Appalachian Regional Commission: Export-Oriented Industry Clusters, Trade and Transportation in Appalachia

The Appalachian Region encompasses more than 400 counties in 13 states, including many rural areas inland from Atlantic and Gulf ports. International exports are a crucial contributor to the region’s economy, and this new study by Cambridge Econometrics, for the Appalachian Regional Commission, provides detailed insights into the key export-orientated industry clusters, which play a major role in international trade and global connections for Appalachia. By analyzing areas such as growth, specialization, and multi-modal transportation infrastructure needs, the findings from this study can equip policymakers to develop effective strategic economic development plans for the region.

Our Approach

Our analysis, drawing on county- and state-level economic data encompassing employment, wages, GDP, industry output, freight shipments and commodity flows, and other topics, identified seven key export-oriented industry clusters in the Appalachian Region: (1) chemicals and plastics; (2) consumer products (including food and paper products); (3) electronics; (4) machinery; (5) metals and minerals; (6) mining; and (7) transportation equipment and vehicles.

This report analyzes key industry clusters, offering insights into their characteristics, such as employment and wages, the transportation needs and key trading partners of these industries, and overall regional freight trends, such as the growth in warehousing and distribution, and the long-term decline of coal.

Key Findings

• The mix of export-oriented industry clusters in Appalachia has shifted over the past twenty years, with greater emphasis on electronics, chemicals, machinery, and transportation equipment (including automobiles), with growth led by the South and South Central regions of Appalachia.
• These clusters make up about 15 percent of the region’s overall employment and generate 85 percent of its foreign exports (about $102 billion in exports). Export activities in these industries provide resilience against fluctuations in domestic demand and stimulate economic growth through increased international trade.
• With international destinations including Canada, Europe, Eastern Asia and Mexico, export activities are multimodal, relying on trucking (border crossings), seaports, and airports to link Appalachia to global markets.
• The substantial value of exports traveling by air to international markets highlights the importance of major airports that are often just outside the Appalachian region such as Atlanta, New York (JFK), Memphis, and Louisville. However, Appalachia has abundant general aviation airports which could be combined with new technologies for ‘advance air mobility’ freight shipping solutions.
• Inland ports serve a critical role in connecting regional export industries to global markets. While freight rail is facing significant challenges in Appalachia given the major decline of coal shipments (historically, the leading commodity shipped by rail), there is evidence of growth in rail shipments of goods such as electronics and motor vehicles.
• Export industries and warehouse distribution facilities are not spread evenly through Appalachia. For example, the transportation equipment cluster is heavily concentrated in the South, while machinery, chemicals and warehousing have a significant presence in the northern areas of Appalachia. Export-oriented clusters and trade activity are generally underrepresented in the central areas of the region, reflecting the mountainous terrain and historically weaker transport connections of these areas. A potential area for future research is identifying Appalachian Development Highway System corridors that are currently underserved by warehousing, distribution and truck parking facilities to see if there could be win-win opportunities to boost economic development and help highway facilities realize their potential and intended role.