History & Growth of Chattanooga Logistics
Transporting Success
Today, Chattanooga is frequently lauded as a unique destination for transportation- and logistics-minded entrepreneurs looking to make an impact on the growing industry worth over $4.8 trillion globally. With our hyper-fast internet, ever-increasing levels of investment, low cost of living, and unique positioning, it’s a natural fit. But this is nothing new. Local business men and women have been capitalizing on this centrally located Southeastern city since the early 19th century, propelling it to its current status as a global powerhouse.
Rolling on the River
Covering 41,000 square miles and running through 60 counties and seven states, the Tennessee River is the largest tributary of the Ohio River, matching it in water volume. The river’s mouth is located in Paducah, Kentucky, though its tributaries flow far and wide, reaching the likes of Tennessee’s Knoxville and South Pittsburg, as well as areas in Georgia, Alabama, Mississippi, and more.
First known in the late 1600s as the “Caquinampo” on French maps, the Tennessee River endured numerous name changes ranging from “Cussate,” “Hogohegee,” “Callamaco,” and “Acanseapi,” before a British map from 1755 christened it the “River of the Cherakees,” referencing the large population of Cherokee Indians residing on the banks of the river.
As the Cherokee population continued to grow and develop along the river, its chief, John Ross, (whose Cherokee name Koo-wi-s-gu-wi meant “Mysterious Little White Bird”), saw an opportunity to create a trading post just north of Chattanooga Creek in 1816. Later deemed Ross’s Landing, it became a vibrant source of commerce for the area as steamboats began traveling through carrying goods, traders, and settlers. By 1840, the population of what had become Chattanooga had grown to more than 8,000.
River trade continued to pick up steam for decades and began to flourish even more when, in 1900, the United States Army Corps of Engineers proposed the building of a dam on the Tennessee River just below Chattanooga at Hales Bar to provide hydroelectric power and reduce hazards in the gorge. Construction began in 1905, and the first boat navigated the dam in 1913. With this, the opportunity for towboats and barges to traverse the waters without looming threats immediately improved.
In 1933, the Tennessee Valley Authority was established to control flooding and improve river navigation even further. The organization began building more dams (nine in its first 10 years), and creating lakes that are still used for commercial transportation to this day.
One family able to capitalize on the success of the river trade was the Serodinos. In 1958, Victor “Pete” Serodino launched Serodino, Inc., whose towboats and barges service the marine and construction industries. “In the early years, we primarily transported coal to power plants,” says current President Peter Serodino III. “Now, principal commodities are grains, fertilizers, minerals, steel, petroleum, salt, and chemicals.”
These days, Serodino moves more than 2 million tons of cargo per year by river. “A typical river barge carries 1,500 tons of cargo, which equates to about 65 full tractor trailer loads. From Chattanooga, a typical river barge can travel to ports as far away as New Orleans, Houston, Pittsburgh, Tulsa, or even Minneapolis.”
River transportation is still integral to both the state and the city economy. In recent years, a reported $8.2 billion in economic impact was generated by the 1,046 miles of navigable waterways and ports in Tennessee, which supported 46,435 jobs statewide. The Port of Chattanooga specifically shipped and received 2.5 million tons of commodities in 2012, according to the most recent data available.
(above) photo from Images of Rail Chattanooga’s Terminal Station by Justin Strickland
Chugging Through Chattanooga
The early success of river transportation eventually led to the city’s first railroad line. In 1850, the Western and Atlantic rolled into town, serving as an immediate boost to the economy. Other lines linking Chattanooga to Nashville and Chattanooga to the Mississippi River followed shortly thereafter, and by 1860, the city was an essential connection in the region’s rail system. So centrally located in the Southeast, a majority of the region’s cargo traveled through Chattanooga on its way to or from the Deep South, earning the city the identifier “where cotton meets corn.”
Due to its infrastructure, the city became a key battleground during the Civil War, with both river and rail serving as vital transportation options for soldiers and supplies. The war devastated the city, but business-minded leaders were quick to rebuild. Retail and wholesale businesses began cropping up, and the railroad continued to expand, adding lines from Chattanooga to Birmingham, Meridian Mississippi, and later New Orleans. Chattanooga quickly earned a reputation as the “Dynamo of Dixie.”
The largest railroad station in Chattanooga’s history opened in 1909 to connect the North and the South by way of linking Cincinnati to Chattanooga. Known as the Terminal Station, its $1.5 million construction price tag, while large, was necessary. Though the city already had the Chattanooga Union Station and another small station built in 1882, they were too small to handle the rapid expansion of the rail system. Originally, the railroad was intended to solely carry supplies and small packages, but it had evolved to serve passenger trains as well.
