SONAR sightings for Nov. 16: Baltimore to Indy, reefer rejection rates, more

Highlights:

• Dry van rejection rates increase to 20.24% on the LAX–ATL lane, which is well above the LAX market average of 16.17%.
• Dry van rejection rates have increased slightly in the Atlanta market to 15.29% as freight volumes rebound to 413.50 index points. 
• Atlanta shippers have decreased dry van tender lead times to 2.72 days, but market conditions could tighten as we approach the Thanksgiving holiday.

What does this mean for you?

Brokers: Market conditions remain tight in the Los Angeles market as shippers struggle to find capacity for their loads. Brokers should search the spot market for dry van loads that run across the LAX–ATL lane, and increase their bids since rejection rates are trending upward on the lane. Average spot rates for carriers are around $3.57 all-in rpm according to SONAR’s Market Dashboard, suggesting that brokers should start their bids around $9200.00 all-in to clear a 15% margin. 

Carriers: Carriers with excess capacity in the Los Angeles market should search the spot market for dry van loads that deliver into the Atlanta market. SONAR’s Market Dashboard shows a range from $3.49 – $3.70 all-in rpm for spot rates on this lane, but shippers are willing to pay more if they are in dire need to ship their freight. The Atlanta market is still a decent market for carriers with rejection rates just above 15% and trending upward. Plan ahead since Atlanta’s dry van Headhaul score is below 0.00. 

Shippers: Atlanta shippers need to increase their dry van tender lead times since rejection rates are starting to trend back upward. Volatility in spot rates will increase as we approach the Thanksgiving holiday, so try to ship the majority of your goods this week. Secure capacity as early as possible, and avoid putting any loads on the spot market for on-demand capacity.

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MEMPHIS to JACKSONVILLE (Florida)

Overview: Memphis rejection rates remain volatile. 

Highlights

• Memphis’ outbound rejection rate has been much more volatile over the past few weeks, bouncing between 27% and 32%. 
• Lane rejection rates to Jacksonville have fallen under the Memphis market average, but are still relatively high in relation to the national average. 
• Jacksonville’s outbound rejection rates have fallen dramatically since this summer as demand has eased. There is still consistent outbound demand coming out of nearby Savannah. 

What does this mean for you?

Brokers: Expect continued volatility in this lane this week with some increasing upward pressure on spot rates with a wide range between carriers’ prices. Jacksonville demand is slowing, but carriers will still have a good reason to move in this direction thanks to Savannah. 

Carriers: Expect an increasing need to drive to Savannah out of Jacksonville for reloading. Rejection rates are still well above the national average in this lane with most all-in spot rates over $3.50 per mile according to TRAC, which should cover repositioning costs. 

Shippers: Keep this lane as a higher priority for finding coverage until rejection rates stabilize at a lower level. Carriers have been inconsistent in covering this lane on the contract side and spot rates have become polarized. Target carriers that have consistent outbound freight from this destination.

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BALTIMORE to INDIANAPOLIS

Overview: The 18% increase in the Headhaul Index week-over-week (w/w) is likely to cause capacity to tighten further in the days ahead.

Highlights

• Baltimore outbound tender volumes are up 5%w/w, signaling that demand for outbound capacity has increased significantly from last week.
• The Headhaul Index in Baltimore is up 18% w/w, signaling that there is a growing imbalance between inbound and outbound volumes. 
• Baltimore outbound tender rejections are up 2.4%w/w, signaling that capacity has likely tightened w/w.

What does this mean for you?

Brokers: The 18% increase week-over-week (w/w) in the Headhaul Index is signaling that capacity is likely to get even tighter in the days ahead. With rejections already up 2.4% w/w, and the largest peak season import volumes having already arrived into the Port of Baltimore, it is reasonable to expect that the Baltimore market will likely remain tight for at least the next month. 

Carriers: Stay firm on your rates coming out of Baltimore. An 18% w/w increase in the Headhaul Index, and rejections already up 2.4% w/w, pricing power is likely to shift even further into your favor. With the peak season import volumes that have already arrived into the Baltimore market, you can expect demand for truckload capacity to remain high throughout the remainder of 2021.

Shippers: Your shipper cohorts in the Baltimore market have outbound tender lead times averaging 2.2 days, but with outbound volumes on the rise, shippers will need to get these lead times closer to 3.5 to 4 days if possible. This will help ensure your carriers/brokers have adequate lead time to secure capacity while conditions keep tightening in the weeks ahead.

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Watch: Shipper Update

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Impact of rising diesel prices

From John Kingston’s story on the latest DOE/EIA diesel prices

The continued increase in the retail price of diesel while commodity and wholesale prices continue to fall means an increase in wholesale margins, reflected in the FUELS.USA data stream in SONAR.

At roughly $1.09 a gallon, that level on a nationwide basis has been rising but is still far from all-time highs. That spread this year has been as high as $1.25 a gallon and as low as 78 cents per gallon. 

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Watch: Carrier Update

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Focus on … Dry Van Outbound Tender indices

By Zach Strickland

The national average for dry van outbound tender rejection rates has climbed up to 18.75%, but dry van freight volumes have declined to 10,859.98 index points.

Spot rates for on-demand capacity remain high, and will increase as we close in on the Thanksgiving holiday.

Shippers in the Sioux Falls, Omaha and Cape Girardeau are struggling with rejection rates over 40%, and over 30% in the Des Moines, Cedar Rapids, Dubuque, Memphis, Rock Island, Montgomery and Mobile markets.

Carriers will find the most opportunities for dry van freight in the Ontario, Atlanta, Harrisburg, Los Angeles, Dallas, Elizabeth, Joliet, Columbus, Indianapolis, Allentown and Chicago markets, which are the largest dry van markets by volume in the nation.

SONAR users need to pay close attention to rejection rates over the next few weeks as market conditions shift. Drivers will start to head home next week for the holiday, tightening capacity, which will push spot rates up for on-demand capacity.

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Watch: Reefer rejection rates

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Latest Freightos Baltic Daily Index

By Mike Baudendistel, Market Expert

FreightWaves explains why air cargo is a relative bargain. In short, for all the reduced transcontinental flights, the capacity crunch in air cargo has been less severe than the capacity crunch on the ocean. Pre-pandemic, the average price to move air cargo was 13-15 times higher than ocean, but now it is only 3-5 times higher. 

While the Freightos Baltic Daily Index below shows that daily ocean rates are ~20% lower month-over-month from China to North America, they remain sharply higher year-over-year, leading to a narrower rate spread compared to air cargo.

This note appeared in the latest issue of The Stockout, FreightWaves’ CPG Supply Chain newsletter. To subscribe to The Stockout, click here.