The highlights from Wednesday’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: Rock Island (Ill.) to Dallas
Overview: Rock Island’s outbound rejection rate tops 45%.
Highlights:
- Rock Island’s outbound rejection rate has climbed over 10 percentage points to 45% over the past nine days but is showing signs of recovering in the past day.
- Spot rates from Rock Island to Dallas have increased over 10 cents per mile over the past week (to $3.53).
- Dallas’ outbound rejection rate jumped back over 19% earlier in the week, but appears to be dropping once again.
What does this mean for you?
Brokers: Expect more spot market activity in this lane and out of Rock Island this week. Pad your margins compared to pre-Christmas rates if capacity is not secured.
Carriers: Divert more capacity to the spot market in this lane in the near-term. History suggests this recent uptick in activity will be short-lived, but it is a large enough event to keep things interesting the rest of the week.
Shippers: Increase lead times out of Rock Island this week. Push all non-urgent loads into next week to avoid spot market premiums and the potential of compliance disruption.
Watch: Shipper Update
Lane to watch: Chicago to Los Angeles
Overview: In this backhaul lane, intermodal becomes less compelling for spot shippers as carriers raise rates closer to dry van levels.
Highlights:
- The door-to-door domestic intermodal spot rate in the lane is up 7.4% in the past week and is up 21.7% in the past month – to $1.41/mile, including fuel surcharges.
- That intermodal spot rate is 17% below the dry van truckload rate of $1.70/mile, also including fuel surcharges. Truckstop.com shows a similar $1.66/mile rate, including fuel.
- The van tender rejection rate in the lane is 15.6% which is well below both the outbound long-haul Chicago tender rejection rate of 27.8% and the inbound LA tender rejection rate of 18.2%.
What does this mean for you?
Brokers: Brokers may want to lower their bids slightly to reflect spot rates coming down ~$0.10 since mid/late December and to reflect rail intermodal becoming a less compelling option for spot shippers as rail carriers have increased rates to be closer to dry van rates.
Carriers: This is a solid lane for carriers, which is reflected in the relatively low tender rejection rate in the lane. Even with outbound LA freight demand not having fully ramped back up following the holidays, the LA Headhaul Index is 107; this suggests that it should still be very easy for carriers to get reloaded in LA.
Shippers: The recent rise in intermodal spot rates in this backhaul lane appears to reflect rail carriers pricing to the market, which makes utilizing intermodal less compelling for spot shippers. However, the spread between intermodal and dry van rates remains within a normal range; this suggests that spot shippers may still want to use intermodal for less time-sensitive loads.
Watch: Carrier Update
Lane to watch: Harrisburg (Pa.) to Dallas
Overview: Rejections are likely to rise as the Headhaul Index surges 20% w/w.
Highlights:
- Harrisburg outbound tender volumes are up 7% w/w, signaling that demand for capacity is increasing.
- The Headhaul Index in Harrisburg is up 20% w/w, signaling that capacity is likely to tighten.
- Harrisburg outbound tender rejections are only up 26 basis points (bps) w/w, but expect them to increase due to the growing imbalance between inbound and outbound volumes.
What does this mean for you?
Brokers: You are likely to see capacity tighten significantly through the remainder of the week. Outbound tender rejections are only up 7% w/w , but the increase of 20% w/w in the Headhaul Index is signaling that there are fewer trucks hauling freight into Harrisburg, so any further increases in outbound volumes (highly likely) will put even greater pressure on capacity and spot rates.
Carriers: Harrisburg’s pricing power will be shifting even further into your favor for the remainder of the week. If you have capacity in that market, you should increase your rates ahead of the weekend. Most brokers and shippers are likely already feeling capacity tighten, so stay firm on your rates and capitalize on your spot market opportunities.
Shippers: Your shipper cohorts in Harrisburg are averaging 3.3 days in tender lead times, but if the Headhaul Index continues to increase, you will need to set your tender lead times between 3.5 and 4 days to ensure that you are able to source capacity effectively during these tightening conditions.