The highlights from Monday’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.
Capacity was relatively unchanged during the past week with rejection rates dipping slightly below 20%. There is good news in the way it appears the market is not getting worse, but trucking demand still outweighs its supply by a wide margin.
The Outbound Tender Volume Index (OTVI) has been trending higher since the start of the year and may be on track to recover to its previously elevated levels over the next month. This means shippers will have to relinquish the thoughts that winter will provide any window of relief or recovery or time to push spring inventories.
Carriers’ coverage of Southern California continued to improve, meaning upward rate pressure has not been present for several weeks now. One coast’s gain is another’s loss, however, as capacity in the Northeast continues to deteriorate.
These trends should continue throughout the month.
Watch: Shipper Update
Lane to watch: Toledo (Ohio) to Charlotte (N.C.)
Overview: Rejections are on the rise as the Headhaul Index surges over 22% w/w.
Highlights:
- Toledo outbound tender volumes are up 17% w/w, signaling that demand for capacity is increasing.
- The Headhaul Index in Toledo is up 22% w/w, signaling that capacity is likely to tighten.
- Toledo outbound tender rejections are up 135 basis points (bps) w/w, signaling that capacity is likely already tightening.
What does this mean for you?
Brokers: Outbound tender rejections from Toledo to Charlotte are 289 bps higher than the national average, and 355 bps higher than the overall Toledo market. For that reason, you will likely find it more difficult to source capacity for outbound freight headed to Charlotte. As the Headhaul Index continues to rise (putting pressure on capacity and spot rates), you will need to prioritize the Toledo market for coverage while ensuring your team is accurately pricing any loads to be shipped out of Toledo for the next few weeks.
Carriers: Rejections are up 135 bps in the Toledo market, which has likely started putting significant upward pressure on rates. If outbound volumes continue to increase relative to inbound volumes (only a small increase w/w), stay firm on your rates in the coming days to ensure your rates reflect the tightening capacity that is likely to continue as demand increases.
Shippers: Your shipper cohorts in Toledo currently have tender lead times at 2.7 days. However, judging by the Headhaul Index increase of 22% w/w, it would be wise to get a jump on your competition for truckload capacity by pushing your tender lead times closer to 4 days. This will help ensure you maintain adequate capacity if/when the market tightens again.
Watch: Carrier Update
Carriers are prioritizing covering loads off the West Coast as regional rejection rates fell to 8.74% out of the western region this past week.
The Los Angeles markets continue to produce consistent volumes at extremely high rates. Many of these loads will pay for a round-trip on the spot market.
Spot rates have been declining out of Southern California as carrier compliance has improved. FreightWaves TRAC average spot rate from Los Angeles to Chicago has fallen 50 cents per mile since Jan. 5, but remains at a historically elevated level (around $3.27 per mile).
While carriers flock to the West, they are abandoning the traditionally oversupplied Northeast. Regional rejection rates remained over 21% this past week with no strong weather systems hitting the area for the first time in a few weeks.
The market appears to be in a holding pattern with capacity remaining very tight and potentially getting worse in areas that are not normally known for being tight.
Lane to watch: Harrisburg (Pa.) to Boston
Overview: Harrisburg rejection rates are leveling off but remain high.
Highlights:
- Spot rates have hovered around $6.25 per mile over the last week and a half in this lane.
- Harrisburg’s outbound rejection rates have fallen back to 22.2%, their lowest value in a month.
- Over the past week Boston’s outbound rejection rate has fallen nearly 5 percentage points (to 15.3%).
What does this mean for you?
Brokers: Keep this lane as one of the highest priorities for finding coverage, but some easing may take place this week. Spot rates are nearly double similar mileage loads moving south.
Carriers: Consider diverting capacity to the spot market to take advantage of historically high rates. Boston capacity remains tight but has eased since last week.
Shippers: Consider rate increases in this lane if your rates are well below the current spot market rates and compliance is less than 75%. This is one of the most challenging lanes to operate in the U.S. at the moment.
Lane to watch: Memphis (Tenn.) to Des Moines (Iowa)
Overview: Load balance is tight, but rates are low.
Highlights:
- Memphis volumes are rising dramatically (up 23 bps from last week alone), but rejection rates are slowly falling and are currently around 17.62%.
- FreightWaves TRAC rate is at $3.50, marking a string of low rates for the past month.
- Des Moines has very tight capacity, with rejection rates at 43.27%.
What does this mean for you?
Brokers: Capacity will continue to be tight in both markets. Work with carriers to see what they can do to help out, but be prepared to pay the high end of the rate per mile range at almost $4.00 per mile. This lane will be one to watch as we head into planting season and capacity tightens more in Iowa.
Carriers: Rates are low for this lane compared to a couple weeks ago but capacity is tighter. Hold your rates toward the higher end of the range (around $4.00 per mile). The pricing power lies with you.
Shippers: With the lower rates and both markets averaging nearly a 3-day tender lead time, ship as much as you can now before rates spike upward as spring approaches. Take advantage of the 3-day lead time to maximize savings on this lane.
Focus on … Reefer Outbound Tender Reject Index
Securing reefer capacity over the past 20 months often has been difficult and that hasn’t changed so far in 2022.
The Reefer Tender Reject Index – Weekly Change (ROTRIW) signals where reefer capacity has tightened (or loosened) over the past week.
In the map below, the bluer the market, the higher reefer rejection rates increased over the past week, which indicates relative reefer capacity has tightened.
A heat wave that struck across the Southwest has caused reefer capacity in markets like Phoenix to tighten over the past week.
Winter weather had placed increased strains on capacity across the Midwest and Northeast over the past couple of weeks.
However, after limited weather impacts last week, reefer capacity constraints in the region largely corrected themselves.
