The smartest minds on Wall Street use charting analytics to quickly identify and then track trends in multiple data sets. Why? Because it works. Even the most intelligent investor or skilled trader identifies patterns in numbers when they are charted far faster than when those numbers are simply displayed in columns and rows. Graphically depicting data becomes more important when you are trying to compare two or more data sets and understand the relationship between them over time. When viewing a chart of a couple of data sets that are related, you begin to understand the reason of the marketplace. If you can add a series of technical indicators to the graph, you begin to understand the rhyme and the reason of the marketplace.
SONAR allows you to quickly view graphical series of data, many of which weren’t previously available to professionals trading the marketplace. More importantly, it allows you to view those data series compared to other data series (some proprietary, others not) and then apply the type of sophisticated technical indicators to the data series that are normally reserved for Wall Street. Patterns in the data don’t just sit there quietly as numbers; they literally jump off the screen at you. What are a few of those ‘jumping off the screen’ at us right now?
Capacity in trucking has increased over the last year, but is it where it’s needed?
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As truckers in all modes and carriers with fleets of all sizes appear to on an ever-increasing basis and learning how to adapt to the use of ELDs, improving utilization has restored much of the capacity initially lost.
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Strong pricing power was first achieved, then collected, and then used to significantly increase driver pay. Higher driver pay means more people willing and able to be truck drivers instead of in other competing jobs.
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The focus on the loading and unloading times of shippers and receivers that was necessary to recover lost utilization post-ELD adoption has provided dispatchers and fleet managers with the data needed to provide the added benefit of improving the driver’s quality of life. Whether it was directly penalizing those shippers and receivers who abused the driver’s hours through higher rates and detention charges; indirectly penalizing them through decreased access to equipment; or simply managing the equation through increased drop and hook – drivers are spending less time than ever waiting to be loaded and unloaded.
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More trucks have been built and purchased, and with higher pay and better working conditions, enough additional drivers have been brought into and retained in the industry to increase the number of trucks on the road.
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All the new trucks added to the nation’s fleet have brought down the average age of trucks. New trucks have more capacity because they spend less time in the shop. If a truck spends one day a month in the shop, and is only on the road 20 days a month (to keep the math simple), that one day is 5% of its monthly capacity.
Demand has also continued to grow, but one of the age old challenges facing the trucking industry is being emphasized. When demand exceeds capacity to the extent necessary to create pricing power, and that pricing power is sufficient to grow trucking capacity, it still faces further challenges. Where the loads are is seldom where the trucks are. Even in that perfect moment in time in which all the trucks are where the loads are, they pick up those loads, take them to destination and then are out of place again.
With the market data available on SONAR, we have ability to see all these ebbs and flows happen in real-time. Admittedly, some of these ebbs and flows are exactly as you would expect them to be but seeing the marketplace data as it is actually occurring highlights that where the trucks were needed last week is not necessarily where the trucks will be needed this week. Where the trucks are needed this week is not where they will be needed next week.
Since early May, the demand for dry van trucks in southern California has been significantly boosted by an almost ever increasing amount as import container traffic has steadily grown and achieved new record highs. As a result, the OTMS (Outbound Tender Market Share) for the Ontario, CA, region (ONT) grew so much that it eventually exceeded one of the consistently largest outbound markets in the country, Atlanta (ATL), peaking in mid-November, as the last of the containers bringing goods to stuff those holiday stockings arrived. Volumes have begun to decline in the ONT market for a very simple reason, if it’s not in the store, distribution center, or fulfillment center already, it is about out of time to get wrapped and put under the tree.
Unfortunately, not everyone got the memo. As demand falls in that market, and dispatchers make the mistake of thinking, “We have needed ever more trucks in Southern California for months; I better take more loads destined there, send more trucks out there,” we expect rates out of ONT to see some “surprising” pressure to the downside.
Stay tuned, and stay nimble.
– Donald Broughton – chief market strategist