the system safely and reliably. For some perspective on these costs, consider the recent case of trenching freight tracks (or, tucking them underground) in Reno, Nevada. By 2005, Reno residents were spending an enormous amount of time waiting for a couple dozen trains to pass through the middle of town. That burden was estimated to reach a few dozen trains by 2030, with several times more delay, not to mention carbon monoxide emissions and train warning whistles. Necessary as trenching was, it came at a cost of $265 million, and that for a mere 2.1 miles.
Safety upgrades can be even costlier. Four billion dollars have been spent so far on Positive Train Control, a complex GPS tracking and remote control safety system mandated after a freight train collided head-on with a commuter train whose engineer was distracted while texting. The system, now about 20 percent complete, monitors the location of every train in the network, and can stop a train remotely if an engineer misses a signal. Initially considered a financial burden, the PTC system has improved how rail operators manage the movement of trains over varying topography, saving large amounts of fuel in the process. Other safety improvements include new and stronger tank cars for the increasing amounts of petrochemicals traveling the rails from the North American shale oil and gas boom.
The presence of freight rail goes largely unnoticed by the American public, which is passenger-centric when it comes to trains, especially when discussing high-speed rail. But growing stacks of colored boxes cutting through metro areas may finally catch its attention. In 2013, a high-speed freight train traveled over 6,000 miles from Zhengzhou, China, to Hamburg, Germany in two weeks, less than half the time it takes by sea. Europe is a good place to look for inspiration, as people there are already dealing with the density and transportation issues America will face more of as populations and urban areas grow.
The Federal Highway Administration has some numbers to consider: In 2011, approximately 11 million trucks moved 16.1 billion tons of freight worth $14.9 trillion. This level of activity caused recurring peak-period congestion on 10 percent of the National Highway System. Now consider that commercial vehicles currently account for only 9 percent of all vehicle highway miles traveled. Think rush hour is bad now? The FHA estimates that in the next 30 years, there will be 60 percent more trucks, translating to significant slowing on 28,000 miles of the NHS during peak hours, and stop-and-go conditions on an additional 46,000 miles.
The recent MAP-21 federal surface-transportation funding bill mentions the need to mitigate community impact from freight congestion, but offers no suggestions as to how. It does address the 23 percent increase in freight tonnage over the next ten years that's predicted by the American Truckers Association. Identification of a "highway primary freight network" is meant to help states focus resources on critical freight corridors, in the face of increasing wear-and-tear on already underfunded roadways. As public burden increases so will regulation, in an industry that already feels beset by recent hours-of-service rules, fuel-efficiency standards, and other controls.
But the money will be there. The American Trucking Association forecasts a surge in revenue of 72 percent by 2025 as a result of the increased volume and tonnage, and industry investment is the response. Daimler's "Highway Pilot," an autonomous truck, has already driven itself on the Autobahn and is slated to enter service in 10 to 15 years. More immediate advances include telematics, "platooning" software, efficiency-improving automated manual transmissions, and service features like the ability to control a tractor from outside the cab with a tablet for difficult parking scenarios.
City delivery vehicles may even be on the verge of a sub-modal revolution. Americans like their trucks to look tough, but urban delivery vehicles will eventually become smaller, more toy-like, and either hybrid or fully electric. Short ranges and stop-and-go traffic are where electric vehicles have the advantages of regenerative braking, and energy efficiency at low speeds. Older vehicles with high emissions will also fade away, as cities here develop "low emission zones" as seen in Europe, and move toward cleaner delivery modes in line with the established "motor transition" of urban freight movement. Following the pace of congestion most closely will be truck bans, as regulations, like them or not, are the quickest way to make a change.
Not all the responsibility will fall on transportation providers. Giuliano, who specializes in urban freight, says developers and architects will have to make freight delivery a more important part of their plans instead of an afterthought, though it will involve measures like cutting into their saleable square footage to incorporate off-street loading areas. Sharing this responsibility will also be the goods receiver. Since 1998, Barcelona has required new bars and restaurants to set aside at least five square meters of space to store stock and reduce daily deliveries. And a night delivery pilot program for supermarkets in the Netherlands showed savings of 30 percent in delivery costs and 25 percent in diesel.
