The 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 Chicago
Overview: Dry van and domestic intermodal capacity loosen in Los Angeles.
Highlights:
- The intermodal spot rate to move 53’ containers door-to-door declined 13% in the past week to $2.02/mile, including fuel surcharges. That rate is now down 51% in the past month, which suggests that carriers are less concerned with protecting capacity for contracted intermodal shippers.
- Dry van truckload spot rates in the lane have also declined in the past month, but not to the same extent. The latest dry van truckload spot rate is $3.56/mile, including fuel, down from a recent high of $3.77, including fuel, on January 5th.
- The LA outbound van tender rejection rate is 9.6% and the LA long-haul tender rejection rate is 14.0%. Those are well below the national tender rejection rates for dry van and long-haul of 19.1% and 21.1%, respectively.
What does this mean for you?
Brokers: Lower your bids in the lane to reflect declining spot rates. When bidding for capacity, keep in mind that $3.56, $3.71 and $3.37 represent the average spot rate, the 67th percentile spot rate and the 33rd percentile spot rate, respectively.
Carriers: Los Angeles has gotten to be more of a shippers’ market so there will be fewer available spot loads in the market. Given the excess intermodal capacity, loads in the LA-Chicago lane are likely to be time-sensitive, so seek to be compensated accordingly. It should be fairly easy to get re-loaded in Chicago given the Van Headhaul Index of 40.
Shippers: Capacity is easing in LA and shippers should have an easier time securing capacity and getting their loads moved, provided they are not tied up in port congestion. The wider-than-normal spread between truckload and intermodal rates suggest that spot shippers should use intermodal for less time-sensitive loads. For more time-sensitive loads, shippers should be able to keep loads out of the dry van spot market with carriers rejecting 13% of dry van tenders in the lane.
Watch: Shipper Update
Lane to watch: Denver to Seattle
Overview: Capacity is loosening, with downward pressure on spot rates.
Highlights:
- The FreightWaves TRAC rate for this lane has fallen compared to last week’s rate ($4.82 compared to this week’s $4.50).
- Tender rejections in Denver have trended downward as the end of the month approaches.
- Tender volumes in Seattle have hit a two-month high.
What does this mean for you?
Brokers: Capacity is increasing out of Denver. Stay vigilant in monitoring outbound rates in this market. Volumes are slowing and rejections are dropping. Rates are still inflated, but lower than at the beginning of the year.
Carriers: Seattle is loosening and has more outbound loads than inbound. Getting an outbound load in the Pacific Northwest should be no issue. Volumes are high, so hold firm on your rates. The pricing power is with you.
Shippers: Tender lead times should stay at a minimum of 3 days to ensure coverage and avoid inflationary spot rates. Overall, the Seattle market has increased lead times by half a day this week. Ship early and often when you can.
Watch: Carrier Update
Lane to watch: Elizabeth (N.J.) to Cleveland
Overview: Capacity conditions are easing, placing downward pressure on spot rates.
Highlights:
- FreightWaves TRAC spot rates from Elizabeth to Cleveland have increased by 16% over the past month to $3.58/mi.
- Tender rejections in Elizabeth have fallen by 321 basis points (bps) in the past week, but are still above November and December averages at 16.9%.
- Tender volume levels in Cleveland have increased by over 13% in the past week, cementing the market’s headhaul status with a Headhaul Index of 27.8.
What does this mean for you?
Brokers: Be diligent in pricing this lane as capacity conditions in both markets have eased, signaling spot rates could decline in the coming days. Potential winter weather in the Northeast could have an impact on capacity in coming days, so pay attention to changing market conditions and price accordingly.
Carriers: Getting out of the Northeast could be vital to keeping the wheels moving this weekend as a Nor’easter threatens to dump up to a foot of snow in some areas, causing significant delays. Securing a load out of Cleveland should be easier as well, given the market has experienced the Headhaul Index increase over 13% in the past week. This signals that the imbalance of outbound freight and inbound freight is intensifying.
Shippers: Capacity conditions have improved, but getting ahead of the Nor’easter will allow for fewer disruptions to the carrier network. Pushing tenders further out in advance could avoid disruptions caused by winter weather, as well as give you the ability to claw back some of the pricing power.