When freight moves, it moves through Freight Alley

Freight Alley includes a region that roughly mirrors the areas between Knoxville and Nashville to the north, Memphis to the west, down to Birmingham, east to Atlanta and north again to Chattanooga.

Freight Alley includes a region that roughly mirrors the areas between Knoxville and Nashville to the north, Memphis to the west, down to Birmingham, east to Atlanta and north again to Chattanooga.

From Chattanooga to Birmingham, from Memphis to Atlanta, the region is home to a growing number of freight and logistics companies

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Location, location, location … and a qualified workforce. Chattanooga, TN, has all of those, and because of that transportation and logistics companies, particularly startups, are flocking to “Gig City.”

The area is ideally situated to move freight, and that has been a big reason for its popularity. In fact, according to a freight study by Cambridge Systematics, Chattanooga ranks No. 1 of all metropolitan cities when it comes to freight movement. The Thrive 2055 study, commissioned by the Chattanooga-Hamilton County Transportation Planning Organization, found that approximately 80% of all the nation’s freight travels through Chattanooga on its way to its final destination. This is due in large part to the convergence of three Interstates – I-75, I-24, and I-59.

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Some 81.5% of all freight transportation spend is in the U.S. trucking and logistics markets and there are approximately 500,000 active trucking companies, 3.5 million drivers and 16,000 freight brokers in the country. And Chattanooga is right in the center of all this, making it easy to see why it is getting a reputation for being part of “Freight Alley.”

The study also found that 42% of the region’s employment and 40% of its economic output ($6.6 billion) was related to “logistics-dependent” companies involved in manufacturing, transportation and warehousing, construction, mining, agriculture, retail/wholesale trade, and utilities. The report predicted that the dependence on these businesses would grow in the future. Additionally, 80% of the U.S. population is within a two-day truck transit time from Chattanooga.

“Total freight volume (by weight) in Chattanooga will grow from about 25 million tons in 2007 to 33 million tons in 2035, despite the recent recession,” the report notes. “Most of this freight will be inbound or outbound, reflecting Chattanooga’s position as a regional distribution center, manufacturing base, and freight hub.”

Where is Freight Alley?

Freight Alley is not actually an alley, instead it is an area that roughly defines freight traffic moving throughout the Atlanta-Birmingham-Chattanooga area.

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In many ways, Chattanooga is the centerpiece of Freight Alley and it has several benefits going for it, including fast Internet (it is ranked 6th in the world, offering 10 gigabit speeds) and transportation expertise. The area is home to well more than 50 freight-related entities, including major carriers such as U.S. Xpress, Covenant Transport, Western Express, P&S Transportation, Boyd Bros. and CRST Malone. Coyote also has a significant presence in Chattanooga by way of the acquisition of Access America in 2014. Lipsey Logistics, originally funded by a water company executive out of Atlanta, established its logistics home in Chattanooga primarily because of the talent-base that is found in Chattanooga. Lipsey is widely regarded as the leading FEMA broker in the U.S., providing natural disaster logistics for federal and state governments.

UPS, FedEx, AmeriCold, Kenco, Averitt Express, OHL, Saia, Forward Air, and LandAir also call Freight Alley home. Ingram Barge, the largest barge company in the U.S., is also located in Nashville (See chart for a more complete listing of companies).

And there is the nearby University of Tennessee-Knoxville, which is ranked as the No. 3 university in the nation for logistics. Georgia Tech also has one of the most respected supply-chain programs in the country, ranking at No. 5  in the U.S and is widely respected as one of the top data-mining and business intelligence universities in the world using applied scientific principles in its supply-chain research and education.