In 1946, following the Second World War and the invention of cars, the city began a project to relocate the railroads so that they wouldn’t cross congested streets like Market, Main, 23rd, and Rossville Boulevard. Eventually, the railroad’s popularity with passengers waned in favor of quicker, easier transportation options like cars, but it still serves as an efficient transportation option for goods today.
The Implication of the Interstates
By the mid-1950s, railroad transportation began to give way to trucking business, thanks to the establishment of new and improved interstate systems. Under President Franklin D. Roosevelt, the Federal-Aid Highway Act of 1938 had funded research to see if toll-based superhighways would be feasible and cost-effective for the United States. The results, detailed in the Toll Roads and Free Roads report, concluded that transcontinental toll roads would cost too much to build, and the creation of interregional roads that would more easily connect major cities was recommended instead.
After much planning and political negotiation, the Federal-Aid Highway Act of 1956 was passed under President Dwight D. Eisenhower, and construction on the interstate system began in the fall. Standardization played a key role in the creation of these roads, with consistent lane width (at least four 12-foot-wide lanes), number of lanes (at least two lanes heading each direction, separated by a median), and signage remaining consistent across regions.
In Tennessee, construction on I-75, which runs through Chattanooga, Ooltewah, Cleveland, and Knoxville, began in 1958 with stretches opening over the next several years. I-59, a north-south route that connects Chattanooga to New Orleans, opened in 1960. By 1968, I-24, which passes over Monteagle Mountain, opened, becoming the safest route over the treacherous terrain.
With several major interstates running through Chattanooga, the city was once again a gateway for the country’s favorite method of transportation and an attractive city for industry and businesses requiring transportation services.
(first above photo) Kenco founders Jim Kennedy, Jr. and Sam Smartt, Sr.
Winning with Warehousing
The advent of the interstate system would pave the way for the transportation and logistics industry as we know it today. Trucks became the most efficient way to deliver goods, and local families took advantage of the golden opportunity. Jim Kennedy, whose fireplace fixture business had been taken over by the government during World War II for ammunition manufacturing, identified a void in the trucking market. With his son, Jim Kennedy, Jr. and his son-in-law, Sam Smartt, Sr., he launched another business that, over time, evolved into Kenco.
Starting with a single warehouse to support trucks passing through the city in 1950, Jim Kennedy, Jr. and Sam Smartt, Sr. turned Kenco into now a fully integrated third-party logistics provider that employs more than 5,000 individuals and anticipates annual revenues to reach nearly $600 million. “Our business model has certainly changed since we opened our first warehouse nearly 70 years ago. We have been historically associated with warehousing services, but today we also provide our customers with transportation, material handling, real estate, and information technology solutions,” says CEO Denis Reilly. “Our goal is to go broader with each of our solutions for our customers. We are looking to build out analytics for faster decisions and, in the future, provide predictive information to optimize the supply chain better.”
The year Kenco opened, 173 billion tons of commercial freight were carried nationally by trucks. By 1980, the amount had jumped nearly three and a half times to 555 billion. And by 1985, following the deregulation of the trucking industry, 650 billion tons were cruising across the country in trucks.
(above) Pat Quinn and Max Fuller in 1998
Taking a Chance with Trucks
When Clyde Fuller was unable to sell a traded-in tractor trailer at his car dealership, he elected to use it as a hauling device. The idea sparked his entrepreneurial spirit, and Southwest Motor Freight was born more than 50 years ago. His son, Max Fuller, and his stepson, David Parker, both began working for the company, eventually learning the ins and outs of the industry. Clyde sold the company in 1984, but not before planting an entrepreneurial seed with both sons.
Fuller and Parker branched out separately, creating U.S. Xpress and Covenant Transport, respectively.
Max Fuller partnered with Patrick Quinn, launching U.S. Xpress in 1986 with just 48 trucks. Today, the company, which was the fastest truckload carrier in the nation to surpass $1 billion in annual revenues, houses over 6,500 tractors and 16,500 trailers, and employs more than 9,000 people. Max’s son, Eric, serves as president and CEO, and Quinn’s daughter, Lisa Quinn Pate, serves as chief administrative officer. “We’re proud to be based in Chattanooga and to be part of the thriving transportation and logistics industry here,” says Eric Fuller.
Covenant Transport, the brainchild of David and Jacqueline Parker, also launched in 1986 to massive success. “I felt a calling from God to start Covenant. I had been in the industry my whole life, and the timing felt right. We were both 28,” says David, the company’s CEO. “We started as a team company, meaning two drivers to a truck. That’s still the foundation of our company, but we have added to our portfolio with Southern Refrigerated Transport, Star Transportation, and Covenant Solutions.”
(above) David and Jacqueline Parker of Covenant Transport
Chattanooga’s location has been integral to the company’s success. “At the end of the day, we’re a service company, and we can go to New York, Dallas, Miami, or Chicago on a team truck 750-mile next-day delivery. That’s huge.”
