CMA CGM, the fourth-largest container shipping line and parent of CEVA Logistics, now owns a cargo airline. The move bears similarities to what Amazon.com (NASDQ: AMZN) did five years ago when it launched a private airline to help support its rapidly growing e-commerce business.
The French shipping company, based in Marseille, announced Friday it was diversifying its transportation and logistics portfolio by creating an airfreight division. It has purchased four Airbus A330-200 freighters, which can carry up to 60 tons, and is outsourcing flying to an unnamed European airline.
Signs point to that airline being Air Belgium, a small passenger airline that began operating between Belgium and the Caribbean in 2018. Two weeks ago, Air Belgium announced it would add four cargo aircraft to its fleet, with plans to have six in operation by the end of the year. The first two aircraft are expected to begin flying next month from Liege Airport, a major air cargo airport that has done better than most European competitors during the huge industry downturn caused by the coronavirus pandemic.
Air Belgium spokeswomanCatherine Haquenne declined to provide more details at the time. The Loadstar had reported the four aircraft to be operated by Air Belgium were previously with Qatar Airways Cargo.
Qatar Airways Cargo has moved to an all-Boeing fleet and replaced the A330 freighters with 777 freighters. Spokesman Kamal Hassan confirmed the four aircraft exited the fleet on Jan. 31 but declined to name the buyer. Qatar Airways planned to phase out the planes last year but held onto them longer because of the urgent need to move personal protective equipment and other critical aid during the pandemic, he said in an email.
The aircraft are very new for used freighters, having entered service between 2014 and 2016.
Air Belgium founder Niky Terzakis knows something about air cargo having run TNT Airways for 15 years. TNT Airways was a subsidiary of TNT Express, which was acquired by FedEx Corp. (NYSE: FDX). European competition authorities required TNT to divest the airline, which was sold to ASL Aviation Group, which operates from Liege Airport too.
CMA CGM also owns CEVA Logistics, a top 15 third-party logistics provider measured by gross revenue. Having its own airline gives CEVA access to direct capacity instead of having to compete with shippers for flight access at passenger and all-cargo airlines, which currently do not have enough supply to meet demand.
CMA CGM Chairman and CEO Rodolphe Saadé said the new air cargo division is a response to customer demand for “agile logistics solutions.”
CMA CGM began dabbling in air cargo last September when it bought a third of Groupe Dubreuil Aéro and essentially became a general sales agent for the company’s two leisure airlines, marketing the bellyhold space of their aircraft to shippers and managing cargo operations.
Amazon now operates about 75 aircraft but contracts their operation to cargo carriers. Amazon leases all its aircraft, but recently bought nearly a dozen passenger planes for the first time and plans to convert them to freighters.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Ocean shipping giant CMA CGM spreads its wings to air cargo
Amazon buys first aircraft for fast-growing cargo fleet
Boeing 777 freighters bring relief to tight air cargo market
To commemorate Black History Month, FreightWaves Classics profiles the Red Ball Express, which was manned primarily by Black soldiers.
FreightWaves thanks each man and woman, of all races and creeds, who has served in and is serving in the armed forces of the United States of America.
This is the third article in a series about the fabled Red Ball Express, which supplied the American armies racing through France to fight and/or capture the retreating German armies.
How the Red Ball Express worked
The French “highways” used by the Red Ball Express were similar to two-lane country roads in the United States (although most were not as wide as their American counterparts). The rapidly advancing Allied armies needed vast supplies; therefore the roads needed to be kept open and functioning. To ease this strain, main roads leading to the front were designated as one-way roads and all civilian and local military traffic were prohibited. Tens of thousands of truckloads of supplies were pushed forward over these one-way roads in a constant stream of traffic.
To keep the supply chain moving, two routes were opened from the beachhead (and later from Cherbourg, the main port used to supply the Allied troops) to supply depots along the route as well as the forward logistics base at Chartres. The northern route was used to deliver supplies, while the southern route was used solely for returning trucks.
Military police (MPs) were often stationed at the routes’ major junctions to ensure the convoys stayed on course. The MPs often directed traffic at bridges that were damaged, around other obstacles or through the narrow streets of the French villages on the route. Large rectangular signs with red balls painted on them kept the convoys on the right roads when MPs were not present.
The 793rd Military Police Battalion, which was activated in December 1942, was attached to the Red Ball Express from August through December 1944 to provide security for the route and control the traffic along it. This service with the Express is commemorated on the 793rd’s unit insignia. It features two red balls on a diagonal line of yellow, with a field of green in the background (green and gold are the colors of the U.S. Army Military Police).
Reaching supply dumps in forward areas, the Red Ball Express trucks unloaded and returned empty to the primary supply depots, the port at Cherbourg and the lesser landing places. After the French railways were repaired, loaded trains ran parallel operations.
What kind of trucks were used?
General George Patton pushed hard for a more robust resupply operation for his Third Army (which led to the formation of the Red Ball Express). He and his supply master, Major General John C.H. Lee, had 12-inch bright red circles painted on the supply trucks.
MP units assigned to the Third Army were ordered to ensure that Red Ball Express trucks were cleared to use any road and were never to be slowed or stopped. Literally, the Red Ball trucks were the lifeline for the Third Army, transporting fuel, ammunition and food to the front lines as Patton’s tanks and troops raced across France.
General Lee believed that the Army should be integrated; he influenced the decision to use the rear echelon Black troops to staff the Red Ball Express. Colonel Loren Albert Ayers, nicknamed by his men as “Little Patton,” was in charge of requisitioning two drivers for each truck, obtaining special equipment as needed, and establishing the training of the personnel as drivers for the Express’ long hauls.
In the early 1940s, Dodge trucks were known for their ability to run for thousands of miles with few repairs. Their reliability was due primarily to their flat-headed engines. Some Dodge trucks used by the U.S. Army lasted the entire war without an engine rebuild.
It has been written that Patton specifically preferred the tough 6×6 Dodge trucks for the Express, because they could run at top speeds over rough terrain to deliver the necessary war materiel. (Note, however, that the top speed of the Dodge 230-cubic inch flat-head V-6 with a two speed transfer case was about 55 mph.)
Despite his wishes, however, there weren’t enough Dodge trucks that Patton’s staff could requisition, and GMC and Chevrolet 6×6 trucks were also used. Ultimately, the Red Ball Express fleet consisted primarily of the two types of GM trucks. According to the Army Quartermaster Corps, nearly 30,000 GMC or Chevrolet 2.5-ton trucks were sidelined/cannibalized for parts to keep the other trucks running – a 5:1 ratio of parts to trucks.