Companies that service the industry also have a significant presence in the area. One of the leading trade publications, Randall-Reilly Publishing is located in Tuscaloosa. McLeod Computing, one of the top software vendors to the industry is located in Birmingham. SMC3, the leading LTL pricing and rating service, has its HQ in Atlanta. Pilot Flying J, the largest truckstop and diesel fuel vendor to the trucking industry is located in Knoxville. Idle Air, the leading provider of in-cab climate control and entertainment also calls Knoxville home. Comdata/Fleetcor, the largest fleet card provider in the business have HQs in both Nashville and Atlanta. U.S. Bank’s fleet-card business even gained a small foothold into the city, by way of its investment and acquisition of Chattanooga’s own TransCard fleet processing unit in 2012.

In search of innovation

Chattanooga is also actively reaching out to startup businesses in the logistics arena. One of those companies that recently announced its move to Chattanooga is TransFX, formerly TransVix. In announcing the move from Fort Worth, TX, the company cited a number of factors working in Chattanooga’s favor, including its high-speed Internet and proximity to so many freight-related businesses.


We intend to establish Chattanooga as a global hub for trucking commodities trading similar to other major U.S. cities by leveraging the Gig City’s high-speed Internet and deeply seeded trucking industry network.
— Craig Fuller, CEO of TransFX

TransFX intends to offer Freight Futures Contracts that allow participants to hedge against rate volatility in the physical market. The financially settled contracts, which will feature no physical delivery or service, are meant to be risk-management tools that participants can use to normalize price fluctuations. Think of trading oil, gold, wheat, or corn as examples of commodities that trade futures. Other examples that are more closely correlated include maritime freight, pipeline capacity, and electricity.

“We intend to establish Chattanooga as a global hub for trucking commodities trading similar to other major U.S. cities by leveraging the Gig City’s high-speed Internet and deeply seeded trucking industry network,” Craig Fuller, CEO of TransFX, says.

The appeal of Freight Alley

Industries that are highly innovative tend to cluster. Talent is a huge issue for rapidly changing business models and you need to tap into the talent base of experienced employees, vendors, and strategists that are connected and have a deep understanding of how things work in that sector. If you are setting up a highly-innovative futures market based on freight, knowledge and real-time market insights are critical to gaining liquidity.

"Chattanooga and the broader region is incredibly seeded with talent that understands the logistics industry with many leading firms having a significant presence here. Our futures exchange will be able to take advantage of these connections to the freight market to build liquidity and design tradable products that will be needed and demanded by the market. Plus, real-time information is critical to a financial marketplace. No city in the U.S. is better positioned to understand the direction and economics of freight than Chattanooga,” Fuller states.

If successful, the futures market could have a huge multiplier effect on the city. The exchange listed contract market will attract a new breed of logistics professional - but this time they will have a financial and mathematics background. Because the contracts that TransFX is developing are financial in nature, they will attract interest from not just logistics firms, but financial bankers like Goldman Sachs, Morgan Stanley, SocGen, and hedge firms. Chattanooga will now be on their radar and potentially could set up shop in the city.

Additionally, because financial markets are usually the first to react to major changes, innovations, or events in a particular industry, Chattanooga will have an edge in insights on the changes in the market. This will become critical over the next few decades as the freight industry adapts to  innovations such as autonomous trucks, drones, regulatory changes, and big data.

Business-friendly climate

The city also has several other advantages working for it, including top rankings for business climate (No. 4 in the nation according to Site Selection), logistics (No. 4 says Inbound Logistics), and lowest cost for startups (No. 1 says SmartAsset). In addition, millennials are settling in the city. Chattanooga is one of the few cities in the country that saw home ownership increase for those under age 35. More than 30% of millennials own homes in the city. More millennials equates to a younger, more diverse workforce, helping businesses replace older workers who are leaving the industry.

All of these factors have helped in luring businesses.

WorkHound is another of those newer businesses to the area, settling in Chattanooga thanks to its participation in a Chattanooga-based accelerator program.

Last summer, the company participated in the Dynamo Accelerator program. Dynamo is a venture capital firm based in Chattanooga that invests in transportation and logistics startups. Its Accelerator program is designed to help startups grow their business by offering strategic guidance and mentorship.

