FREIGHTWAVES' SONAR CHART OF THE WEEK (August 12-18, 2018)
Chart of the Week: Outbound Tender Volume Index San Francisco comparing Outbound Tender Volume Index Los Angeles (SONAR: OTVI.SFO comparing OTVI.LAX)
SULTAN OF SONAR SAYS:
Last week, we covered some of our predictions of ranges of peak truckload spot rates out of the West coast this peak season. We can see from the data that volumes have been steadily climbing with spot rates soon folllowing. Container rates out of China are also being monitored for additional insights on how imports will drive the freight market. All signs point to a strong surge off the West coast (it's still early, but we think other parts of the country will struggle more than the West coast this peak).
Our focus for last week's piece had us looking at activity around Los Angeles and Seattle. This week, we will focus on San Francisco.
SInce March 1, 2018, trucking freight volumes have been surging out of San Francisco. Since March 1, 2018, load volumes out of San Francisco (SFO) are up over 48%. Over the same period volumes out of Los Angeles have only increased by 10%. In July, Los Angeles' volumes grew, but not nearly at the level of volumes out of San Francisco. Normalized for July 4th, San Francisco volumes continued surging, growing nealy 15%. Volumes out of Los Angeles only grew by less than 2% over the same period. What is driving the faster surge in San Francisco vs. Los Angeles?
SFO is a far smaller trucking freight market than Los Angeles. Los Angeles currently represents around 2.1% of all trucking origin transactions in the United States, while San Francisco has climbed to about 1%. Back in March, Los Angeles was about 1.9% of all loads in the US, while SFO was just .7%.
SFO remains one of the most important economic centers in North America, home to many of the world's most successful corporations: Google, Facebook, Apple, along with thousands of other technology companies. Unfortunately for trucking companies few of these companies manufactuer or distribute products that drive the freight markets.
Tesla (NASDAQ: TSLA) is an exception. They produce cars out of their Fremont facility, which is only 45 miles from SFO. For the purpose of SONAR, we list Fremont as SFO.
In the past year, Tesla has been under a lot of pressure to crank production of the Model 3 car up out of it's Fresno facility. Auto plants are huge drivers of freight demand, impacting communities and surrounding markets, especially as companies ramp up production on new automobiles.
In June 2018, Tesla's production numbers exploded to 19,801 cars out of it's Fremont, CA facility. With the entire U.S. production of light-vehicles sitting at 1.55 million in June 2018, Tesla represented 1.28% of all U.S. light vehicle production. In March 2018, the same facility produced 13,116 cars.
Going back in time, Tesla's progress has been even more spectular. In January 2016, Tesla produced 4526 vehicles out of Fremont. Tesla's June 2018 production numbers represent a 337% increase over the January 2016 mark.
To put Tesla's production in comparison to other car plants, Tesla's car manufacturing production volume has been roughly the same as Volkswagen's (VW) production out of Chattanooga. VW has recently expanded their production by adding a new SUV line, but the increase of volume at VW's only U.S. based plant has not kept up with Tesla's production increases during the same period. Volkswagen produced 5827 cars out of Chattanooga in January 2016. In June 2018, VW's car production numbers had grown to 11,699.
About this indices presented in this article
OTVI: Outbound tender volume index. OTVI tracks the volume of load tenders that are accepted in a given market on a given day. The index is updated daily based on a relative comparison of transactions on March 1, 2018. The index values are NOT load counts, but counts compared to March 1, 2018 and the perecent of loads that market represented on that specific date.
AUTO: Automotive production index. AUTO tracks the number of vehicles manufactured in a specific market on a given month. The index is updated monthly and tracks the number of cars or light-vehicle trucks out of the specific market.
About Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real-time. Each week the Sultan of SONAR will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry- in real time.