Drivers routinely removed the speed governors on the carburetors to raise their trucks’ speed over 50 mph. The governors slowed the overloaded vehicles on grades and kept them from maintaining a steady and much higher speed. The governors were then replaced when it was time for the trucks to be inspected or repaired.
The hazards of driving the route
All the Express drivers were pushed as hard as the trucks they drove. They often did without regular food and rest, and their bodies were punished by the constant jolting of the harsh terrain they drove.
Engineers patrolled the roads designated for the Red Ball Express, repairing as much damage as possible – without slowing down the Express… Ordnance troops were standing by along the route with wreckers. One wrecker model used was the Diamond T Prime Mover, which had enough power to tow a disabled tank to a repair depot. As for Red Ball drivers, if their trucks were broken down, they were ordered to pull off the road and wait for a wrecker. The roving mechanics worked on Red Ball trucks on the roadside; if a truck could not be repaired there, the trucks would be towed to a maintenance depot when a wrecker was available. If a truck was too damaged or worn out to be repaired, it was cannibalized for parts.
The Red Ball trucks took a tremendous beating and many simply wore out. Among the common issues were: dried-up batteries; overheated engines; burned-out motors due to insufficient grease and oil; worn-out shocks and struts; and stripped transmissions. In addition, bolts came loose and some drive shafts simply fell off.
However, the key part of the trucks that had to be constantly repaired or changed were the tires. In its first month, Red Ball Express trucks wore out 40,000 tires! General wear and loads that were too heavy for the trucks and their tires were the biggest reasons for this. Most of the tires were retreaded and re-used. Tire treads routinely shredded and came loose, and a rear inside dual tire would blow-out and catch fire from friction as the truck was in motion.
The trucks were being operated on roads that had been bombed, were in disrepair and/or were washed out. The Express also drove on dirt roads, which could become mud traps when it rained. At other times the trucks did not travel on roads at all – cutting across open fields to reach depots or troops in need of supplies.
Tires went flat or were shredded due to road debris – shell fragments, barbed wire remnants and empty C-ration cans – that littered the roads. Hundreds of thousands of ration tins were thrown away along the roads by troops who walked and ate at the same time, and the sharp metal edges of the tins tore the tires.
Red Ball trucks also broke down due to water in the gas or gas lines. Proper maintenance called for the gas line filter on the firewall between the engine and truck cab to be purged of water at regular intervals, but the trucks received little “proper maintenance.” Condensation was the main reason that there was water in the gas, but sabotage also took place.
German prisoners of war knew that the American trucks could be stopped (at least for a time) by water in the gas, and POWs were frequently used to load supplies into the trucks in rear areas and to fill their gas tanks. POWs would take the caps off of gas cans and rain and snow would contaminate the gas.
The Red Ball trucks rarely ran empty. In addition to carrying POWs on return trips from forward area depots, the trucks carried expended artillery casings, empty gas cans, and sometimes the bodies of American soldiers…
There was some downtime, even if the idea of hours of service was unheard of. Red Ball convoys stopped at rest areas where trucks were serviced, coffee and doughnuts were available, and some even had cots – if another team of drivers were available and could drive the trucks to the next stop. Some rest areas also had food, but because the drivers were in their trucks so much, they were used to eating C-rations while driving. Drivers who wanted a hot meal wired C-ration tins to the trucks’ exhaust manifolds to heat the rations.
A dangerous job
Red Ball truckers were rarely involved in direct combat, but convoys were a primary target of the German Luftwaffe (air force). Luckily for the Express, there were so few German aircraft by late 1944 that the convoys were not attacked very often. The biggest problems facing the Express were truck maintenance, finding enough drivers, and the overworked truckers’ lack of sleep.
While a few trucks were outfitted with .50-caliber machine guns (see photo above), most truck drivers were armed only with carbines or machine guns. Although Red Ball Express personnel were ordered to wear helmets and carry rifles, they were normally stowed on the truck floor. There was a greater danger from German mines. Some of the Red Ball truckers put sandbags on the floors of their cabs to absorb mine blasts.
Another danger was piano wire strung across roadways. Therefore, angle-iron hooks designed to snag the wire before it decapitated jeep or truck occupants were attached to some of the Red Ball jeeps. The hooks were necessary because the jeeps and trucks were often driven with their windshields down. This was particularly true in combat areas, where a reflection from windshield glass could attract German artillery fire. Windshields were also down because they were coated with road dust, making it difficult for drivers to see.
Other hazards included wandering livestock and hungry civilians, who would stand in the trucks’ path to beg for food.
Just like soldiers in the line, drivers were pushed to the limit. Some fell asleep at the wheel and ended up in ditches (or worse); some switched seats with relief drivers without even pulling over.
At night, the truckers drove with “cat eyes” (narrow slits masked onto truck headlights that reduced light to a dim beam so convoys couldn’t be spotted and attacked). “With those cat eyes you could hardly see,” said James Rookard, a trucker with Company C, 514th Quartermaster Regiment, who was drafted in March 1943. Nonetheless, drivers drove almost as fast at night as they did during the day. Rookard also said that driving in blackout conditions was the most dangerous part of the Express.
“My worst memories of being in the Red Ball Express were seeing trucks get blown up and being afraid that I might get killed,” Rookard recalled when he was interviewed in the 1990s. “There were dead bodies and dead horses on the roads after bombs dropped. I was scared, but I did my job, hoping for the best.”
In summary, Rookard said, “We hauled anything Gen. Patton needed. We took supplies all the way to the front line, back and forth, back and forth.”
The trucks were driven fully loaded (and usually badly overloaded) as fast as possible over bad roads and sometimes across open fields. They were then unloaded, turned around and driven bacj to pick up more supplies. Drivers often made two or three trips daily, up to 80 miles one way, as fast as possible.
The trucks rolled 24 hours a day, seven days a week for 83 days, with drivers rushing supplies 400 miles to the First Army and 350 miles to Patton’s Third Army.
To read Part 1 and Part 2 of this article, please follow the links.
Information for this series of articles came from a number of sources and articles written over the decades about the Red Ball Express. Quotes attributed to members of the Red Ball Express and other World War II service members were taken from an article on HistoryNet written by David P. Colley.
In addition to the numerous in-depth articles about the Red Ball Express, there are hundreds of photos available online. Explore these, and learn more about the brave men and women who served our nation in World War II.In addition, museums like the National World War II Museum and the Army Transportation Museum (to name just two) have fascinating exhibits about the Red Ball Express and other military operations.
To commemorate Black History Month, FreightWaves Classics profiles the Red Ball Express, which was manned primarily by Black soldiers.
FreightWaves thanks each man and woman, of all races and creeds, who has served in and is serving in the armed forces of the United States of America.
