Chattanooga's 'freight alley' rides coronavirus roller coaster

Article written by Mike Pare
Chattanooga’s “freight alley” logistics sector is riding the roller coaster economy like other businesses, but some industry experts say they’re moving ahead despite the coronavirus outbreak.
“Chattanooga is an attractive place to run a logistics company. Those things are still true,” said Craig Fuller, chief executive of FreightWaves, a locally based transportation and logistics data and content company.
But in April, Arrive Logistics cut about 10% of its workforce nationally amid the coronavirus pandemic, including some of its Chattanooga employees. Also, Arrive’s proposed expansion in the city, one of the biggest announced in 2019, hasn’t happened yet and appears to face an unclear timeline.
CEO Matt Pyatt said the Austin, Texas-based company’s Chattanooga office now has about 50 employees and remains a priority for the venture that last year unveiled plans to create 500 new jobs along with a $3.6 million investment in the city.
He said that Arrive plans to “continue to grow that office although our timeline for expansion has evolved due to the impact of COVID-19.” Arrive, founded in 2014, is a technology-enabled freight brokerage serving shipper and carrier partners to deliver brokerage and transportation management services.
Fuller, who founded FreightWaves about four years ago, said the logistics industry is probably better positioned than most in the current environment because “the things which drive freight demand are not things that have been shut down.”
“Freight is still moving,” he said. “They’re still ordering goods.”
Still, a lot depended on what area within the sector a company was focused, he said.
In March when the outbreak hit, there was a surge in demand for food and groceries, Fuller said. But, the auto sector suffered and is perhaps still struggling, he said.
Also, the surge that freight haulers saw in March turned into “a hangover” in April, Fuller said.
“It would be a tough month for everybody in the economy as manufacturing and manufacturing activity shut down,” he said.
But, he added, freight demand has come back and appears more robust than this time a year ago.
“I’m pretty bullish,” Fuller said, adding that all parts of the economy likely will grow slower than they would otherwise. He said that while people won’t be spending their money on experiences or sports through the summer, they’ll still buy hard goods.
“The Home Depots and Lowes are doing exceptionally well,” he said. “I’ve talked to a number of CEOs locally (in logistics) and they’re doing well relative to the broad economy.”
Fuller said that a number of logistics-oriented companies had started paring staff even before the coronavirus outbreak, including FreightWaves. His company trimmed staff by just over 20 workers early in the year and paused immediate plans for another downtown building.
Also, around that time, Coyote Logistics, the freight brokerage firm that UPS bought after the business helped launch much of Chattanooga’s startup success in logistics when the company began as Access America, shifted 25 carrier sales jobs to its Atlanta headquarters “to improve efficiency and customer service.”
Pyatt said Arrive Logistics is continuing to invest in employees, processes and programs.
“Despite COVID-19 and the economic impact of the pandemic, Arrive Logistics remains focused on serving our customers and partners with best-in-class service,” he said.
Fuller, whose father Max Fuller is co-founder of Chattanooga trucking firm U.S. Xpress, said he has added some employees recently, with the business at about 150 workers, and he’s raising more capital.
“I’ve been hiring the last couple of weeks,” he said.
FreightWaves was the winner of venture capital firm Revolution’s Rise of the Rest pitch competition held in Chattanooga in 2018. The competition spearheaded by AOL founder Steve Case gave FreightWaves a $100,000 investment.
The Chattanooga area has been dubbed “freight alley” because of the concentration of logistics and trucking companies, including a number of startups.
Charles Wood, the Chattanooga Area Chamber of Commerce’s vice president of economic development, said late last year that when it comes to logistics, the business group is looking to continue to grow white-collar jobs.
“We’re not necessarily looking for warehouse,” he said. “It’s one of the sectors in the marketplace where our existing business leaders are actively supporting our recruiting efforts.”
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