The highlights from Monday’s SONAR reports are below. For more information on SONAR — the fastest freight-forecasting platform in the industry — or to request a demo, click here. Also, be sure to check out the latest SONAR update, TRAC — the freshest spot rate data in the industry.
Lane to watch: Indianapolis to Dallas
Overview: Spot rates are likely to level off and possibly increase slightly as the Headhaul Index surges 19% w/w.
Highlights:
- Indianapolis outbound tender volumes are up 6% w/w, signaling that demand for outbound capacity has decreased slightly over the past week.
- The Headhaul Index in Indianapolis is up 19% w/w, suggesting capacity is likely to tighten because of the growing imbalance between outbound and inbound volumes.
- Indianapolis outbound tender rejections are up 19 basis points w/w but are likely to move higher as a result of the large w/w increase in the Headhaul Index.
What does this mean for you?
Brokers: Take notice of the 19% increase in the Headhaul Index w/w. Though outbound volumes are up only 6% w/w, inbound volumes have actually dropped at a faster pace, causing the major increase in the Headhaul Index. With fewer trucks headed into the Indianapolis market, if outbound volumes level off or reverse and head higher, capacity will likely tighten rapidly and put significant upward pressure on spot rates.
Carriers: Stay firm on your rates out of Indianapolis. The w/w increase of over 19% in the Headhaul Index is likely to cause greater upward pressure on spot rates. Outbound volumes are up 6% w/w, but keep a close eye on outbound tender rejections, and if they rise higher in the coming days, adjust your pricing higher to capitalize on tightening conditions.
Shippers: Your shipper cohorts in Indianapolis currently have tender lead times at three days on average. Historically, shippers in Indianapolis have pushed lead times to between 3.5 and four days during periods of tightening capacity, so it would be wise to go ahead and adjust your lead times to prepare for the tightening likely to occur in the days ahead.
Watch: Shipper update
Things to watch in SONAR
Ocean TEU Volume Index:
This index measures the overall TEU volume sent from China to all ports within the U.S. Currently at 177 bps, the SONAR seven-day forecast for TEU volume is expected to continue rising in the next five days, but the effects of the shutdown in Shanghai will then begin to reach the market, causing the volume to fall rapidly in the couple of days after. As imported freight begins to decline, this will add to the already tightening truckload market that we have been seeing in recent weeks.
Reefer Outbound Tender Volume Index: (ROTVI)
Reefer volume has been trickling downwards since the early days of March, but has flatlined (temporarily) at 1440 bps. Its lowest point since 2020. As Shanghai scales back on reefer exports to the U.S., this number can be expected to drop even lower in the days and weeks ahead. Reefer rejections are reacting by dropping as well, currently at 17%.
FreightWaves Scientific VAN RPM 28-Day Forecast:
Average truckload spot rates have been trending downward since the start of the month. Based on FreightWaves’ RPM 28-Day Forecast, this movement is expected to continue in the month ahead. Currently at an average of $2.22 a mile, this time next month the average truckload rate is forecast to be $2.06. This continuous drop in pricing while the cost to ship rises will only further tighten the market.
Watch: Carrier update
Allentown, Pennsylvania’s, outbound market:
Overview: Volumes and rejections continue to decline as lower volumes have a notable w/w impact.
Highlights:
- Allentown outbound tender volume indexes fell from 410 bps at the beginning of March to 323 bps.
- Allentown outbound tender rejection levels fell across the board – from 22% during early March to 11.81% as more capacity competed for lower volumes.
- A tree map of w/w outbound Allentown tender rejection levels indicated that this loosening is not localized, with rejection levels ranging from 7.31% going to the West Coast to 10.63% heading to the Chicago market.
What does this mean for you?
Brokers: The notable outbound rejection and volume levels will put further pressure on spot market rates as market carriers compete against one another, which will further drive down costs. With Allentown being more of a backhaul market, this decline is a golden opportunity to increase margins (depending on how contracted lanes were bid during the last cycle). If spot bids with truck in hand, focus on what the market rate is and determine if you have better buying power to squeeze out margins as rates decline across the board.
Carriers: Focus on improving contract or committed rate tender compliance, as the recent downturn will put greater pressure on service levels as customers seek more competition and greater cost savings. Service levels can protect premium contract rates, but expect brokers or other carriers to attempt to undercut the competition as volumes decline.
Shippers: Depending on your carrier relationships and service levels, there may be an opportunity to examine growing the routing guide and looking for cheaper options coming out of Allentown now that volumes are declining. While this competition may not benefit carriers, you will gain the opportunity for transportation savings after two years of record rates.