“The north had been moving to an industrialized economy while the south had been content with selling high priced cotton to England and France.”
One thing that history teaches us, is that nations fall because they fail to adapt to changing technologies and refuse to modernize. In this case, the South could have industrialized, but elected not to industrialize.
“So, to answer your question, the South couldn’t support their war effort because the North, rather strategically, rushed to capture Southern transportation systems for over-seas sales.”
History also teaches us that if a nation at war is so weak that it is unable to secure its transportation systems, that nation loses their war.
The reason the South never industrialized was the Slaver aristocracy had the region under their iron fist and did not want it for various reasons particularly the loss of power to a rising bourgeois class which industrialization would produce.