The Headhaul Index (HAUL) was added to the SONAR platform in the most recent release. HAUL measures the likelihood of being able to find a load out of a market, which makes its value obvious to any asset-based carrier. With many load planners operating on a 48-hour cycle, knowing when a market is hotter or colder on a daily basis can lead to better asset utilization. On the transactional side of the business, having an early indication of capacity changes can lead to higher margins.
What is HAUL?
The simplest explanation of HAUL is the greater the value, the easier it will be to get a load out of the market. Conversely, the lower the value, the harder it will be to get a load out of the market.
HAUL is calculated by subtracting the inbound tender volume index (ITVI) value from the outbound tender volume index (OTVI) value. A higher HAUL value indicates the higher likelihood of getting a load out of that market due to the fact there are more outbound loads available in the market than loads entering.
Example: OTVI.CHI is 168.45 and ITVI.CHI is 134.53. HAUL.CHI is 168.45 – 134.53 or 33.92.
The main value of HAUL is not necessarily in the absolute value, but the magnitude of the daily movement up or down. Familiarity over time will create an understanding of what it means to have a high HAUL value versus low.
Markets like Miami, which is considered the consummate backhaul market, with more loads entering than exiting, have a very low HAUL value. Miami had a range from -65 to -91 in August.
Whereas the general condition of the Miami market is widely known, there are times where it is easier to get loads out of the area. When HAUL increases this means there are more outbound loads available in relation to inbound, meaning the odds of finding a load out are higher.
Haul movements can lead tender rejections as it takes time for a carrier to realize market capacity conditions. A big increase in HAUL value is indicative of anomalous volume increases that carriers struggle to fill. The converse, a large decrease, can also indicate a reduction in tender rejections is about to occur as capacity returns to the market.
Length of Haul by Market
In addition to HAUL, FreightWaves also offers length of haul tender rejection values at a market level. Now there will be another way, in addition to trailer and lane, for users to analyze where the most opportunity or threat lies. Knowing what mileage bands have the most tender rejections out of a market will allow the user to know what areas carriers are avoiding the most.
An example of this would be if outbound tender rejections in the Los Angeles market (OTRI.LAX) increased from 15% to 18% one day. Typing in each length of haul value shows that the mid-haul tender rejections (MTRI.LAX) increased from 14% to 20% where the other values (CTRI, STRI, TTRI, LTRI) were flat tells you that markets 250 to 450 miles away are where there may be load volume increases and upward rate pressure exists.
Check out the SONAR homepage here for more detailed information on existing SONAR data and further explanations.