This is the second article in a series about the fabled Red Ball Express, which supplied the American armies racing through France to fight and/or capture the retreating German armies.
The Red Ball was primarily Black
Unfortunately, most people under 60 don’t know much about World War II. While they may know the Allies defeated the Axis (Germany, Italy and Japan), they don’t know much about the specifics of the war that now seems so long ago. Of those who served in the war, more than 1,000 U.S. World War II veterans die daily, and most that are still alive are in their 90s.
Also, most Americans do not realize that the U.S. Armed Forces were segregated in World War II. They were not integrated until 1948, when President Truman mandated that change. And most Americans haven’t heard of, or know about, the Red Ball Express. Of those that have, most do not realize that about 75% of all the soldiers who served as truckers or mechanics in the Red Ball Express were Black. Generally, segregated Black troops were assigned to rear echelon support and service units; most served in the Quartermaster Corps rather than as front-line troops. They were assigned to port battalions, drove trucks, worked as mechanics, and served as “humpers” who loaded and unloaded ammunition and supplies.
Since 75% of those who served in the Red Ball Express were Black, that means about 25% were white. Whites and Blacks were urged not to mingle during off-duty hours. “You accepted discrimination,” recalled Washington Rector of the 3916th Quartermaster Truck Company. “We were warned not to fraternize with whites for fear problems would arise.” The races were so efficiently separated that some white veterans of the Express were unaware that most of the Red Ball drivers were Blacks. A white driver recalled telling a soldier that he was a Red Ball driver. The soldier looked at him and asked why he was not Black.
Of those assigned to the Red Ball Express (white and Black), many did not know how to drive a truck and were taught by the Army Transportation Corps. (This training consisted of a few hours of the most rudimentary instruction.) They went from rear-action responsibilities (or soldiers who had not seen combat yet) to the front lines. As truckers, they carried critical supplies inland from the Normandy beachhead and near St. Lô, France, to the 28 American divisions that had landed on the beaches of Normandy, had fought through its hedgerows and were racing across western Europe in pursuit of the retreating German forces.
During its short but illustrious history, both whites and Blacks made it successful. But it was Black troops who kept the Express rolling.
Reality overwhelmed planning
Before the invasion, the Army’s Transportation Corps had estimated that 240 truck companies were necessary to sustain the American advance across France. The Transportation Corps also recommended that these truck companies be equipped with 10-ton flatbed semi-trailers. But there were not enough of the flatbeds available. When the Normandy invasion began on June 6, 1944, the Army had authorized only 160 truck companies for the operation, and most of those were supplied with GMC 2 1/2-ton trucks, which were also known as the 6×6.
Simply put, the existing Quartermaster truck companies did not have enough trucks or drivers to supply the advancing Allied armies. Following the break-out from the Normandy hedgerows, the Allies (particularly the American forces) moved much faster than the pre-invasion planning had estimated. This made the lack of trucks and qualified drivers a more serious problem.
In the first few weeks after the invasion, the Allies made little headway against the disciplined German Wehrmacht (army). Some military leaders even feared that the trench warfare of World War I might happen again as the Germans continued to slow the Allies’ attempts to break out of their Normandy beachhead.
However, the German front lines began to crumble in late July. The Americans moved rapidly toward the River Seine in pursuit of the German Seventh Army. However, the Allied pre-invasion planning had not anticipated a rapid German retreat. Instead, it was believed (and planned for) that the battle to liberate France would be a slow, but steady campaign.
It had also been planned that Lt. Gen. George Patton, Jr.’s Third Army would move westward after the breakout to capture the French ports in Brittany. At the same time, troops under Lt. Gen. Omar Bradley and British Field Marshal Bernard Montgomery were to pursue the Germans eastward across the Seine.
However, because of the speed of the German retreat a new plan took shape. If the Americans could outrun the Germans, they could trap the bulk of the German forces between Normandy and the Seine. Northwest of Paris, approximately 100,000 German soldiers were surrounded, 10,000 were killed and 50,000 were captured. This action demonstrated the vulnerability of the Germans at that time.
Why and how the Red Ball Express began
In order to pursue the Germans quickly, Bradley’s and Patton’s forces needed sufficient supplies and an effective supply chain. However, for their forces (both tanks and men) to be effective, huge quantities of gasoline, ammunition and other supplies were needed. The advancing U.S. forces began to run out of needed war materiel.
The Allies fell victim to their own military strategy and successes. For months prior to the D-Day invasion, Allied air forces had bombed the French rail system to prevent Germany’s Field Marshal Erwin Rommel from resupplying his coastal forces after the invasion. But the ruined railroads could not be used by the Allies. Moreover, the Germans still held the key English Channel ports of northern France and Belgium (particularly Le Havre and Antwerp), so most of the supplies needed by the Allies armies were delivered to the invasion beaches on the Normandy coast instead of to a working port.
“On both fronts an acute shortage of supplies – that dull subject again! – governed all our operations,” General Bradley wrote in his autobiography. “Some 28 divisions were advancing across France and Belgium. Each division ordinarily required 700-750 tons a day – a total daily consumption of about 20,000 tons.”
By late August, Patton’s tanks were having to stop the pursuit, not because of the Germans, but because they were running out of fuel. On an average day, Patton’s Third Army and Lt. Gen. Courtney Hodges’ First Army used 800,000 gallons of gasoline. But there was no supply chain or logistical system in place to deliver enough gasoline, artillery shells and other ammunition, food and water.
For these reasons, what became the Red Ball Express was created following a 36-hour meeting in late August 1944 of key American commanders. Of all those involved, it was Patton that pushed the hardest for a more effective resupply effort.
The crash resupply mission’s name came from a railroad phrase – to “red ball” something was to ship it express – and from an earlier Red Ball Express in Britain that moved supplies to the English ports prior to the invasion.
The second Red Ball operation didn’t even last three months (August 25 through November 16, 1944), but by the end of that critical time, the Express had established itself firmly in the annals of World War II.
In an effort to find more trucks and drivers, infantry, artillery and anti-aircraft units were “raided,” and many of their vehicles became provisional truck units for the Red Ball Express.
Moreover, any soldier whose duties were not immediately critical to the war effort was asked to become a driver. After the beachhead had been expanded to the surrounding countryside, Normandy became the staging area for the reinforcements crossing the Channel from England. Until these infantry divisions were moved to the front, they were bivouacked (camped) for as long as several weeks. Hundreds of infantrymen (including many who had never driven a truck) signed up for temporary duty (which lasted about two weeks) on the Red Ball Express. Most of those temporary troops were white.
