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, New Jersey, to Chicago
Overview: Domestic intermodal volume hits a six-month high, which is evidence of improving rail fluidity.
Highlights:
- The average spot rate that brokers are paying for dry van capacity declined 12.5% in the past month to $2.66 a mile, according to SONAR’s Market Dashboard. That rate includes fuel.
- Loaded domestic intermodal volume averaged a year-to-date high of 283 containers per day in the past week. That is the highest volume since mid-November.
- The Chicago inbound intermodal tender rejection rate, which had been volatile for much of the past year, is currently a benign 1.6%.
What does this mean for you?
Brokers: To preserve margins, brokers should lower their bids for capacity in the lane given the direction of the market. When negotiating with carriers, stress that Chicago remains a headhaul market with a Van Headhaul Index of 25.
Carriers: With evidence of improving intermodal service, loads tendered to highway carriers are more likely to be time-sensitive so get compensated accordingly. Chicago remains a headhaul market, but the Chicago van outbound tender rejection rate has fallen faster than most other markets and currently sits at 11.5%, 30 basis points below the national average.
Shippers: Rising domestic intermodal volume and negligible intermodal tender rejections suggest that rail intermodal service has improved in the lane. Rail intermodal is a viable option for spot shippers as well as contract shippers given that the door-to-door intermodal spot rate to move 53-foot containers is currently 29% below comparable dry van spot rates.
Watch: Shipper update
Lane to watch: Atlanta to Nashville, Tennessee
Overview: Outbound tender volumes are rising in Atlanta but are still below mid-March levels.
Highlights:
- Spot rates are $4.27 and holding pretty steady. Expect rates to stay firmly between $4 and $4.60 for the foreseeable future.
- Nashville’s outbound tender volumes are on the rise, and outbound rejection rates are falling.
- Atlanta’s outbound tender volumes are rising, while rejection rates are falling, signaling a loosening capacity in that market.
What does this mean for you?
Brokers: Rates are firmly in the $4 range. Don’t expect rates to drop below $4.27 anytime soon. Capacity is loosening in Atlanta, so in theory, rates should be falling. However, due to rising carrier costs and the decline in volumes across the country, don’t expect spot rates to drop.
Carriers: Hold firm on your rates and work with brokers to get fair rates on lanes. Capacity is loosening in Atlanta, but outbound tender volumes are still almost four times that of Nashville. Volumes are there but so is everyone else. Take what you can get in the market but not at a rate that will increase costs.
Shippers: Outbound tender lead times are at 2.36 days in Nashville. Tender lead times have been yo-yoing around 2.5 days. Atlanta’s tender lead time is dropping to 3.04 days; expect it to stay around three days. Since the Atlanta market is loosening, you can expect outbound tender lead times to fall.
Watch: Carrier update
Lane to watch: Harrisburg, Pennsylvania, to Atlanta
Overview: Rejections are likely to rise as the Headhaul Index surges 37% w/w.
Highlights:
- Harrisburg’s outbound tender volumes are up 5% w/w, signaling that demand for capacity is increasing.
- The Headhaul Index in Harrisburg is up 37% w/w, signaling that capacity is likely to tighten.
- Harrisburg’s outbound tender rejections are only down 197 bps w/w, but expect them to increase due to the growing imbalance between inbound and outbound volumes.
What does this mean for you?
Brokers: You are likely to see capacity tighten in the week ahead due to an increase of 37% w/w in the Headhaul Index. Even though tender rejections are down 197 bps w/w, you could see that trend reverse quickly due to the growing imbalance between inbound and outbound volumes.
Carriers: Harrisburg’s pricing power will be shifting back in your favor in the days ahead. If you have capacity in that market next week, you should be able to negotiate slightly higher rates due to the growing imbalance in volumes.
Shippers: Your shipper cohorts in Harrisburg are averaging 3.1 days in tender lead times, but if the Headhaul Index continues to increase, you might need to shift them further out to offset the tightening conditions in the days ahead.