And here is the lay of the land. La La land, that is.
I am watching Southern California and the Los Angeles market closely for any signs of disruption and I am not seeing any thus far.
First, let me say that I am not in favor of the AB5 rulings thus far. It appears that $200 million will get an exemption from a law that kills the very business people it was not aimed at helping?
‘Merica! Sorry, offensive to the rest of this great nation to call California ‘Merica.
Am I clear thus far?
Is it too early?
Were preparations made?
Have the incredibly resilient truck drivers made the necessary pivots to survive this?
Are trucking companies changing structures to accommodate the latest insanity?
Probably a “yes” to all of those questions; at least to a degree.
SONAR’s most volatile markets chart above shows Ontario and Los Angeles both making the list. This is significant because it is the first time in a long while that we have seen this. In addition, both are growing in outbound volumes.
Not so fast; this is exactly what we better see coming off the 4th of July holiday week. If not, we’re all in trouble. It is a bounce back from the holiday drop-off.
If we did not see this it would mean the trucking world has ended. (Not an exaggeration.)
U.S. customs maritime imports compared to local or city truckload volumes originating in Los Angeles are compared in the SONAR chart above.
There is a direct correlation here as 57 miles is the distance from the Port of Los Angeles to Ontario. This distance is well within the definition of a city length of haul.
A divergence is seen in the past couple of days. Strong growth in truckload moves is preceded by a decrease in maritime imports.
When I compare this to the tender lead time in Los Angeles (which dropped significantly) it would indicate that booking the moves is becoming urgent.
Preparation?
Running scared?
Maybe, but it doesn’t matter. The point is that the urgency to secure capacity in the local Los Angeles market is growing even while the amount of imports is weakening.
This leads us to….
Rate pressures in the market.
The SONAR Market Dashboard is filtered for moves specifically from the Port of Los Angeles to Ontario. This 57-mile one-way trip has seen rates diminish over the first half of 2022.
The direction of rates changed abruptly with the Supreme Court decision on AB5. Rates have risen $0.60 per mile and are trending higher.
So, what are the other lengths of haul doing? It’s hard to tell because the overall Los Angeles market is rebounding after the holiday week.
However, let’s check the SONAR chart below just for fun.
Comparing the various lengths of haul, we see that the city’s outbound tender volumes have rebounded and then some. These are represented in the fuchsia color – COTVI.LAX.
The other lengths of haul have rebounded as expected from the holiday week, but certainly not more so, as the city haul has.
And then there is the rejection rate across various lanes that originate in Los Angeles.
The SONAR chart above is showing red across the board. A total market recovery in Los Angeles from the holiday week.
The exception?
City length of haul, which is dominated by the oppressed owner-operators of California.
Peace and love
