Ruthie Thompson knew the arrival of the Volkswagen plant “was going to be a game-changer in terms of the type of ancillary businesses that it was going to attract, the kind of economic development that would happen, the stresses on our infrastructure.”
“Our regional Chambers of Commerce knew it,’’ she adds. “So, they gathered a group of close to 100 people and they did an intercity trip to Greenville, South Carolina, where there had been a BMW plant for 10 years.”
Thompson is the communications and outreach manager for Thrive 2055 in Chattanooga, which began as a three-year initiative (2012-2015) sparked by Volkswagen’s decision to move to the area.
In Greenville, Thrive members asked what they should anticipate as a region and suspicions were confirmed that education and transportation were going to be stressed because of an influx of people, employment, and the added pressure of freight movement from manufacturing and the suppliers that would come to the area.
“Also, there was a consistent theme, and they said start thinking regionally because when manufacturers decide on an auto manufacturer or an international company like Amazon, or any one of these big international companies that come in, they’re not looking at jurisdictional borders,” Thompson says ‘They’re looking at a region.”
The Greenville visit launched Thrive 2055, and at the end of 2015 officials released the Capstone Report outlining their best plan for the 16-county, Tri-state Chattanooga region of Southeast Tennessee, Northwest Georgia and Northeast Alabama.
The plan identifies regional values and goals along with a consensus on strategies related to regional economic development, the region’s natural treasures, regional transportation and education and training that can be implemented for the area’s long-term prosperity.
(Report can be found at www.thrive2055.com/About/Thrive-2055-Capstone-Report.aspx)
Instead of disbanding Thrive 2055, the 300-plus Chattanooga area community leaders and volunteers who worked on it decided it should not go away.
“This report gave all kinds of specific action steps that needed to happen to preserve our way of life and deal with growth, and they didn’t want to just put it up on the shelf and let it sit there and gather dust,” Thompson points out.
Thrive now operates with a board of trustees and is in transition to rebrand as the Thrive Regional Partnership.
“We will continue doing the work, which is basically getting people from around the region to have conversations and convene and come to consensus on issues and solutions that are facing our region, and that can help us grow sustainably in the future,” Thompson adds.
Transportation was one of four priorities that the Thrive volunteers worked on, along with economic development, education and workforce development and the preservation of the area’s natural treasures.
“One cannot be measured or weighed more heavily at the expense of another because really, when you’re talking about economic development on the scale that we’re talking about, all the other three are what are going to be stressed the most,” Thompson says.
“Having said that, transportation is one that as a region, gives us a golden opportunity right now to leap ahead of other regions that are struggling with how to keep up with their infrastructure and with their growth, particularly in the southeast.”
The U.S. Department of Transportation recently released Beyond Traffic 2045, the organization’s most comprehensive assessment of current and future conditions it has released in decades. The report pinpoints the Southeast as currently growing faster than any other region in the country.
Thompson says that puts the Tri-state region around Chattanooga at an advantage to jump on the technological advancements that are coming in transportation, and leap ahead of communities floundering with transit issues, including Nashville.
“Nashville is struggling so hard to catch up with the extraordinary growth,” Thompson says. “As we look towards the future, is building roads the only solution or is building roads the solution at all?
“We are not at the point, like Nashville, where being stuck in traffic for an hour-and-a-half is a given. It happens fairly quickly here, but it’s still not the norm like it is in Nashville and like it is in Atlanta.”
Freight increase affects roads, too
Chattanooga ranks No. 1 among all metropolitan cities in the volume of freight moving through by truck, a study by Cambridge Systematics reveals. That has created congestion along the city’s interstates and affected delivery times.
Eighty percent of the freight traveling through Chattanooga – where there is the convergence of three interstate highways, I-75, I-59, and I-24 – is destined for delivery somewhere else, the study shows.
Transportation solutions are absolutely needed, the study also finds, as there are currently 10,000 daily-through trucks on I-75, and nearly as many on I-24.
“That’s comparing us to LA, New York and big major hubs,” Thompson points out. “It’s because we are that crossroads of the three interstates. We have to deal with it because truck traffic is going to increase. Every street corner has a Walgreens. Every town has a Walmart, and there’s so much stuff being shipped back and forth.”
The study says at current rates the interstates will be above their capacity by 2035, with some portions operating at more than twice for what they were designed.