One example of a volunteer was Cpl. Phillip A. Dick, who was assigned to Battery A, 380th Field Artillery, 102nd Division. Dick had never driven a truck. But like many other volunteers, Dick was given a few hours of instruction and told he had qualified.
Dick recalled, “Everybody was stripping gears, but by the time we got back to the company area we could make the trucks go.” The Red Ball’s motto was “tout de suite” (immediately), which probably came from a French phrase adopted by Americans. According to John O’Leary of the 3628th Truck Company, “Patton wanted us to eat, sleep and drive, but mostly drive.”
The Red Ball Express in action
The need for supplies was so critical that the Red Ball Express delivered the most supplies within the first five days of being in operation. On August 29, 132 truck companies, operating nearly 6,000 vehicles, carried 12,342 tons of supplies to forward depots – a record that was not matched during the next 14 weeks of the Red Ball’s operations.
However, all did not run smoothly at the beginning. The first Red Ball convoys were overwhelmed by civilian and military traffic in the area. (The civilian traffic was mostly foot traffic as the French moved toward the Allied lines.) In response to the traffic jams, the Army established a priority route of two parallel “highways” (two-lane roads) between the Normandy beachhead and Chartres, a city just outside Paris. The northern road carried one-way traffic outbound from the beaches. The southern route was used for return traffic.
All civilian and non-Red Ball military traffic was forbidden on the Express route, and military police (MPs) and Red Ball drivers enforced that rule with vigor. Generally, the Red Ball convoys drove in the middle of the road to avoid mines planted by the retreating Germans, and stopped for nothing.
As the front lines passed the Seine and Paris, the two-way loop route was extended to Soissons, northeast of Paris, and to Sommesous and Arcis-sur-Aube, east of Paris in the direction of Verdun, a key battleground in World War I.
The “rules” and the reality of the Red Ball Express
As outlined above, the Army sought to establish control over the newly formed Red Ball route. “Rules of the road” were drawn up to govern the Express. David Cassels, a warrant officer junior grade with the 103rd Quartermaster Battalion, recalled, “trucks were to travel in convoys of at least five trucks; each truck was to carry a number to mark its position in the convoy; each convoy was to have a lead jeep carrying a blue flag; a ‘clean-up jeep’ at the end of the convoy had a green flag; the speed limit was 25 mph; and trucks were to maintain 60-yard intervals.” That was the “perfect world” plan.
However, the fast-moving Allied armies made those regulations obsolete for all but the most regulation-happy bureaucrats. In reality, it was common for single trucks to leave supply depots as soon as they were loaded. According to those who participated, the real story of the Red Ball Express was more like a stock car race (at slower speeds and with more crashes).
“Oh boy, do I remember that Red Ball gang!” said Fred Reese, a former mechanic in an ambulance unit. “They were a helluva crew. They used to carry ammunition boxes twice as high as the top of the truck and when they went down the highway they swayed back and forth. They had no fear. Those guys were crazy, like they were getting paid for every run.”
Delays could occur at any time, but the longest delays usually took place when trucks were being loaded at the beachhead or at depots. If the truckers followed the regulations and waited for a convoy to assemble, they could be delayed for hours. Therefore, knowing that the supplies they were carrying literally meant life or death for American soldiers, many truckers went out alone or in small groups without an attending officer to keep the vast supply line going.
The men of the Red Ball drove night and day, week after week. Drivers and assistant drivers stayed exhausted. One Red Ball veteran remembered being so exhausted at one point that he could no longer drive. But the convoy could not stop. He and his assistant driver switched seats as the truck kept moving at speed. When the convoys were stopped the drivers dozed in their seats.
There were times when the front line was moving so quickly that Red Ball drivers never found the supply depot they were to deliver to. When that happened, the drivers gave their loads to any units that needed the ammunition, fuel or rations.
Most frequently, trucks carried supplies from one depot to the next, dropped them and returned for more. From advance depots other trucks picked up supplies and carried them closer to the front lines. In the days after the breakout from Normandy, Red Ball trucks were dropping gas or ammunition at artillery positions within a few miles of the front line. One Red Ball veteran came upon a Sherman tank that had run out of gas. He passed cans of gasoline to the crew while Germans were very nearby.
Another Red Ball trucker remembered kicking ration boxes off his truck to a group of MPs who had not been relieved for days and had no food.
Click here to read Part 1 of the story of the Red Ball Express.
Quotes attributed to members of the Red Ball Express and other World War II service members were taken from an article on HistoryNet written by David P. Colley.
Also, there are many in-depth articles about the Red Ball Express and hundreds of photos available online. Explore these, and learn more about the brave men and women who served our nation in World War II.
To commemorate Black History Month, FreightWaves Classics profiles the Red Ball Express, which was manned primarily by Black soldiers.
FreightWaves thanks each man and woman, of all races and creeds, who has served in and is serving in the armed forces of the United States of America.
This article is the first in a series about the fabled Red Ball Express, which supplied the American armies racing through France to fight and/or capture the retreating German armies.
According to the Army Transportation Museum, “Transportation is the most frequently encountered limiting factor in military logistics, which is the science of planning and executing the movement and support of forces. It provides the bridge over which the nation’s resources reach our combat troops and is the key to victory, which requires that ‘we get there first with the most.’”
Since the time of Alexander the Great, large armies have crossed the world’s military landscapes with great difficulty, their lines of animal-drawn carts and wagons trailing the warriors. And while armies “lived off the land” for centuries, the need for provisions of all kinds has become a huge part of modern warfare.
From the American Revolution until World War II, the U.S. Army command structure realized the critical role of war-time transportation and formed a temporary management organization that was later disbanded post-war. However, in 1950, the Transportation Corps that proved so effective during World War II was made a permanent branch of the U.S. Army. For over 70 years since, the Corps has sought to meet or exceed the accomplishments of predecessor units, working closely with civilian industry as well as its counterparts in the other military branches, in both war and peace.
The heritage of the Transportation Corps – the “Spearhead of Logistics”
The United States Army Transportation Corps was established in 1942, making it one of the Army’s newest service branches. However, its role goes back to the Revolutionary War. General George Washington ordered the use of animal-driven carts and wagons to move American and French forces from the Hudson Valley to Yorktown, a distance of more than 450 miles. Transportation was so critical during the American Revolution that Washington advised the Continental Congress to establish the position of Wagonmaster General to provide needed mobility for the army.
In the history of warfare, armies have either developed new ways to move troops and materiel, or taken advantage of the latest technologies. For example, during the Civil War, railroads were used extensively for the first time to move troops to nearby battlefields. The U.S. Army Transport Service was rebuilt to assist the Army during the Spanish-American War. During World War I the Transportation Service was created. It was responsible for moving 2 million men and their supplies to France across 3,000 miles of ocean.
