The highlights from Wednesday’s SONAR reports. For more information on SONAR — the fastest freight-forecasting platform in the industry — or to request a demo, click here.
Lanes to watch
By Zach Strickland, director, Freight Market Intelligence
ATLANTA to CHICAGO
Overview: Brokers should lower bids as capacity loosens both in truckload and rail intermodal.
Highlights:
- The van tender rejection rate in the lane has declined steadily in recent weeks and is currently 17.2%, which is 210 basis points (bps) below the national average.
- The volume of loaded domestic intermodal containers in the lane has remained steady at around 281 units/day while the volume of empty domestic intermodal containers has risen in recent weeks from around 5 units/day to 25 units/day.
- The Class I railroads cut the spot rate to move 53’ domestic intermodal containers from $2.08/mile, including fuel, to $1.64/mile, including fuel, in late September and the rate remained at that lower level throughout the past month.
What does this mean for you?
Brokers: Lower your bids to reflect the loosening capacity in the lane both in the dry van truckload and the domestic intermodal modes. When negotiating with carriers, stress that SONAR shows that Chicago will be an easy market for van carriers to get reloaded.
Carriers: Chicago is currently a solid destination for carriers despite the Chicago van outbound tender rejection rate being 150 bps below the national dry van tender rejection rate. The Chicago Van Headhaul Index of 64 suggests that it should be easy for van carriers to get reloaded in Chicago.
Shippers: With excess domestic intermodal capacity in the lane, shippers with less time-sensitive loads may be able to take advantage of the recently lowered domestic intermodal spot rates. For van shippers moving more time-sensitive loads, look to keep your loads out of the spot market, which should be more feasible than it has been of late amid the falling van tender rejection rate in the lane.
CHICAGO to DENVER
Overview: Dry van carriers average a historic high of $3.63 all-in rpm on the CHI–DEN lane.
Highlights:
- Dry van rejection rates have climbed to 17.83% in the Chicago market, pushing carrier rates up to $3.63 all-in rpm on the CHI – DEN lane.
- Capacity has tightened in the Denver market, pushing dry van rejection rates up to 27.38%.
- Denver shippers have decreased dry van tender lead times to 3.06 days, but market conditions have tightened over the past few weeks.
What does this mean for you?
Brokers: Shippers have often struggled to secure capacity on loads that deliver into the Denver market. Brokers should search the spot market for dry van loads that run across the CHI – DEN lane, helping Chicago shippers secure capacity. Increase your rates since the average carrier rate on the lane has trended upward to historic highs. When searching for capacity, look for West Coast-based carriers first and keep downward pressure on their rates.
Carriers: Carriers with excess capacity in the Chicago market, and that are looking to shift their trucks to the West Coast, should search the spot market for dry van loads that deliver into Denver. Carriers averaged $3.63 all-in rpm last week on the lane, indicating that carriers should increase their spot rates for on-demand capacity well above this average. Dry van rejection rates have increased to 27.38% in the Denver market, but carriers may have to reduce their rates on loads that deliver into Southern California or Phoenix markets to secure their loads.
Shippers: Market conditions have tightened again in the Denver market, but shippers have decreased dry van tender lead times to 3.06 days. Shippers need to prepare for rejection rates to increase as spot market rates increase. Increase your tender lead times to help open more capacity options for your loads.
DENVER to PHOENIX
Overview: Denver’s outbound rejection rates are trending above the national average.
Highlights:
- Denver’s outbound rejection rate moved back above 23% this week and spent much of October above 20%. The market’s inbound and outbound volumes are extremely volatile, making this market a wild card.
- Rejection rates to Phoenix are below the Denver market average, more than likely due to the elevated contract pricing and proximity to L.A. They rose sharply in October, however.
- Phoenix’s outbound rejection rates continue to trend lower as the market remains one of the most well supplied in the U.S.
What does this mean for you?
Brokers: Do not expect this lane to be as easy to cover as it was in early October. Rejection rates are on the rise indicating that even as contract rates have risen, carriers are able to find better lane options in recent weeks. Keep a close eye on Denver in general due to its erratic nature.
Carriers: Be wary of Phoenix easing even further. Rejection rates are as low as they were in February out of Phoenix, more than likely thanks to elevated outbound L.A. rates paying for deadhead miles into the area. Divert capacity to the spot market in some of the Headhaul lanes like Denver to Dallas where contract rates are lower.
Shippers: Watch out for lower compliance in this lane this week. Increase lead times as much as possible to help mitigate an erratic Denver market where capacity fluctuates wildly.
Watch: Carrier Update
Market focus: Salt Lake City
By Jim Knuerr, SONAR account executive
In the broker world, we all wanted gravy freight, the type of freight that was so easy to move once you put it on the load board every carrier rep wanted it. Salt Lake City to Los Angeles comes to mind as one of those lanes. But as of last week, the rates on SLC to Los Angeles hit all-time highs.
Below is the correlation between Outbound Tender Rejections (blue) for Salt Lake City and the rate for the same lane Salt Lake City to LAX (orange). As the rejections increase, so does that rate. If you want to stay ahead of the marketplace, know where the Rejections lay.
Brokers– Know when a market flips and keep your shippers and carriers informed.
Shippers– Be prepared to see a higher level of rejections than normal and work with your carrier partners on solutions early in the week.
Carriers- Position equipment into markets with elevated rejections to bring additional value to your shippers or take advantage of the spot market.
Watch: Shipper Update
Headhaul Index vs. Outbound Tender Volume Index
By Zach Strickland
The Headhaul Index (HAUL) calculates the difference between the Outbound Tender Volume Index (OTVI) and the Inbound Tender Volume Index (ITVI). By measuring the flow of outbound and inbound freight in a market, SONAR users are able to measure capacity over time, based on the inbound and outbound trucks that are moving freight.
Capacity is everything when it comes to brokers bidding freight on the spot market.
Blue markets signify tighter capacity – a signal for brokers to increase their bids on outbound freight – and to increase their margins.
Red indicates backhaul markets where carriers need help relocating their trucks to healthier, blue markets.
Brokers should be able to book loads at a lower rate per mile for loads that deliver into blue markets.
The Headhaul Index will help brokers understand where carriers want to run. In the map below, SONAR users are able to compare the tight (blue) markets with freight volumes, enabling them to choose tight markets with the most opportunities for their next load.