“The freight traffic is one of the primary reasons we’re looking at transportation as a region,” Thompson says. “Nashville’s dealing with it, Atlanta’s dealing with it. Charlotte is dealing with it. Any major metropolitan area that is relying on 1950s-era planning and infrastructure is struggling. We can’t just rely on that anymore.”
Tennessee Department of Transportation Chief Engineer Paul Degges says traffic counts are done all over the state with growth in traffic everywhere, including trucking and freight traffic.
“The long-range projections for freight in the United States talks about it probably doubling in the next 20 years, and the proportion of freight on rubber tires is growing faster than it is on steel tires, so you’re seeing more freight on the roads than you’re seeing on rail and on the water,” Degges adds.
Thompson says the specific challenges such as population growth and the growth in freight movement are precipitated by the global economy. And like it or not, crumbling infrastructure or not, money or not, Tennessee is a very active participant.
“We’re in the process of convening leadership from Georgia, Alabama and Tennessee in the business, education, conservation and transportation communities,” Thompson says. “Transportation practitioners from private and public sectors over the next year will really start working hard on how we are going to prepare our region to deal with the influx of freight, and then deal with the exponential growth in technology and transportation.”
Tech rapidly changing
Thompson says area transit experts are incredibly excited about the growth in technology that’s happening right now, which will radically change the way we get around in the next 25 years. After all, the iPhone came to market just 10 years ago, and self-driving cars and connected vehicles are being tested.
“Transportation is so incredibly complicated, but it is also full of possibilities,” Thompson explains. “Gov. Haslam has approved the testing of autonomous vehicles in Tennessee, which is great. Now, there is going to have to be a lot of regulation that comes on board with this for obvious safety reasons, and security is going to be an issue as well. But, the fact is he recognizes, probably from his transportation background, that this technology is going to be a game changer for everyone.”
Thompson says she hopes to see more dedicated funding going to more advancements in technology than dumping money into road projects such as the southern loop of I-840. Initiated in 1986 as part of the state’s Better Roads Program, construction began in 1991 and was completed in 2012.
Total cost for that project was $753.4 million, entirely from state funds, and Thompson wonders if it was worth it.
“If we are building roads now that are going to be obsolete in 20 years, why are we still building them?” she asks. “Why aren’t we using every tool at our disposal to avoid doing this? Heading west up to 40, 840 cuts across the Natchez Trace Parkway, one of the prettiest and most scenic parts of the state. Now you’ve got this humongous ribbon of concrete going through it.
“Yes, it’s terrific for freight but did all of that beautiful countryside have to be plowed under? The last time I drove 840, which was about six months ago, it was a dead zone. Nobody was on it.”
TDOT officials admit there is not enough money to build all the necessary road projects, so Thompson says people need to start thinking about alternatives, including telecommuting. So instead of paying millions to repair a road that may be obsolete upon completion, invest in a high-speed network.
Thrive is even looking at The Freight Shuttle, a concept from monorail that would run down the median of interstates and shuttle cargo containers back and forth between metropolitan hubs and ports without drivers. It would all be run by computer.
“If connected vehicle technology does what we think it’s going to do, in 25-30 years you will not be driving your cars,” Thompson says. “The cars will be driving and be connected to every other car on the road. It will be talking to traffic signals. You will not need lane markers. You will not need medians. You will need none of this stuff because the cars are going to be able to travel 10 inches from each other. Trucks are going to be platooning, and truck trains. I guarantee there will be truck only lanes for that.”
Stakeholders and residents agree the dedicated money for road projects is lacking, and Tennessee is one of the few remaining states that has not come up with a solution. While others are introducing usage taxes or even a standard flat tax rate applied to the state income, Tennessee awaits the governor’s proposal at the end of the month.
“It’s very clear that when we look at transportation, first and foremost, we cannot rely solely on government agencies, either on the state or the federal level, to be coughing up the money to pay for all of our roads anymore,” Thompson says.
“I heard Senator Alexander say it at the Cumberland Region Tomorrow’s annual Power of Ten Regional Summit just a couple months ago. He said when it comes to transportation, one thing you can count on is the fact that Washington is not going to pay for it. To hear a United States Senator say that, it’s just like, wow.”
Alexander told Middle Tennessee area local officials in November that to fix Nashville’s traffic jams they should “think big, think long term and not expect Washington, D.C. to pay for too much of it.
“Last year, Congress passed a long-term transportation program, which is something that the state legislature has not been able to do,” the senator said at the time. “The federal program provides an average of $12 billion per year over five years for mass transit and light rail. But Nashville’s share of that will not be nearly enough to pay much of Metro’s $6 billion 25-year transit program, even if the new president proposes a big, new infrastructure plan.”