When the United States was drawn into World War II, the key role of transportation became clear. The war would be fought on two fronts – the Pacific Theater of Operations and the European Theater of Operations – and both were thousands of miles from the continental U.S.
In March 1942, three months after Japan attacked Pearl Harbor, military transportation functions were transferred from the Quartermaster Corps and assigned to the Transportation Service of the newly created Services of Supply.
On July 31, 1942, President Franklin Roosevelt established the Transportation Corps to assist with the largest mobilization in U.S. history. Responsibility for railway operations and maintenance was transferred from the Corps of Engineers to the Transportation Corps in November 1942.
Ultimately, the Transportation Corps conducted operations in the deserts of North Africa, the jungles of many Pacific Ocean islands, the mountains and valleys of Italy and Asia, and over the beaches of Normandy. During the war, the Transportation Corps moved over 30 million soldiers within the United States. More importantly, it moved 7 million soldiers and 126 million tons of supplies overseas. These logistical achievements played a decisive role in the Allied victory.
Because of the exceptional work done by the Transportation Corps during World War II, the U.S. Congress recognized its importance by making it a permanent branch of the Army on June 28, 1950. Since then, the Transportation Corps has provided support services during each conflict, from the Korean War to Afghanistan and Iraq. The Transportation Corps’ accomplishments are a testimony to the professionalism, dedication and pride that has made the Transportation Corps the “Spearhead of Logistics.”
An overview of the Red Ball Express
The term “red ball” to define express cargo service began near the end of the 19th century. The Santa Fe Railroad (now part of BNSF Railway) began using “red ball” to refer to express shipping for priority freight and perishables in 1892. Such trains and the tracks cleared for their use were marked with red balls. The term grew in popularity and was commonly used by the 1920s.
In World War II it was first used in Great Britain to mark the movement of men and materiel from their bases around England, Scotland and Wales to invasion staging areas in southeastern England (the area closest to the English Channel and therefore to France).
The Red Ball term was used again for the truck convoy system that supplied Allied forces moving quickly through France and western Europe. For nearly two months after D-Day (June 6, 1944), the Allies fought the Germans in the hedgerows of Normandy and often measured progress in feet rather than miles. However, in late July the German lines ruptured and they began to retreat rapidly. The Allies “broke out” of the hedgerows – and soon they were not simply marching from the beachheads of Normandy into occupied France – they were sprinting.
To expedite cargo shipment to the front, trucks emblazoned with red balls followed a similarly marked route that was closed to civilian traffic. The trucks also had priority on regular roads.
The Red Ball Express convoy system was conceived in a 36-hour meeting of U.S. Army field commanders and U.S. Army Transport Corps staff. After the Allied armies were in more open countryside, they were making rapid progress and soon began to outrun their supply lines. Hence the need for the Red Ball Express.
The convoy system began operating on August 25, 1944. It was staffed primarily by Black soldiers (about 75% of the total number of drivers and mechanics). At its peak, the Red Ball Express operated 5,958 vehicles that carried about 12,500 tons of supplies daily. The Red Ball Express operated 24/7 for 83 days – until November 16, 1944.
The Red Ball Express was terminated for several reasons. By mid-November, the port facilities at Antwerp, Belgium, had been captured, repaired and opened by the Allies. Supply ships could anchor in the port of Antwerp and discharge gasoline through portable gasoline pipelines to nearby depots. In addition, enough of the French railway system’s rail lines had been repaired, which allowed larger shipments of supplies to be transported. The third reason that the Express was ended was that the American armies had moved so far from the Normandy beachhead that the supply line had become too long. The law of diminishing returns kicked in – the Red Ball Express was using huge quantities of gasoline to move gasoline (and other critical supplies) much further than when it started!
However, without the work of those who commanded the Red Ball Express and drove its trucks, the struggle against the German army would have taken much longer and the Allies would have suffered many more casualties.
The CMA CGM Group this week announced it will grow its presence in Virginia, where the ocean container shipping company’s U.S. headquarters is located, and create more than 400 jobs.
The company said it will invest a projected $36 million to expand operations in Hampton Roads, reinforce its headquarters in Norfolk and establish in Arlington County the American hub of ZEBOX, a startup incubator and accelerator initiated by Rodolphe Saadé, chairman and CEO of the CMA CGM Group.
“ZEBOX will assist innovative startups in developing new technologies in transportation, logistics, mobilities and industry 4.0,” Thursday’s announcement said. “ZEBOX will become an essential place where entrepreneurs from all over the world meet and work on building tomorrow’s innovations.”
Saadé said the expansion begins a “new chapter in the long-lasting history of the CMA CGM Group with the United States and Virginia.”
France-headquartered CMA CGM launched its U.S. operations in 1997 and opened the Norfolk headquarters in 2005. CMA CGM said it supports the U.S. economy and American customers in part through its more than 12,000 employees across the country and its presence at 19 U.S. ports with 34 services and 93 weekly calls.
“Given the success of our startup incubator and accelerator ZEBOX in France, we’re thrilled to launch ZEBOX America in Arlington County,” Saadé said. “This is an exciting challenge to enable the development of innovative, game-changing projects and technologies.”
The announcement did not elaborate on the types of jobs that would be created.
Ed Aldridge, president of CMA CGM America and APL North America, noted that the company has “a long history in Virginia that began in 2002 when we opened our first office in Virginia Beach. We later increased our presence and moved into our Norfolk headquarters in 2005. We are very pleased to expand our roots again and continue working with the Port of Virginia. Together we provide great maritime services to customers both in Virginia and around the world in addition to offering reliable inland transport to America’s heartland utilizing the port’s excellent rail network.”
The French CMA CGM has long been a friend to the United States. In 2020 alone, CMA CGM donated 10,000 turkeys for Thanksgiving tables across the country. It also sent refrigerated containers with generators to Louisiana communities impacted by Hurricane Laura and firefighting equipment and storage containers to support relief efforts during California wildfires.
In late May, Alridge presented CMA CGM’s donation of 200,000 respirator face masks to Port of Los Angeles Executive Director Gene Seroka, who was tapped to serve as LA’s chief logistics officer to secure personal protective equipment to help fight the spread of COVID-19.
“We are proud to provide these masks as a gesture of our dedication to the great people of Los Angeles and to our partners at the Port of LA, who do an absolutely outstanding job working our vessels every week,” Aldridge said at the time. “As the largest ocean carrier today calling the Port of Los Angeles and our nation’s largest ocean carrier, we are absolutely committed to help the U.S. recover from the effects of this pandemic.”
