Innovation Valley: Location, Location, TransportationOctober 03, 2014
Situated at the junction of several major interstates, rail lines, and the Tennessee River, Innovation Valley is one of the most accessible regions in the country. With 60 percent of the nation’s population within a day’s drive of the area, it’s no wonder Innovation Valley has become a prime location for transportation-related companies.
The region offers easy access to the Tennessee River, Interstates 40, 75, and 81, as well as rail travel by CSX, Norfolk Southern, and Gulf & Ohio. Innovation Valley’s proximity to these vital routes has created a flourishing transportation industry, and spawned approximately 14,000 warehousing and distribution jobs in region. Those jobs account for an annual payroll of $3.8 billion.
Because of the area’s wealth of logistics operations, Innovation Valley has included transportation as a target cluster in its strategic plan. The plan, or Blueprint 2.0, outlines five target recruitment clusters that are perfectly suited to take maximum advantage of the area’s strengths, especially its concentration of scientific and technological assets, central location, well-developed infrastructure, and low cost of living.
“Innovation Valley is not only a hub for technology and research, but also for transportation. Our central location is ideal for businesses with logistical needs,” said Doug Lawyer, vice president of economic development for the Knoxville Chamber. “We are always seeking out logistics-related projects which bring high density job numbers to vacant buildings or sites to the Innovation Valley region.“
Innovation Valley offers both main- and short-line transportation options. While locomotive giants Norfolk Southern and CSX operate most of the main-line rail in the area, local company Gulf & Ohio operates the region’s short line — the Knoxville & Holston River Railroad.
The Knoxville & Holston River Railroad consists of 20 miles of track. The KXHR transports more than 6,400 carloads per year with freight such as scrap metal, steel, ethanol, and plastics for companies like Gerdau Ameristeel, Burkhart Enterprises, Tindall’s, and Republic Plastics.
“Rail is the second most fuel efficient form of freight transportation available (barges being first),” said Peter “Doc” Claussen Jr., president of Gulf & Ohio, “Short-line customers can save on their freight costs by using rail, and can usually get more flexible service from the short lines than the big railroads are able to deliver, as they have much larger interwoven networks to consider.”
Claussen said KXHR’s proximity to Interstates 40, 75, and 81 allows the company to provide transloading services, which accommodate customers who do not have a rail siding.
“(Transloading) allows customers to still get rail freight rates into Knoxville, and have trucks deliver from our sidings to their establishments,” he said.
Moving oversized material can sometimes prove difficult for rail or highway transportation. However, Innovation Valley’s location on the Tennessee River makes that easier with the help of local logistics company Burkhart Enterprises Inc.
Burkhart Enterprises specializes in several transportation modes, but moving freight by barge is one of its most popular, cost-effective methods. Each year, the Burkhart barge terminal transfers approximately 500,000 tons of bulk commodities per year.
General Manager Tim Jones said that while it might be the slowest mode of transportation, it is the best for moving large volumes of materials and costs a fraction of other methods. For example, one barge load is equal to 66 truckloads of freight. Jones also said very few companies have the facilities needed to load and unload barges, so Burkhart acts as a middle man –– receiving the shipments by barge, then moving them to the customer by rail or truck.
“That’s our niche with rail and barge transport,” Jones said. “We enable every company in East Tennessee to ship or receive by barge and rail without the expense of the infrastructure that is needed for these modes. Products are picked up and delivered by truck and we handle everything in the middle.”
Since 1958, Cherokee Distributing Company has been taking advantage of Knoxville’s proximity to major roadways to advance its business. The company operates two distribution centers –– one in Knoxville and one in the Tri-Cities area –– to ensure fast delivery to its approximately 2,500 clients.
Vice President Mary Ellen Brewington said her father started the company when Miller Brewing Company needed a distributor in the Knoxville area. The company began with four delivery trucks.
“(Since the company began) Knoxville has grown to a nice-size market and with three major interstates converging here,” Brewington said. “This has allowed us to more easily deliver to the East Tennessee counties we serve.”
Cherokee’s fleet has grown to more than 40 trucks as the company serves 22 counties in Tennessee, making around 4,400 deliveries per week.
Transportation and supply chain management company Averitt Express also relies on Knoxville’s prime location since to deliver fast service to its customers.
“Proximity to interstates 40, 75, and 81 is crucial to shipment speed,” said Joseph Greek, Averitt Express’ marketing and communications manager. “Interstate 40, for example, provides our drivers with a clear shot between our services centers in Memphis, Nashville, and Knoxville. If we had to drive an additional 45 minutes just to get onto an interstate, our delivery times would suffer as a result.”
Averitt Express is based out of Crossville, Tenn., but has operated a service center in Knoxville since 1976. The center has 143 trucks in its fleet and has 260 people.
“Knoxville is more than just a strategic point on the map for Averitt Express. The area has given us many invaluable associates over the years. The overall dedication to customer service that our drivers in Knoxville provide is something we do not take for granted.”
Developing Tomorrow’s Workforce
The University of Tennessee’s College of Business Administration boasts one of the top logistics programs in the country. In fact, the supply chain management program was recently ranked third among public research universities and fourth in the nation by U.S. News and World Report –– a two-spot jump from 2013 rankings.
Mark Moon, department head of Marketing and Supply Chain Management, said a lot of the program’s success has to do with its long heritage and central location in the region.
“We were one of the relatively early players with a transportation program,” Moon said. “Over time, I think we’ve done a good job adapting to the changing market. The department has evolved from physical distribution to logistics to marketing and supply chain management –– which integrates both supply and demand principles.”
Moon said Knoxville’s array of transportation modes helped develop the department’s content expertise early on.
Last year the department graduated 273 supply chain students. The average salary for those graduates is $51,000. Moon said the majority of the department’s students are from in-state and a good percentage typically stay in the region after graduation.
Moon said a lot of these students are hired by companies like Bush Brothers, Pilot Flying J, Wal-Mart, Procter & Gamble, and Boeing –– which are just some of the department’s industry partners.
“We’ve formed a strong alliance with industry partners over the years,” said Moon. “(For 18 years), we’ve had a program called the Supply Chain Forum, which consists of almost 60 companies that come to conferences a couple times a year where faculty and students present (work). We bring top minds in the field of logistics and supply chain management to speak to that group. It’s also an opportunity for those industry partners to get to know our students and possibly recruit our students.”