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.
Lane to watch: Memphis (Tenn.) to Chicago
Overview: Capacity out of Memphis has eased rapidly in front of a potential ice storm.
Highlights:
- Spot rates have fallen over 40 cents per mile in this lane since Jan. 11, but they are still 5 cents per mile higher than they were on Thanksgiving.
- Memphis’ outbound rejection rate has plummeted from 27.4% on Jan. 19 to 20.7%.
- Chicago’s outbound rejection rate has slowly fallen from 22% to 19.9% over the past two weeks.
What does this mean for you?
Brokers: Be wary of the weather system potentially pushing rates lower in front of the system, before increased pressure to end the week. There has been a long running pattern of easing, however, which puts you in a conflicted position. Be prepared for capacity to tighten, keeping rates flat to higher than where they currently are to end the week.
Carriers: Add weather premiums to any expedited pickups in this lane today. Also be prepared for increased demand next week due to the weather slowing production. This lane should return to normal late next week.
Shippers: Push lead times out in this lane to avoid potential service delays. Capacity has been easing over the long-run and should return to trend after the weather issues and subsequent shipping backlogs subside.
Watch: Carrier Update
Lane to watch: Atlanta to Laredo (Texas)
Overview: Outbound tender rejections decline amid falling spot rates.
Highlights:
- Atlanta outbound tender rejections have declined 15.8% from Jan. 25 highs of 18.24% to 15.35% as outbound tender volumes remain elevated at 622 basis points (bps).
- Spot rates from Atlanta to Laredo declined 26 cents (or 11%) from a monthly high of $2.31 per mile on Jan. 26 to $2.05 per mile.
- Outbound Laredo tender rejections declined from holiday highs of 13% on Dec. 25 to 5.96%, indicating capacity returning to the market.
What does this mean for you?
Brokers: The Atlanta market has seen volatility from 15% to 20% on outbound tender rejections for the past three months. The Atlanta to Laredo lane is experiencing greater volatility, with price fluctuations between $1.80 per mile to $2.32 per mile over the past six months. Given the downward trend in spot rates, this should provide some margin relief in contracted lanes priced aggressively to win business, as outbound rates coming from Laredo appear to be increasing.
Carriers: Lowered tender rejections from the Atlanta market may indicate a loosening of spot rates and greater capacity in the market. This change may prompt other carriers to honor contracted rates; greater pressure will be placed on service levels and tender compliance, while balancing the opportunity cost of taking more ad hoc opportunities in more rate-favorable markets. Expect brokers to push down rates while also attempting to bid directly on ad hoc opportunities with customers if extra capacity is available.
Shippers: The Atlanta market appears to be on a downward trend for tender rejections but both spot rates and rejections remain volatile as winter weather systems disrupt transportation providers. Given the lower spot rates, there may be opportunities for savings if spot rates are lower than contracted awards. With more capacity moving south to avoid winter conditions, there may be an opportunity for savings as more carriers compete and drive down costs.
Watch: Shipper Update
Lane to watch: Greenville (Tenn.) to Allentown (Pa.)
Overview: Rejections are likely to increase as outbound volumes surge 12% w/w along with a 19% increase w/w in the Headhaul Index.
Highlights:
- Greenville outbound tender volumes are up 12% w/w, signaling that demand for outbound capacity is increasing.
- The Headhaul Index in Greenville is up 19% w/w, but could be poised to increase further as inland import rail container volumes head toward a record high.
- Greenville outbound tender rejections are down 60 bps w/w, but are likely to rise higher in the coming days.
What does this mean for you?
Brokers: Greenville tender rejections are down 60 bps w/w, but with outbound volumes increasing 12% w/w and the Headhaul Index increasing 19%, outbound tender rejections are likely to move higher in coming days. Make sure your team is aware of the upward pressure on rates, and be sure to prioritize your existing outbound Greenville lanes while this upward pressure continues.
Carriers: If outbound volumes in Greenville continue to increase, and inbound truckload volumes remain relatively flat (or drop further), then it is likely that we will see outbound tender rejections increase significantly. Even though outbound rejections are down 60 bps w/w, capacity is likely already tightening. If this current trend continues, the growing imbalance is likely to earn you even more pricing power in the days and weeks ahead.
Shippers: Your shipper cohorts have moderately increased their tender lead times w/w to 2.9 days. With the volume imbalance growing in Greenville (as well as outbound tender rejections), it would be wise to make sure that you increase your tender lead times to between 3 and 4 days to ensure you are getting this lane covered without paying above-average premiums due to a lack of sufficient lead time.
Focus on … Van Outbound Tender Reject Index
Van capacity is still difficult to secure across the country, though conditions are easing, particularly in the nation’s largest markets.
The Van Outbound Tender Reject Index – Weekly Change (OTRIW) shows changes in van capacity over the past week through tender rejection rates.
Capacity tightening in markets over the past week has been driven by cold, winter weather that is keeping drivers out of markets throughout the Midwest and into the Northeast.
Markets like Memphis, which has experienced dry van capacity loosening over the past week, are under threat of ice heading into the weekend, which could cause an uptick in van rejection rates in the coming days.