Freight markets are always changing – that is why brokers, shippers, carriers, analysts and others subscribe to FreightWaves SONAR, the freight forecasting platform with the most current data and insights.
Two recently added SONAR indices that are proving useful to SONAR subscribers are the Contract Rate Per Mile Final Index, which is available for dry van, reefer, less-than-truckload (LTL) and intermodal modes; and the Ocean TEUs Index, which shows the daily volume of twenty-foot equivalent units (TEU) being booked with ocean container lines for a specific country of origin, or a specific port within a country of origin.
Contract Rate Per Mile Final Index
This index consists of eight sub-indices. The indices contain the average base rate (no fuel or accessorial charges) of contracted volumes on a per-mile basis. Freight market participants can use these contract freight rate per mile indices to gain a more complete understanding of shippingfreight rates when conducting annual rate increases or preparing annual contract freight bids.
The SONAR Contract Rate Per Mile Final Index should be of particular interest and use to transportation executives and managers, pricing analysts and industry experts.
According to Zach Strickland, Director of Freight Market Intelligence at FreightWaves, “This index helps take some of the guesswork out of annual rate discussions. While contract tender data is useful in measuring how effective the current contract pricing is, it can be difficult to translate that into a rate per mile or revenue per hundredweight (CWT) for an LTL carrier on a daily and annual basis. This data helps provide additional clarity around the relationship between spot pricing and contract pricing.” Truckload and intermodal rates are expressed in a rate per mile, while LTL rates are expressed in a CWT format.
Strickland explained, “LTL carriers are largely blind when issuing general rate increases because the truckload spot market does not always correlate cleanly to LTL pricing. In large part this is because over 90% of all LTL pricing is based on long-term agreements of 12 months or more.”
Ocean TEUs Index
SONAR’s Ocean Shipments Report shows subscribers how much cargo is shipping to and from the United States. SONAR subscribers can search for specific ports and specific carriers to see when and who is moving this cargo.
Being able to see when this freight will land in specific U.S. ports and which carriers are moving the freight is a first-of-its-kind tool in the marketplace. The Ocean TEUs Index is very useful not only for those involved in ocean shipping, but those in drayage trucking, warehousing, trucking and intermodal rail. Being able to track cargo coming into ports transforms a subscriber’s approach to the market from reactive to proactive. Why? Almost all the containers being moved on cargo ships are moved to warehouses or distribution centers elsewhere in the country by trucks or on trains as intermodal freight.
Henry Byers, FreightWaves Market Expert – International Freight Forwarding & Maritime, explained that the Ocean Shipments Report and Ocean TEUs Index “provide a leading indicator to SONAR subscribers regarding how much containerized ocean volume is moving from various countries and ports of origin around the world.”
The Ocean TEUs Index is very similar to the SONAR indices for outbound tender volume in the truckload market. “SONAR’s outbound tender volume index (OTVI) provides insight into demand within various trucking origin markets. Similarly, the Ocean TEUs and shipment indices provide subscribers data on demand/volumes being booked with ocean carriers as long as seven (7) days from the estimated time of departure for those volumes in TEUs,” Byers explained.
For example, if a SONAR subscriber looks at the Ocean TEU Index volumes from China to the U.S., the index provides a seven-day forecast and two years of historical values for ocean TEU volumes that have been booked with ocean carriers and are expected to move within those next seven days. Byers said, “Therefore, the SONAR user proactively knows the amount of TEU volume leaving China destined for U.S. ports – instead of waiting from 20-40 days until that volume actually lands in the U.S., is reported by U.S. Customs and then reacts by trying to book trucks or rail intermodal.”
SONAR subscribers have data, insight and analysis before their competitors
In turbulent times, freight market participants need certainty to stay ahead of the freight market and understand how any of dozens of factors may impact the market. FreightWaves SONAR allows subscribers to benchmark, analyze, monitor and forecast freight rates in both the spot and contract freight markets.
SONAR ensures more proactive responses to the market, provides correlations between several indices to guide decisions and brings confidence to freight market participants.
The history of the American shipbuilding industry goes back to before the Revolutionary War. The United States is blessed with three extensive coastlines, as well as numerous ports and harbors that have been the sites of shipbuilding companies for more than 250 years.
Although it is no longer true, at one time in the not too distant past the U.S. commercial shipbuilding industry led the world in quality and output.
This article will focus on the U.S. merchant shipbuilding industry in the 20th century.
Between the wars
Following the end of World War I and the mid-1930s, the U.S. merchant fleet, including its cargo and passenger ships, was in danger of becoming obsolete and declined in absolute numbers.
However, Congress passed the Merchant Marine Act of 1936, which led to a national shipbuilding program to upgrade and increase the size of the fleet. It was the start of World War II in Europe that intensified those efforts and eventually led to a shipbuilding program that produced 5,500 vessels in just a few years. Among them were 2,710 mass-produced ships known as Liberty ships.
President Franklin D. Roosevelt served as Assistant Secretary of the Navy during World War I, loved naval vessels and had an eye for ship design. While reviewing blueprints of the Liberty ships at the White House, the president said to Maritime Commission administrator Admiral Emory S. Land, “I think this ship will do us very well. She’ll carry a good load. She isn’t much to look at, though, is she? A real ugly duckling.” The president’s comment led to the Liberty ships’ second nickname, “the ugly ducklings.”
When the Japanese bombed Pearl Harbor on December 7, 1941 and plunged the United States into World War II, the shipbuilding program of the previous five years had put the country on a path to a modern merchant fleet.
But Germany’s lethal submarines (U-boats), preyed on American merchant ships, sinking thousands of tons of shipping and often sinking ships within sight of the American coastline. Unfortunately, the Liberty ships were too slow and too small to carry the vast tonnage of supplies needed to win the war. Convoys protected by U.S. Navy ships were organized to get war materiel to the United Kingdom, the Union of Soviet Socialist Republics and other war-time allies. While merchant and naval vessels were still sunk by the U-boats, the numbers were lower thanks to the convoy strategy.
Because of the limitations of the Liberty ships, the U.S. began a new shipbuilding program. The new ships were faster, larger and if they survived the war, would be able to carry cargo in peacetime. These ships were named Victory ships.
As foretold by President Roosevelt, the Liberty and Victory ships served the United States and its allies in war and peace. But those ships were built between 76 and 85 years ago. Of the thousands of Liberty and Victory ships built, only a handful remain (and most are floating museums).
After World War II, American commercial shipbuilding was at its peak and led the world in output and tonnage. As noted in a 1985 article, “Thirty years ago, U.S. shipyards built most of the world’s fleets.” In 1975, the U.S. was building more than 70 commercial ships annually. Within a few years, however, the U.S. commercial shipbuilding industry had almost vanished.