WorkHound will maintain software operations in Des Moines, IA, but co-founders Max Farrell and Andrew Kirpalani are now located in Chattanooga. Farrell, the CEO, tells FreightWaves that before the Dynamo program, there was no thought of moving to Chattanooga.

“Going through the Dynamo program opened our eyes to the community that is being built around a thesis (logistics) in Chattanooga,” Farrell explains. “I don’t think we would have found Chattanooga and made so many relationships without the Dynamo program.”

That program also helped WorkHound secure $500,000 in fundraising last month to hire staff and continue building is software platform, which allows truck drivers to anonymously submit complaints, praise or questions to their companies for action. The information is collected and allows fleet managers to address problems. WorkHound says some fleets have seen a 16% decrease in driver turnover when using its software.

Working with the Dynamo program was well worth it, Farrell says.

“It opened a lot of doors to companies we didn’t think we were ready to work with,” he notes. “And it had a lot to do with securing that $500,000 round of funding.”

Dynamo will also be critical to keeping Chattanooga on the forefront of the logistics industry. Like futures markets, venture capital firms have insights into the trends and developments of industries due to the nature of visiting with hundreds of startups and seeing how entrepreneurs are addressing problems. The firm was started by the founders of one of the most successful group of entrepreneurs in the industry’s history - the team behind Access America. Access America sold to Coyote Logistics in 2014 for over $260 million. The trio decided rather than retire (they are in their 30’s), they wanted to double down on the logistics space and make investments in the next batch of young entrepreneurs that are working to address major challenges. Beyond WorkHound, Dynamo has made investments in Starsky Robots, a SaaS  autonomous driving technology; Steam, a NVOCC for the container freight industry; skupos, an inventory management platform for the C-store industry; and Slope, a logistics service that oversees the complexities involved in FDA clinical trials.

The vision of Dynamo is broader than just making smart investments in logistics. One of the missions of the firm is to help create an ecosystem that drives entrepreneurs to Chattanooga to set up shop. For entrepreneurs, it’s a win-win. They gain capital, insights, and a roster of highly connected mentors that can bring talent, ideas, and most importantly customers. By locating in Chattanooga, they will be apart of a community that has two of the nation’s largest truckload carriers, four billion-dollar logistics firms in the city, and a few hour’s drive from a very large swath of the nation’s freight companies.

Birmingham, home of the flatbed

Like Chattanooga is doing with its technology push to land logistics and transportation startups, Birmingham, AL, has been able to do with its steel knowledge. That city is known for its expertise in the more specialized flatbed industry with a collection of flatbed carriers setting up shop, including Buddy Moore Trucking, Montgomery Transport, Blair Logistics. Three of the top ten flatbed carriers are based or have business units based in Birmingham including Daeske, CRST Malone, and P&S Transportation.

“Flatbed became popular in Birmingham during the steel boom [because] iron ore is rich in Birmingham,” Mauricio Paredes, director of information technology at P&S, tells FreightWaves. He adds that Birmingham steel did not play a major role in automakers’ just-in-time delivery processes and that allowed the city’s steelworkers to avoid the most damaging effects of the automotive industry collapse. Birmingham offers diverse choices in steel which also helped it weather the crisis. P&S is one of the largest flatbed operators with over 2,000 trucks.

“This separated Birmingham from the rust-belt and made it a prime location for larger flatbed carriers to create their headquarters,” Paredes notes.

Like Chattanooga’s easy Interstate access, Birmingham flatbed fleets also have quick access to Interstates that can allow carriers to easily route trucks to Chicago, Dallas, Houston and up and down the East Coast.

P&S has taken advantage of the local talent as well, with many of its dispatch team graduating from nearby Auburn University or the University of Tennessee.

So, whether you are traveling through Chattanooga, Birmingham, Atlanta, Memphis or somewhere in between, chances are you are in the middle of a major U.S. freight corridor now known as Freight Alley.

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