Online commerce at least eliminates half of the trip for American consumers: where we once needed a drive there and back, Web-based delivery only needs a drive there. Considering that Americans ordered nearly $262 billion worth of goods in 2013, according to Forrester Research, that's potentially a big reduction in fuel, time, and traffic. But if your legs can do the job, then cut out the delivery truck altogether. The use of Amazon lockers can reduce vehicle miles by aggregating deliveries in fewer locations, and services like eBay Now, Amazon Same-Day, and city micro-delivery services primarily save time as long as a motor's not involved. Package drones, for now, can wait.
Air cargo is all about speed, and that includes processing. UPS Worldport in Louisville, Kentucky, is the largest fully automated package handling facility in the world, able to move up to 416,000 packages an hour. Just after 11 p.m., UPS aircraft—130 per night—begin touching down at Louisville International Airport, a location that allows planes to reach almost any part of the 48 mainland States within four hours. Jets pull up with sports car-like precision to loading docks, where teams of workers offload specially designed cargo units and move them along floors studded with casters so that one person can maneuver a unit without a dolly. Then the parcels are fed onto conveyors that speed them through scanners and sorters that divert their course up to six times on the way to location-specific bags, to be loaded onto either a truck or another plane toward its destination. Unloading to loading takes 13 minutes.
"It's like walking around inside a 5.2 million square foot supercomputer," says public relations manager Mike Mangeot during a tour, as boxes zip through curtains of red light in the neural core of the facility. Data scanned from dense codes on the labels is integrated into a system that tracks, routes, and re-routes parcels on the fly, guiding them to specific positions on specific trucks, until a final input relays the message to the system, "I'm here." Control of the process from start to finish allows UPS to figure out the best combination of modes between pickup and delivery. UPS, as a third-party logistics provider, uses every available mode, including ship, train, motor vehicle, bicycle, tuk-tuk, Venetian gondola, and in the case of the Grand Canyon, mule.
Decades of systems design—really since 1907, when UPS was a bicycle-messenger service—led to a breakthrough development in 2013 in the world of logistics: the On-Road Integrated Optimization and Navigation System, or ORION. Developed by Jack Levis, UPS Senior Director of Process Management, the ORION system uses geospatial technology, telematics, and algorithmic computation to evaluate more than 200,000 ways to run a single route, then suggests the best one for the day. The system saved the company 1.5 million gallons of fuel in 2013, and reduced carbon emissions by 14,000 metric tons. "If we can take just one mile a day off each driver's route, it saves us about $50 million a year," says Levis.
Maintenance costs and idling times were also reduced. Two hundred sensors on each truck send data on everything from idling time to tire pressure to whether or not the driver was wearing a seat belt. "Have you heard the saying about taking data and turning it into information, which then can become knowledge?" asks Levis. "Well, after that comes wisdom." In industry terms, he described the company's progress from analytics, which uses data to determine past performance, to prescriptive analytics, which uses data to improve route performance today, to predictive analytics, where data is used to determine what a route will look like tomorrow. "Once you understand the power of data, so many things become possible," he says. "But data is tremendously undervalued."
It won't be for long. Companies of all kinds are beginning to make use of data, as well as cluster freight activities to cut waste and share resources. Both Louisville and Memphis, home of FedEx, have attracted hundreds of business distribution operations to their air and trucking hubs. Logistics clusters are a global freight forwarding trend, and logistics concepts and practices are working their way ever closer to the consumer level.
Stuff, in the simple and broad sense, primarily competes with space and time. If you don't care about having space, fill it with stuff. If time doesn't mean much to you, spend it on getting and processing more stuff. But as we bump up against the finiteness of these resources, time is the hard one to figure out. We seem to value it highly, but then waste so much of it. "Perhaps we don't need all that stuff," says Genevieve Giuliano. "Maybe we can decide to have a different kind of life, one where we choose to spend our money on experiences."
At our current pace, we'll most likely keep expanding outward, at least for resources—to asteroids or the Moon for minerals, and whatever else we'll have made scarce. And efficient transport of it will remain extremely important. Even if their values have shifted many times over, people in space are still going to want breakfast.