The highlights from Friday’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: Elizabeth to Chicago
Overview: Dry van spot rates have fallen faster than intermodal spot rates as volume drops in both modes.
Highlights:
- Domestic intermodal volume declined 10% in the past week and a half from an average of 281 containers/day to 253 containers/day.
- As a result, carriers are seemingly less concerned with securing intermodal capacity for shippers with contracts already in place. Therefore, the railroads cut domestic intermodal rates by 5% in the past week – from $1.97/mile to $1.88/mile. Those rates include fuel.
- Dry van spot rates have declined 15% in the lane in the past month – from $2.92/mile to $2.49/mile.
What does this mean for you?
Brokers: Brokers should continue to lower their bids in the lane to preserve margins in light of spot rates that continue to fall. However, it should be noted that the pace of the decline in spot rates in the lane has moderated in the past week.
Carriers: Capacity continues to loosen in the lane. Carriers are less likely to find spot loads in light of the lane’s 8.4% van tender rejection rate, the lowest since June 2020. The Chicago market is roughly as tight as the national market as a whole with an outbound van tender rejection rate of 10.45%.
Shippers: SONAR’s intermodal spot rates are for the door-to-door movements of 53’ containers and include fuel and any other surcharges. Therefore, we consider the rates to be comparable with highway spot rates. The current 24.5% spread may entice spot shippers to use domestic intermodal for less time-sensitive shipments.
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Lane to watch: Cape Girardeau, Missouri to Jacksonville, Florida
Overview: Capacity is tightening in Cape Girardeau, but spot rates haven’t increased yet.
Highlights:
- Outbound tender rejections in Cape Girardeau have risen over 6% since the beginning of the week.
- Spot rates for this lane are currently at $3.68, not far from the $4-per-mile highs at the end of March.
- Jacksonville’s outbound tender rates are falling, signaling spot rates will not be jumping any time soon.
What does this mean for you?
Brokers: Capacity is tightening in Cape Girardeau, which is putting upward pressure on spot rates. The rates for this lane haven’t caught up to that increase yet. Watch out for carriers putting pressure on to increase rates.
Carriers: Rates are bound to increase on this lane. Apply that pressure to brokers to increase rates and help offset operating costs. Capacity is tightening in the Cape Girardeau market, making it an ideal market to move excess capacity.
Shippers: Capacity is tightening in the Cape Girardeau market. Keeping outbound tender lead times above three days will ensure the best price per shipment and help you avoid inflated spot rates.
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Lane to watch: Seattle to Chicago
Overview: More upward pressure is being put on spot rates as outbound rejections rise 106 bps and the Headhaul Index increases 12% w/w.
Highlights:
- Outbound tender volumes are up 8% week-over-week, indicating that demand for outbound capacity is increasing.
- The Headhaul Index in Seattle is up 12% w/w, signaling that there is a growing imbalance between inbound and outbound capacity.
- Outbound tender rejections are already up 106 bps, but are likely to increase further as the demand for outbound capacity increases as well.
What does this mean for you?
Brokers: The Seattle truckload market is likely to tighten in the days ahead because of an 8% increase w/w in outbound tender volumes and a 12% increase in the Headhaul Index w/w. Outbound rejections are already up 106 bps w/w, so be sure to prioritize this lane and let your team know that there is major upward pressure on spot rates.
Carriers: Stay firm on your rates, as you are likely to see pricing power shift further into your favor in the days ahead. Even though spot rates have been on the decline in recent weeks, the growing imbalance in volumes and increasing tender rejections should make Seattle’s outbound spot rates more favorable to carriers.
Shippers: Your shipper cohorts currently have tender lead times at 2.5 days, but that is not likely to be sufficient for the increase in demand that is expected in the weeks ahead. In the tightest markets historically, shippers in Seattle have increased lead times to between 3.5 and four days to help offset tightening conditions.