More than 90% of global shipbuilding takes place in just three countries – China, South Korea and Japan. In 2019. China completed ships with a combined gross tonnage of approximately 22.3 million tons. China State Shipbuilding Corporation (CSSC) is China’s leading shipyard, and as the name implies, is controlled by the government.
By contrast, only four U.S. shipyards construct large oceangoing commercial ships. The U.S. ranks 19th in commercial shipbuilding, accounting for only about 0.35% of new commercial ship construction. This is despite the fact that the U.S. formerly led the world in this category and the nation boasts the world’s largest economy. What happened?
Government subsidies tilt the playing field
Many issues contributed to the decline of the U.S. commercial shipbuilding industry, including global oversupply, recessions and changing economic fundamentals. However, one government policy decision is the key to the decline. For decades, nations around the world have subsidized their national shipbuilding industries – including the United States. Shipbuilders received construction differential subsidies (CDS); however, these subsidies were halted in 1981. Because foreign shipbuilding companies had the advantage of subsidies from their governments but U.S. shipbuilding companies did not, it was impossible for the American shipbuilding industry to compete.
Moreover, there was no government action to enforce fair market policies, and so the U.S. commercial shipbuilding industry declined steadily during the 1980s as it tried to compete against subsidized foreign competitors. According to a U.S. Navy report, between 1987 and 1992, the U.S. shipbuilding industry “sold only eight commercial ships over 1,000 gross tons, compared to 77 ships annually in 1975.”
This contrasted with “The Japanese, Korean and European governments made it a standard practice to support their shipbuilding subsidy programs,” according to a maritime analysis. Another analysis by Dun & Bradstreet concluded, “Japanese and South Korean shipbuilding industries received substantial government support during the 1970s and 80s, which helped them to emerge as top players in the world. While the South Korean government significantly bolstered the industry under its Heavy and Chemical Industrialization (HCI) policy, which included capital incentives, trade incentives and tax holidays, the Japanese government provided large subsidies in the form of easy finance and loan deferments.”
Because of these government subsidies and a lack of U.S government action to resolve the imbalance, the U.S. shipbuilding industry slowed significantly and the orders for new ships were filled in other countries.
For reasons that are very hard to explain, the Reagan Administration stopped the construction subsidies for U.S. shipyards without seeking reciprocal action from other shipbuilding nations. The result was that the U.S. commercial shipbuilding industry collapsed while subsidized Asian shipbuilding companies captured the market. In less than a dozen years, the U.S. went from the leading commercial shipbuilder in the world to producing virtually no vessels for international trade.
Other U.S. industries met similar fates during the last decades of the 20th century, including the textile and shoe industries for example. And not to make light of those job losses, the U.S. cannot move the materiel for war without a merchant fleet.
This article also provides a cautionary tale. Industries and jobs that are lost do not come back – or come back only with a great deal of money and effort. The shipbuilding portion of the U.S. industrial base has been gone for nearly 40 years, devastating companies, communities and significantly impacting our national defense. The loss of this vital industry to subsidized foreign companies significantly damaged a key American industry.
DB Schenker, which operates the largest pan-European trucking network, on Thursday resumed deliveries to Great Britain after a weeklong suspension because of customs-related delays associated with Brexit.
Complex new rules and fees has created operational headaches for road and air transport.
The contract logistics and freight management arm of German railroad Deutsche Bahn said it reduced the error rate by educating customers on how to properly fill out customs entries with information required for the first time in more than 50 years, making it possible to get truckloads cleared again.
Noncompliant individual shipments can hold up the entire load, leading to trucks being held back from making the trip until every shipment is in order.
Shippers began experiencing significant problems moving goods after the U.K.’s withdrawal from the European Union went into effect Jan. 1. The U.K. and EU have signed a free trade agreement, but now shipments are treated like those exchanged with other foreign nations. Adapting to new customs checks and regulations on both sides of the English Channel has created a bureaucratic nightmare for companies used to seamless transport within a single customs union.
DB Schenker last week said it had stopped accepting consignments for the U.K. because only about 10% of customs documents submitted for cross-Channel land transport were complete and free of errors. The Road Haulage Association told the BBC that about a fifth of trucks were being turned away at the Port of Dover for turning up without the correct paperwork or not having negative COVID test results to enter France. Daily traffic for the Dover-Calais ferry or the Channel Tunnel was about a third of normal – 2,000 vehicles per day – it said.
Dynamic Parcel Distribution, a large parcel carrier in Europe, also temporarily suspended road service to Ireland and mainland Europe because 20% of parcels had incomplete or incorrect information. DHL Express said it reserves the right to transfer small parcels to air without consultation and at a higher tariff.
The new trade environment has also impacted air cargo. New security requirements, for example, are complicating road feeder service from the U.K. to European airports. Shipments often have to be rescreened to get on an outbound flight because the EU no longer accepts trucked cargo as secure. Lufthansa Cargo says it is charging a security fee for shipments it is “legally obliged” to reinspect.
Air France-KLM-Martinair Cargo is not passing on the cost of extra security checks, according to The Loadstar.
The EU and the U.K. mutually recognize their air cargo security standards so pure air shipments continue to move without interruption.
Logistics providers are urging shippers and consignees to share information in advance to facilitate completion of the customs forms.
The documentation problem has increased the workload for freight forwarders, forcing DB Schenker to add people to a team that provides 24/7 customer assistance for completing the required customs documents.
The company has cautioned customers that shipments will only be accepted if the necessary export/import documents are submitted and accurate.
Customs entries must now include a proof of origin, a new customs invoice and a power of attorney to process the customs clearance. The importer must also issue a power of attorney and provide information such as the commodity code found in the U.K. tariff schedule.
“By making the hard decision to suspend shipment collections for a short period, we were able to protect our transportation network from potential tailbacks [long queues of trucks] affecting transshipment platforms in the whole of Europe,” said Cyrille Bonjean, head of land transport Europe at DB Schenker, in a statement.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Brexit forcing grocers to stock enemy product
Titan Airways to operate world’s second A321 converted freighter
The Murphy’s Law of transportation integration projects can now add the loss of as many as 6,300 jobs to its dubious legacy.
FedEx Express, the air and international unit of FedEx Corp. (NYSE:FDX), will cut between 5,500 and 6,300 jobs as part of its continued combination of the operations of former Dutch delivery firm TNT Express LLC, the FedEx unit said Tuesday.
Memphis, Tennessee-based FedEx acquired TNT Express in May 2016 for $4.8 billion. However, the integration process has been hobbled by a multitude of problems and is unlikely to be fully completed until calendar year 2022 at the earliest.
