Desperate logistics service providers in Chicago are resorting to a number of new tactics, including bribery and undercover extraction missions, to avoid worsening congestion that is trapping shipments for more than a week at O’Hare International Airport’s cargo terminals, according to industry executives.
Shipment volumes at O’Hare have exploded in the past 18 months as businesses turn to air transport for critical imports of personal protective equipment, replenishment of depleted inventories and to overcome manufacturing and ocean supply chain disruptions. Facilities are short-staffed and don’t have adequate space to swiftly process mountains of cargo offloaded from the giant freighters that have predominated since COVID devastated lower-capacity passenger flights.
Freight management companies say backlogs are so severe that warehouses are storing rows and rows of containers in parking lots and that it can take up to 10 days to retrieve a shipment. Delivery trucks often sit in line for hours waiting for a load and some local carriers are refusing to get freight at certain airlines.
The situation is so bad that one 3PL is essentially orchestrating heists of its own freight.
“We will literally bring a truck from our facility with a forklift in the back, with like six or seven guys, and we’ll basically pay our way in to find our freight, break it down and use the forklift to load out trailers to get it out,” a top company executive told FreightWaves on condition of anonymity.
The teams have to scout the floor to find the pallets and cartons, some of which are marked with bright stickers at origin.
“When you’re paying people off in cash, they’ll let you do it. That’s the only way you can get your freight,” he said.
C.H. Robinson, a large Minneapolis-based 3PL, sends individuals along with the trucker for established appointments so they can walk the warehouse floor and help find freight. Fully-built, dedicated units are marked with Robinson tags so they are easily recognizable, Matt Castle, the company’s head of air cargo, said.
Cargo volume by weight at O’Hare grew 14.8% in 2020 to more than 2 million metric tons and freighter flights increased 25% to 30,399, according to the Chicago Department of Aviation. International imports carried on widebody jets increased much more in Chicago, a major freight hub in the center of the country, than at other large gateways.
The influx of cargo has not slowed down this year. Other airports are also experiencing cargo congestion, but none to the same degree as O’Hare. The airport experienced a 17.8% year-over-year increase in international all-cargo flights through June, with international freight volume soaring 46% to 871,000 metric tons.
Evan Rosen, president of the Americas for EFL Global, characterized air cargo logistics at Chicago O’Hare as a “disaster,” pointing to huge warehouses that only have a handful of dockworkers to sort cargo and load it on trucks. “We have stuff that’s stuck for six weeks and we’re still trying to find it in some of these facilities. People are paying $9 to $10 per kilogram [for air because it’s supposed to be faster] and six weeks later I still can’t find their freight.”
Ground handling companies, which lost many workers to layoffs when airline customers sharply scaled back flight operations and health concerns over COVID, have had difficulty refilling their ranks.
Alliance Ground International, for example, is trying to fill 200 vacancies at its five facilities in and around the airport, said Warren Jones, vice president for business development, in an email message. He expressed hope that the expiration of federal extended unemployment benefits on Sept. 1 will increase the potential labor pool. Workers in certain industries, including restaurants and warehousing, have been reluctant to return to lower-paying jobs, but there are also constraints with background checks and training that take time to complete.
Most freight forwarders don’t have rescue teams, but are doing whatever they can to bypass the airport terminals.
A recent practice is for logistics providers to build their own air containers, known as unit load devices (ULDs), with cartons and small pallets rather than tender multiple loose shipments for the airline to co-load in a container with other customers. There is a better chance freight will be ready soon after arrival at the destination airport if it’s consolidated in a single ULD because ground handling agents that run the airside facilities don’t need to break down the stacks and sort the individual shipments.
Kuehne + Nagel, the largest air freight forwarder in the world, is controlling entire ULDs bound for Chicago so they can get picked up by a trucking supplier with only one or two days’ delay, said Edward DeMartini, vice president of air logistics development for North America, during a recent video update for customers.
“We are not shipping anything into Chicago anymore that is not a full ULD of EFL freight. We will no longer tender freight loose to an airline at origin so that they can build my freight with mixed pallets because that’s the stuff that just doesn’t move,” Rosen said.
The average cost per kilogram goes up if a 3PL doesn’t completely fill a rented ULD, “but at the end of the day, I can’t have freight sitting at the airlines for two months waiting to go pick it up,” he said.
Having shipper-controlled ULDs also makes it easier for logistics providers to circumvent the airport warehouses. Several freight forwarders, including San Francisco-based Flexport and EFL Global, use local cartage providers that have special permission to drive on the tarmac and directly load ULDs onto lowboy trucks with roller beds. Both companies have bonded facilities very close to the airport that can handle large, heavyweight pallets.
“The solution here is to bypass those terminals, take freight right off the airplane and move it into your own cargo freight station to do the breakdown,” Neel Jones Shah, Flexport’s executive vice president and head of airfreight, said during a company webinar in late July.
Flexport, he said, also plans to add incremental capacity to its dedicated charter network operated by Atlas Air (NASDAQ: AAWW) and is considering alternate airports that aren’t congested. As previously reported, German logistics companies DB Schenker and Senator International earlier this year established freight stations at nearby Chicago Rockford International Airport and are diverting their own-controlled freighters there.
EFL, a heavy user of leased aircraft to haul customers’ shipments, sends many flights to Rickenbacker International Airport, a cargo-only airport outside Columbus, Ohio, that also offers quick turn times for inbound freight.
Some forwarders are using Air Canada’s cargo-only passenger flights into Toronto and then trucking the shipments to their Chicago container freight stations.
Even ground handlers are trying to get out of their own way. Alliance Ground, Maestro International Cargo and Swissport have recently opened import facilities outside airport property where containers are immediately sent as they come off freighters. By moving more freight off airport, the companies hope to free up space at existing facilities for pharmaceutical, export and other shipments and enable faster cargo collection.
But so far, according to Rosen and other sources, the facilities haven’t made much of a difference because they don’t have enough workers. Jones acknowledged that the 253,000-square foot building it opened in June is minimally staffed.