The highlights from Thursday’s SONAR reports. 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.
Lanes to watch
By Mary O’Connell, FreightWaves freight broker/3PL expert
CHICAGO to ATLANTA
Overview: Brokers should raise rates to preserve margins as capacity costs inch upward to a new high of $4.06/mile, including fuel.
Highlights
- At 20.56%, the van tender rejection rate in the lane is 220 basis points above the national average despite being roughly in line with the national average for most of the past year.
- According to TRAC/Market Dashboard, brokers are paying an average spot rate of $4.06/mile, including fuel surcharges, in the lane with $4.37 and $3.82 representing spot rates in the 67th and 33rd percentiles, respectively.
- The door-to-door intermodal spot rate in the lane is $3.67/mile, including fuel, which is just under a 10% discount to the van spot rates shown in TRAC/Market Dashboard.
What does this mean for you?
Brokers: To preserve margins, you may want to raise your rates slightly in the lane since Market Dashboard shows that the amount brokers are paying for van capacity is at the highest level in the past month.
Carriers: Before accepting tenders to Atlanta, you may want to look for loads that will take you to a tighter freight market; the Atlanta van outbound tender rejection rate of 16.45% is 191 basis points below the national average. That said, the latest tender volume data shows that Atlanta is a headhaul market again (the Atlanta Van Headhaul Index is 36) which should make it easy for carriers to get reloaded.
Shippers: The spread between dry van spot rates and domestic intermodal spot rates looks rational so your mode choice will likely be based on time-sensitivity. While intermodal service levels have improved, they still leave something to be desired. Other shippers are extending lead times to 2.9 days for inbound Atlanta loads and 2.7 days for outbound Chicago loads which indicates that other shippers are concerned with securing capacity.
PENDLETON (Oregon) to LOS ANGELES
Overview: Capacity still tightening in the Northwest.
Highlights
- Spot rates for refrigerated loads remain elevated in this lane this week, hovering just over $4 per mile after having been $2.74 a month ago.
- Reefer rejection rates for Pendleton remain close to all-time high levels around 70% with rejection rates to Los Angeles hitting 44%.
- Ontario’s outbound rejection rate for reefer loads has been volatile since mid-September, bouncing between 30 and 44%. It is currently trending on the lower end of that range at 35%.
What does this mean for you?
Brokers: Expect rates to remain flat to slightly higher in this lane with continued pressure on capacity. Historically speaking, this seasonal push should be nearing its end in the coming weeks. Until then, don’t take capacity in the Northwest for granted.
Carriers: Look for continued activity on the spot market out of the Northwest. This seasonal tightening is typically brief, but this is not a typical year. Both van and reefer capacity is showing signs of tightening, so farm the spot market and accept a few more inbound loads on the contracted side to maximize margin and utilization.
Shippers: Check with all your carriers for any pickups that are scheduled this week. This disruption should be temporary with no long-term rate increases necessary. Increase lead times as much as possible.
DALLAS to CHICAGO
Overview: Rejections likely to increase further with Headhaul Index up 39% week-over-week (w/w).
Highlights
- Dallas outbound tender volumes are up 38% w/w, signaling that demand for capacity is increasing.
- The Headhaul Index in Dallas is up 35% w/w, signaling that capacity is likely to tighten further in the coming days as outbound demand outpaces inbound volumes.
- Dallas outbound tender rejections are relatively flat w/w, but are likely to climb significantly higher in the coming days due to the growing volume imbalance in Dallas.
What does this mean for you?
Brokers: The w/w change of 35% in the Headhaul Index is a massive shift in the Dallas market. With outbound tender rejections remaining relatively flat w/w, this increase in the Headhaul Index is signaling that capacity in Dallas is likely to tighten further than it already has in the past week. Get your team to prioritize your outbound Dallas lanes, and also be sure to let your sales team know that there will likely be new opportunities for them to take advantage of as Dallas tightens further.
.
Carriers: Dallas pricing power is likely to shift even further in your favor in the coming days and weeks. Containerized imports are hitting record levels again this week, and with Dallas being one of the major inland rail locations for imported containers, it is highly likely that there will continue to be a great deal of upward pressure on spot rates.
Shippers: Your shipper cohorts in Dallas are still averaging just over 3.1 days in tender lead times, but history would show that when capacity tightens quickly in Dallas, lead times should be between 3.5 and 4 days to help relieve some of the pressure being put on capacity, and spot rates. With outbound volumes on the rise, and inbound volumes dropping significantly w/w, it would be wise to keep your tender lead times between 3.5 and 4 days through the next couple of weeks to ensure you are able to secure capacity in the market.
Watch: Carrier Update
Diesel prices: Retail to wholesale fuel spread
This except taken from a recent John Kingston story.
Retail prices lag wholesale moves, particularly on the way down. Retail price decisions are made at the individual station level, and station owners have long tried to keep their retail prices as high as they can even as their acquisition costs decline.
The sharp difference between the decline in retail prices reflected in the DTS.USA price in SONAR and the ULSDR.USA number means that the FUELS.USA, which reflects that spread, blew out as wide as almost $1.35 a gallon Thursday. That number exceeded even the levels seen in the beginning of the pandemic, when spot and wholesale prices were plummeting at a dizzying rate.
The FUELS.USA number came back slightly to earth, dropping Sunday to just under $1.30 a gallon.
Watch: Carriers grabbing low-hanging fruit?
Outbound Tender Rejection Index: Two-week change
By Mary O’Connell
The Outbound Tender Rejection Index measuring changes over the past 14 days shows the Pacific Northwest having some of the largest increases in tender rejection rates since before Thanksgiving.
This area normally has seasonal tightness during the Christmas tree harvest this time of the year, but that is not the only factor.
The rest of the U.S. is a mixed bag of mild tightening and easing.
Looking at tender rejection rate changes over time on the map allows users to see where conditions have changed the most over time.
Markets in blue have had increases while shades of red indicate declines in rejection rates.