“That means paying for most of it with state and local dollars, which makes sense anyway. Why send Tennessee dollars to Washington, D.C., take some out for overhead, add some regulations and send what’s left back to Tennessee? Conservatives who believe in the 10th Amendment ought to want to keep our money at home, let local officials use it to meet real needs and pay as you go with zero debt.”
Thompson says it is hard not to notice the traffic increase in Chattanooga over the last decade, increased when Volkswagen opened but also bolstered even more by the area’s solar industry, two Amazon distribution centers, and Hamilton County’s largest employer McKee Foods, which has recently expanded by millions of dollars.
“We’re seeing economic growth explode, our population is growing, and yeah, traffic has gotten worse,’ Thompson says. “We’re feeling the effects from the Southeast growing. Chattanooga, like Nashville, is the convergence of three interstates. That’s one of the reasons that we’ve always been so successful is that we have been a commerce hub, but we’re also a pinch point, and it’s because of our geography.”
Chattanooga is also currently in the process of finishing up one of the most expensive road building projects in the state’s history, the expansion of U.S. 27 north coming through Chattanooga for $111,000,000.
Local incubator accelerates programs
Santosh Sankar is the director at Dynamo Accelerator Fund in Chattanooga, a private investment firm devoted entirely to technological advancements in the logistics industry.
Dynamo was born out of an organization called the Lamp Post Group, whose goal was to bring talented founders together and give them some capital. They realized they were rather good at providing logistics advice, so now all the efforts are channeled in the logistics, transportation and supply chain industries.
One side of Dynamo is an early stage accelerator. Each year they go around the world to find the 10 best companies to come to Chattanooga for 12 weeks. During that time Dynamo will help them connect with their key industry partnerships including GE, Ryder and warehouse Kenco so the firms can build better technology and develop pilot trials.
“From our first class we had over 15 pilot trials or sales contracts effectuated,” Sankar says. “Eight of the 10 companies decided to go out and formally raise capital, so currently they’re in the process of, or have already closed, on over $7 million of investment capital. Those eight companies in aggregate have a valuation of about $35 million from those fundraising activities.”
The other side of Dynamo is an $18 million early stage fund that keeps the same industry focus on supply chain, logistics and transportation. Its first major investment right before 2016 ended was in a Bay Area-based company focused on convenience store supply chain software in which distributors who serve convenience stores are able to have full inventory visibility. They also have a sales office in Chattanooga.
Dynamo has currently made a very early investment from the fund in an autonomous trucking company named Starsky. It has also invested in Wise Systems from Boston, which in real time routes a driver in the most efficient way possible using available date.
“They actually have a very large Fortune 500 client that just signed in the New Year who’s using this technology, and they have actually brought their on-time deliveries from the 80 percent range up to the mid to high 90 percent range,” Sankar says. “All this is basically because they’ve harnessed the power of data.”
Another issue they are hoping to tackle in the future is dock congestion, and efficiently unloading and loading vessels with freight so drivers aren’t sitting for hours and trucks aren’t returning to base empty.
“To some degree a rising tide lifts all boats,” Sankar says. “The more traffic Chattanooga can make for logistic tech entrepreneurs, the more interesting people we are able to attract to Tennessee. We’re actually seeing that through our recruiting process we have founders who are in San Francisco, and they spend time with us here. But when they go back to California, they talk about how awesome it is and how meaningful it is to be close to industry and close to customers in Tennessee.”
Sankar says automation is part of the future of transportation, and innovation is key in a hub like Chattanooga.
“We’re of the belief per capita, Chattanooga is unrivaled in logistics knowledge, and it’s reinforced in the way the highways, barge and rail converge,” he says. “If we draw a circle, in two hours, we have 12 million people. If we look on one side, there’s UPS, on the other side there’s FedEx. It’s quite an advantageous place and the pass-through traffic of freight is really unrivaled when you look at US metropolitan areas.”
And while the state is struggling to pay for projects, start-ups can really gain in a competitive advantage when it comes to industry specialization.
“We’re continuing to see people trying to solve the last mile problem,” Sankar says. “We’re finding folks trying to solve warehousing issues. Instead of going out and buying warehouses, what would the warehouse of the future be?
“Chattanooga is an important point in the supply chain and has access to more logistics knowledge than any other place in the country.’’