IThe highlights from Friday’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: Los Angeles to Atlanta
Overview: Intermodal rates fall in the LA to Atlanta lane, suggesting an easing of capacity.
Highlights:
- In the past week, the intermodal spot rate to move 53’ containers door-to-door declined 32% to $2.71/mile, including fuel surcharges, from $4.00/mile the week before.
- Brokers are paying an average of $3.45/mile, including fuel, for dry van capacity in the lane. That’s down from $3.63/mile, including fuel, during the first week of the year.
- In the past week, an average of 314 loaded domestic intermodal containers moved each day in the lane, which is down from 372/day in early December.
What does this mean for you?
Brokers: Lower your bids in the lane to reflect data in the SONAR Market Dashboard app that shows that other brokers are paying less for dry van capacity. When bidding for capacity, keep in mind that brokers are paying an average of $3.45/mile, including fuel, for dry van capacity with $3.58/mile and $3.34/mile representing buy-rates in the 67th and 33rd percentiles, respectively.
Carriers: The 15.8% van tender rejection rate in the lane shows that carriers are more accepting of loads than they are in most dry van lanes (the nationwide dry van tender rejection rate is 21.0%). In addition to keeping carriers moving for four days, dry van carriers also likely appreciate the current headhaul status of the Atlanta market (the Atlanta Van Headhaul Index is 27, suggesting that it should be easy for carriers to get reloaded).
Shippers: The recent decrease in domestic intermodal spot rates suggests that the railroads are less concerned with securing capacity in the lane. In addition, the 32% spread between dry van and intermodal spot rates suggests that spot shippers’ most economical option is intermodal for less time-sensitive loads.
Watch: Carrier Update
Lane to watch: Dallas to Ontario (Calif.)
Overview: Tender rejections plummet amid declining spot rates, indicating capacity is loosening.
Highlights:
- FreightWaves TRAC spot rates declined to $1.38 per mile, a 31-cent decline from a six-month high on November 12th.
- Dallas to Ontario outbound tender rejections declined 29% (from 18.5% on January 2nd to 13.07% now) indicating loosening capacity
- Outbound spot rates from Ontario to Dallas have steadily declined 5% from their end-of-year highs of $4.08 per mile to $3.88 per mile.
What does this mean for you?
Brokers: Declines in spot rates represent an opportunity for greater margins if committed freight is priced accordingly. For ad hoc spot quotes, look to the routing guide to locate carriers needing backhauls back to Southern California.
Carriers: Declining tender rejections and spot rates indicate capacity is entering the market. Tender volumes on both headhaul and backhaul for Ontario and Dallas remain elevated. During the winter months many owner-operators may focus on the I-10 and I-40 corridors, which can reflect the downward pressure on rates and tender compliance.
Shippers: Declining spot rates and better tender compliance represent an opportunity for pushing greater volumes for slight cost savings. While a 5% decline in spot rates is progress, try to get carriers and brokers to take more committed freight volumes over their allotment if the contracted price is less than the spot rate.
Watch: Shipper Update
Lane to watch: Richmond (Va.) to Dallas
Overview: Spot rates are likely to move higher as outbound volumes rise 18% and the Headhaul Index increases 17% w/w.
Highlights:
- Outbound tender volumes are up 18% w/w, indicating that demand for outbound capacity is increasing.
- The Headhaul Index in Richmond is up 17% w/w, signaling that there is a growing imbalance between inbound and outbound capacity.
- Outbound tender rejections are already up 2.6%, but are likely to increase further as a result of the increase in demand for outbound capacity.
What does this mean for you?
Brokers: The Richmond truckload market is likely to tighten significantly in the days ahead. There has been an 18% w/w increase in outbound tender volumes, and with the Headhaul Index increasing 17% w/w, capacity is likely to tighten significantly in the days ahead. 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. Spot rates are already at a one-month high, and with the growing imbalance in volumes and increasing tender rejections, Richmond’s market conditions are very favorable for 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 Richmond have increased lead times to between 3 and 3.5 days to help offset tightening conditions in the outbound truckload market.