FedEx Express said in its announcement that because it operates two large European networks that connect similar geographies, thousands of jobs have become redundant. The cuts will affect operations and back-office personnel, FedEx Express said. It is expected that most of the cuts will be at the unit’s intra-European hub in Liege, Belgium, which had been TNT Express’ hub.
The unit presented its proposal Tuesday to European employees and their representatives. Discussions will begin to work through separation measures, the unit said, adding that some employees may be reassigned to other roles and given priority access to open positions.
Because separation protocols vary by country, the process will take about 18 months to complete, FedEx Express said in the statement. FedEx Express employs about 50,000 people in EU-member nations.
In a filing Tuesday with the Securities and Exchange Commission, the parent expects to book a pretax charge of $300 million to $575 million to be incurred through fiscal 2023. The company said it expects annual savings of $275 million and $350 million starting in fiscal 2024. FedEx, which operates on a June 1 to May 31 fiscal year, is currently in the third quarter of its 2021 fiscal year.
In a late Tuesday note, analysts at the bank UBS said FedEx could realize more than $200 million in additional annual savings by rationalizing expenses such as fuel, purchased services, maintenance, rental fees and depreciation and amortization. UBS has a $386-per-share 12-month price target on FedEx shares, which as of noon ET Wednesday were trading slightly above $250 a share.
When the smoke finally clears, FedEx Express will be operating a dual-hub network on the continent. The primary hub at Paris Charles de Gaulle International Airport will handle cross-continental air deliveries. Liege, meanwhile, will operate as a secondary hub.
The European setup is similar to FedEx’s U.S.-based air hub structure, with Memphis as the primary hub and Indianapolis as the secondary hub. Indianapolis historically has been known as the “daylight sort” facility where shipments not super time critical are processed.
FedEx Express was vague in describing Liege’s future functions, saying only that the hub will “provide excellent service to customers year-round.” It has been thought that Liege would focus on supporting FedEx Express’ intra-European operations. It may also serve as a safety valve in the event that operations at de Gaulle are disrupted, said Dean Maciuba, a longtime FedEx executive and now managing partner of North America for consultancy Last-Mile Experts LLC.
When it was announced nearly four years ago, the transaction was hailed on multiple fronts. It rescued a well-known European brand that had fallen on hard times and in the process saved thousands of European jobs. FedEx Express’ global air network and TNT Express’ intra-European road system would effectively become a one-stop shipping shop for European and non-European companies on the continent and around the world. It would also position FedEx solidly for expected e-commerce fulfillment growth in Europe.
The deal elevated FedEx, which had been a market-share afterthought in Europe, into the conversation with market leader Deutsche Post DHL (OTCMKTS: DPSGY) and FedEx’s archrival UPS Inc. (NYSE:UPS), which three years earlier had abandoned a $6.8 billion bid for TNT Express after European antitrust officials came out against it. For FedEx, the deal had the dual benefit of gaining a seemingly overnight foothold in Europe and keeping TNT Express away from UPS.
It didn’t take long for the integration to run into trouble, however. TNT Express, which was already struggling when UPS made its offer, spiraled further downhill after Big Brown walked. TNT Express’ physical infrastructure and, in particular its information technology, were aging and in disarray when FedEx approached it. Shippers began to get nervous about operational problems that typically accompany an integration of large companies based on different continents. FedEx also grappled with a sluggish European economy in the latter half of the decade, as well as an unfavorable mix of lower-yielding freight generated by TNT Express’ freight forwarder customers.
Almost every aspect of the integration faced delays and the completion date became a constantly moving target. But the biggest hit was the mid-2017 “NotPetya” cyberattack on the two companies’ IT systems. The crippling attack cost FedEx about $300 million to rectify.
Even worse, TNT shippers that spent days, if not weeks, in the dark about their freight decided to migrate their future business to DPDHL and UPS. It has been difficult for FedEx Express to win back those customers, according to Maciuba. Part of the problem, he said, is that both are strong competitors with well-regarded reputations for service. Former TNT shippers may not see any need to return to the FedEx fold, he said.
Analysts lost patience long ago with the integration-related delays and with what they said was top management’s lack of transparency in communicating the challenges it faced. FedEx is expected to have spent $1.7 billion on the integration by the time the physical integration is completed sometime in FY 2022.
This is an excerpt from Monday’s Point of Sale retail supply chain newsletter.
The UK grocery supermarket sector was once highly oligopolistic, but in recent years, European brands have expanded in the UK and have created a much fiercer competitive landscape. There are 4 primary British supermarket chains dubbed ‘The Big Four’: Tesco, Sainsbury’s, ASDA, and Morrison’s. The new challengers include Aldi and Lidl of Germany, and SPAR of the Netherlands.
The long and messy trade disputes stemming from Brexit are forcing supermarkets in Northern Ireland (NI) to conduct highly unusual business practices to keep shelves stocked. On December 31, England, Scotland and Wales left the EU’s single market for goods but NI did not. This created a new trade and regulatory border between NI and the rest of the UK.
The new ‘Irish Sea border’ means that food products entering NI from England must undergo a range of time-consuming new processes such as the creation of export health certificates and checks at new border posts. In response, supermarkets have been looking at ways to source more products locally in NI and the Republic of Ireland.
For Sainsbury’s, that has included indirectly partnering with the enemy, Netherlands-based SPAR. To ensure shelves remained stocked, Sainsbury’s entered into a contract with Henderson Group, one of Northern Ireland’s biggest food wholesalers which sells to retailers and caterers. But, the retailers Henderson stocks are almost exclusively a network of SPAR stores across NI.
While the agreement is temporary and only in place until Sainsbury’s can work out long-term supplier agreements, the move is unprecedented. When the Sainsbury’s management team was pressed on the unusual nature of stocking rival’s goods, the company insisted that it was “not that unusual”. It said that “for example, elsewhere in the UK we have wholesale agreements which mean Sainsbury’s branded products are stocked by Simply Fresh, Dobbies and WHSmith”.
However, as the News Letter pointed out, Dobbies is a garden centre, WHSmith is a newsagent, and the small high-end grocery store Simply Fresh has no shops in NI. Management could not point to any precedent for a supermarket stocking a rival supermarket’s branded produce.
This is the British equivalent of Walmart carrying Target-branded SKUs, or Trader Joe’s stocking Publix products. The anecdote demonstrates a couple of things: how disruptive Brexit is; how even the most extreme supplier flexibility has to be part of any retail contingency plan; and why it’s worth it to sacrifice a little bit of margin on rivals’ SKUs in order to keep shelves stocked, preserve foot traffic, and get consumers in the door (where they can buy lots of other things too).
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