The highlights from Friday’s SONAR reports are below. 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.
Highlights:
Memphis: The only blue market in a sea of red
- Dallas and Houston are areas that are experiencing relative capacity loosening as rejection rates are down 150 basis points (bps) and 133 bps in the past week, respectively.
- After a strong increase in rejection rates in Jacksonville, Florida, they reversed course this week, falling 425 bps week-over-week (w/w).
- In a sea of red, Memphis, Tennessee, is the only market showing a significant increase in rejections relative to the size of the market, as the rejection rate increased 251 bps w/w.
Lane to watch: Chicago to Dallas
Overview: Domestic intermodal volume falls, which may suggest that intermodal shippers are dissatisfied with service levels.
Highlights:
- The average rate that brokers are paying for on-demand capacity is $2.64 a mile, including fuel, which is 27 cents a mile below the national average spot rate. Typically, the spot rate in the lane is roughly in line with the national average.
- Of the 10 densest domestic intermodal lanes, the spot rate from Chicago to Dallas fell the most in the past week – a 7.2% decline – from $3.38 a mile to $3.14 a mile.
- Domestic intermodal volume in the lane averaged 333 loaded containers per day in the past week. That is well below the recent high of 433 containers per day in early May.
What does this mean for you?
Brokers: This should be an easier lane to cover than it usually is, with the dry van spot rates that carriers are willing to accept falling more than the overall freight market. When bidding for capacity, keep in mind that the average rate brokers are paying for dry van freight is $2.64 a mile, including fuel, with $2.78 a mile and $2.49 a mile representing rates in the 67th and 33rd percentiles, respectively.
Carriers: While the Dallas market is not as tight as most others currently (given its outbound van tender rejection rate of 7.1% versus an 8.5% national average), it remains a solid headhaul market with a Van Headhaul Index of 73, indicating that carriers should have an easy time finding a load after the two-day trip.
Shippers: Spot shippers should be using the highway in the lane. The recent drop in domestic intermodal spot rates in the lane may mean that the railroads are less concerned with securing capacity for contracted shippers, but the recent decline in intermodal volume may also mean that contractual intermodal shippers are not finding service levels adequate and are instead using the highway for time-sensitive loads.
Watch: Carrier update
Lane to watch: Milwaukee to Indianapolis
Overview: Refrigerated spot rates dip but hold strong at a $4.96 all-in revenue-per-mile (rpm) average on the Milwaukee to Indianapolis lane.
Highlights:
- Reefer rejection rates have fallen to 6.25% in the Milwaukee market, but spot rates have held strong at a $4.96 all-in rpm average on the Milwaukee to Indianapolis lane.
- Spot rates on the return lane, Indianapolis to Milwaukee, increased throughout May to a $4.21 all-in rpm, allowing carriers to average just over a $5 all-in rpm on the round trip.
- Milwaukee shippers have retracted reefer tender lead time to 5.32 days, which is still well above the national average of 4.32 days.
What does this mean for you?
Brokers: Search the Milwaukee market for refrigerated freight that delivers into the Indianapolis market. Keep upward pressure on your rates to shippers since spot rate volatility remains elevated. Try to find a return lane to keep the driver rolling on your loads.
Carriers: Reefer carriers with available trucks near the Milwaukee market should search the spot market for loads that deliver into the Indianapolis market. Spot rates remain elevated on the lane, and reefer rejection rates in the Indianapolis market have jumped to 18.12% as market conditions tighten.
Shippers: Milwaukee shippers need to keep reefer tender lead times extended, since capacity has tightened in the market over the past few weeks. Pressure your contracted carriers to accept your freight, and avoid the high rates carriers are demanding on the spot market.
Did you know? You can measure whether shippers or carriers have control of pricing with SONAR’s Pricing Power Index.
FreightWaves Supply Chain Power Pricing Index (FWPPI.USA) – This is a weekly analysis index produced by the FreightWaves Freight Intel Group using data and analytics in SONAR and other sources to estimate the current pricing power dynamics between shippers and carriers. The FWPPI is an effective tool that will show SONAR users whether shippers or carriers have the upper hand in freight rate negotiations based on current market conditions.
The FWPPI measures from 0-100. A score of 50 is neutral/equal strength in pricing power between shippers and carriers. When the FWPPI score drops below 50, it’s an indication that shippers have more control of pricing freight than carriers. The more the FWPPI score declines closer to 0, the more control shippers have over the pricing of freight lanes. When the FWPPI score is over 50, it’s an indication that carriers are taking control of the pricing on freight lanes. As the FWPPI score increases toward 100, carriers have more control over pricing.