Nearly a decade after Covenant Transport and U.S. Xpress hit the scene, two other brothers introduced their own transportation company. Twins Bruce and Byron Trantham launched Tranco Logistics in 1995. “We started with only warehousing. Our freight was limited to delivering our warehouse customers’ product to job sites. The next year, we started a local same-day delivery service covering the Chattanooga, Cleveland, and Dalton areas. The fleet consisted of one van, one pickup truck, and one straight truck,” says CEO Byron Trantham. “Today we have approximately 2 million square feet of warehouse space in Chattanooga supporting companies all around the world. We have a local fleet that covers a 100-mile radius of Chattanooga, a dedicated fleet that covers the Southeast, and an over-the-road fleet that operates in 48 states. We also offer domestic and international brokerage services, fuel tax and permit services, receivables financing, and
real estate services.”
Today, Chattanooga ranks number one among all metropolitan cities for volume of freight moved by truck because it’s considered a “crossroads city.” In fact, as much as 80% of the nation’s freight passes through the city en route to its final destination. Considering our city’s location – the centrality puts 80% of the U.S. population within a two-day transit time – it’s not hard to see the opportunity for growth in the transportation and logistics industry. As it stands now, 40% of the region’s economic output and 42% of employment come from logistics-dependent companies.
(above) Bruce and Byron Trantham of Tranco Logistics
The Growth of 3PL
As trucking companies have grown and expanded over the years, so too have the needs for improved warehousing, distribution, and fulfillment services – that’s where third-party logistics, or 3PL, comes in. Some trucking companies manage the entire logistical process of moving products from facility to end recipient in-house, while others partner with third parties that deliver logistic services. Over the last decade and a half, Chattanooga has seen a surge in the creation of this type of business, meant to serve every facet of the trucking and logistics sector and make Chattanooga a global logistics powerhouse.
One of the biggest successes in recent memory, Access America was started in 2002 by three Samford University fraternity brothers. The company made an immediate impact, and with no trucks of their own. Rather, the company’s founders – Ted Alling, Barry Large, and Allan Davis – utilized technology to focus on an improved scheduling system for shipments.
The company doubled profits year after year, growing annual sales revenues to $490 million before merging with Chicago-based Coyote Logistics in 2014, making it the largest private third party logistics company in the United States.
Coyote was acquired by UPS a year later for $1.8 billion, and the company’s Chattanooga office remains a true player in the growth of the transportation and logistics industry in town.
(first above photo) Santosh Sankar hosting investors and corporates at a Dynamo event on the Tennessee River.
(second above photo) Ted Alling and Allan Davis with their first truck in 2004
Focused on Funding & New Technology
Most recently, leaders and industry entrepreneurs have recognized the continued growth potential in transportation and logistics through new technology, and have worked diligently to build and recruit companies to the area. Alling, Large, and Davis were able to parlay their success with Access America into a new venture focused on funding transportation and logistics technology industry startups with worldwide potential.
Called Dynamo, the trio paired with Santosh Sankar and Jon Bradford to launch a fund dedicated to supporting startups working to transform global trade and commerce. Strongly focused on technology, these companies are working on ways to revolutionize or improve the industry by an order of magnitude. “Our focus is on startups operating in supply chain and transportation, an expansive area that is the driver of the global economy,” says co-founder Santosh Sankar. “We believe our purview spans three areas: using bits/bytes to move boxes, the capital flows associated with freight, and risk and liability inherent in transacting in a global world.”
Steam Logistics, which actually started as the international arm of Access America before becoming its own entity, uses technology to streamline air and ocean transportation through freight forwarding and custom brokerage. Started in 2012, the business whose worldwide headquarters is downtown was named one of the fastest-growing companies in America on the Inc. 5000 list in 2017.
WorkHound, another company mentored by Dynamo, uses technology to improve truck driver retention. Through the company’s mobile platform, drivers share feedback – both good and bad – that can then be analyzed to identify actionable insights and goals. For an industry in which driver turnover rates are exceptionally high, companies are now able to fix problems before they go too far, which saves them both time and expense.
What the Futures Hold
Even more recently, trucking and logistics technology companies have emerged to further propel Chattanooga to the top as a global player. Founded by Craig Fuller just a year ago, FreightWaves is harnessing the power of big data and machine learning technology to gather information from trucks across the country to better understand supply and demand in the freight market. With the goal of creating a viable liquid futures market for trucking freight, the company has the potential to change the industry entirely.
Chattanooga has always been vital to the transportation and logistics industry due not only to its location but also to its leaders and entrepreneurs who recognize the importance of evolving at an exceptional rate. Starting as a regional player, the city has become a global powerhouse with unlimited potential.