Boasting nicknames such as "freight alley" and "the Silicon Valley of trucking," the Chattanooga area is riding a growing ecosystem for startups in the sector and a reputation where companies outside of the city need a presence, according to experts.
"We knew we could leverage the talent already there," says Jeff Schroeder, marketing manager for third-party logistics provider R2 Logistics of Jacksonville, Florida, which opened an office in Chattanooga this year. "There are so many logistics professionals there."
Inc. magazine this summer named 13 local companies among the country's fastest-growing firms and eight were in logistics, including five freight brokerage ventures and another three which are supporting the industry.
Craig Fuller, chief executive of fast-growing transportation and logistics data and content startup FreightWaves in Chattanooga, says the city has a large base of people who understand the sector.
Fuller estimates that the Chattanooga area has some 7,000 white-collar professionals involved in freight logistics, and that doesn't count such jobs as drivers or warehouse workers.
He says the area is wooing bright business people who are looking for a place where there's talent in the segment.
Ted Alling, who with business partners Barry Large and Allan Davis founded Access America Transport in 2002 in Chattanooga, said the city has "a remarkable amount of transport and logistics companies for our size."
"Transportation is in our DNA in Chattanooga, and the cluster of companies is continuing to spin out new startups who have seen others succeed and want to take their own shot," he says.
Access America quickly became one of the city's most successful startup companies. Sales reached about $600 million in 2014. The company handled multi-modal transportation, including truckload, less-than-truckload, intermodal, flatbed, and specialized freight for more than 10,000 customers across the United States.
In 2014, Access America was acquired by Coyote Logistics of Chicago. About a year later, Atlanta-based giant UPS acquired Coyote Logistics for about $1.8 billion.
"I believe people are moving to Chattanooga for logistics jobs knowing that if it doesn't work out, they have opportunities to work in several different places," Alling says. "This feels like a very big deal for the community."
Transportation is in our DNA in Chattanooga, and the cluster of companies is continuing to spin out new startups who have seen others succeed and want to take their own shot.
Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development, says the region has a legacy created by Covenant Transportation Group and U.S. Xpress Enterprises, two of the nation's largest trucking companies.
"There's a lot of history," he says, noting the two companies have had "a huge impact" on the area.
Also, Kenco Group, which bills itself as the largest woman-owned third-party logistics company in the United States, started in Chattanooga in 1950.
But, Wood says, there has been a number of changes in the industry, such as a transition to more technology and interaction between trucking companies and customers and truck drivers themselves. Logistics and supply chain management has become an area where large companies can reduce costs, he says.
The Chamber official says some "very hungry entrepreneurs" have jumped on that industry sector.
Wood says that from Access America, there were people who learned how to build logistics and freight brokerage companies.
"One company became several," he says.
Chattanooga’s fastest growing firms
Among the 13 fastest growing businesses in Chattanooga on this year’s Inc. 5000 list, eight are in the logistics industry. The fastest growing local logistics companies and their relative rank on the Inc. 5000 list for 2019 are:
* 366 - LYNC Logistics with 36 employees started in 2014, $28 million in revenue and 3-year growth of 1,248%
* 483 - Trident Transport with 51 employees started in 2013, $31.3 million in revenue and 3-year growth of 911%
* 1021 - Reliance Partners insurance broker with 118 employees started in 2009, $10.1 million in revenue and 3-year growth of 413%
* 1302 - LMS (Logistics Made Simple) with 75 employees started in 2008, $45.6 million in revenue of three-year growth of 316%
* 1339 - Taimen Transport with 17 employees started in 2012, $35.6 million in revenue and three-year growth of 308%
* 1896 - Steam Logistics international freight broker with 38 employees started in 2012, $27.8 million in revenue and three-year growth of 212%
* 2154 - Max Trans Logistics with 28 employees started in 2014, $27.4 million in revenue and three year growth of 187%
* 4169 - AHS Consulting, a logistics consultant in 2014 with 11 employees, $2.3 million in revenue and three-year growth of 75%
Source: Inc. 5000 for 2019
Meanwhile, Alling, Large and Davis formed the Lamp Post Group, a business incubator headquartered in the second floor of the historic Loveman's department store building downtown. It offered business startups working space, back-office support and early-stage funding in exchange for an ownership stake.
Later, Lamp Post launched the Dynamo Accelerator, a three-month program to help tech startup companies in the logistics, transportation and supply chain business, and aided in the formation of the program's sibling, a Dynamo venture capital fund.
Alling says he believes Chattanooga is "the best place in the world to start a logistics business. Chattanooga has a lot of talent, high quality of life, low cost of living and our community supports itself."
He says that a lot of former Access America employees started their own companies, adding that this makes he and his partners "super proud."
"We worked hard on developing and empowering servant leaders at Access America," Alling says. "These amazing folks are positive leaders that believe in others and know how to run a successful business."
Also, he says, companies such as FreightWaves have bubbled up. FreightWaves delivers data analytics, news and commentary, innovation engagement and risk management tools to the transportation and logistics industry. The speed and nature of the data enable shippers, motor carriers, and freight brokers to better understand the market, according to FreightWaves.
Company founder Fuller, the son of one of the patriarchs at U.S. Xpress, Max Fuller, just last year rolled out a major expansion with plans to create 260 new jobs. The company was to invest $3.9 million in the expansion, including a shift of operations to new workspace downtown in the 400 block of Market Street.
Fuller says FreightWaves is already out of space with about 150 employees and is looking at potentially leasing more offices across Market in Jack's Alley.
In 2018, FreightWaves announced it had raised another $13 million in new capital, putting it at about $18.4 million over its first two years and among Chattanooga's top startups.
In addition, FreightWaves was the winner of venture capital firm Revolution's Rise of the Rest pitch competition held in Chattanooga last year. The competition spearheaded by AOL founder Steve Case gave FreightWaves a $100,000 investment.
Fuller said Rise of the Rest "helped validate that we have this really important industry in which Chattanooga is exceptionally well-positioned. We as a city should be doubling down on that."
He says there could be more economic incentives and better training programs to help the sector, for example.
Alling said that while the talent pool is huge and Chattanooga is importing more, the city needs to keep its college graduates here. He says Chattanooga is in "dire need of our own program" at UTC, Covenant College, Lee University and Chattanooga State Community College.
"We also need to be aggressive with [Hamilton County Department of Education] and the private schools to expose our high school students to the startups transportation ecosystem," Alling says.
Wood says there's still a lot of opportunity in the business segment. He cited Arrive Logistics, the Austin, Texas-based company that earlier this year announced plans to expand its Chattanooga office by creating 500 new jobs and investing $3.6 million.
Wood said that within the Chamber's new Chattanooga Climbs economic development strategy, so-called "freight services" is one of its target sectors on which it will focus.
"It's particularly on the white-collar aspect of that — professional services, back-office, technology," he says.
A big asset is leveraging the relationships of executives in the market, Wood says. They help identify the companies with which the Chamber ought to be talking that aren't here, he says. Also, they help identify venture capitalists, Wood says.