The highlights from Wednesday’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.
Truckload sector highlights:
- Reefer rejection rates in the Southeast corridor are plummeting, down over 1,500 basis points (bps) in the past week in markets like Jacksonville, Florida, and Savannah, Georgia.
- In the Memphis, Tennessee, market carriers are trying to push reefer rates higher as reefer rejection rates increased 1,522 bps week-over-week (w/w), the largest increase in the country.
- Harrisburg, Pennsylvania, and surrounding markets are picking up steam now, a full week into June, as reefer rejection rates climb 255 bps w/w.
Lane of the day: Atlanta to Chicago
Overview: Atlanta rejection rates are up over 2 percentage points over the past month.
Highlights:
- Spot rates have increased 9% in this lane over the past month with upward momentum carrying into the first week of June.
- Atlanta’s outbound rejection rate has increased from 6.08% to 8.3% over the past month, but it has taken a somewhat crooked path.
- Chicago has had stable volumes over the past month, with an average outbound rejection rate above 7%.
What does this mean for you?
Brokers: Target carrier rates around $2,100 all-inclusive with some leeway to the high side. Increase priority for covering loads in this lane.
Carriers: Accept loads into Atlanta with confidence due to the increasing reload potential supported by rising spot and tender rejection rates over the past month. Note that there is some leveling off occurring.
Shippers: Expect unstable conditions out of the Atlanta market. Rejection rates have risen over the past month but have changed course a few times over that period.
Watch: Carrier update
Despite choppiness in the domestic freight markets, domestic intermodal contract rates continue to track sharply higher relative to year-ago levels. The most recently processed domestic intermodal contract rates, contained in the SONAR IMCRPM1 data set shown below, show door-to-door domestic intermodal rates on transactions processed within the past two weeks up 19% year-over-year (y/y). That data set does not include fuel surcharges. That’s an important metric for intermodal shippers that will want to monitor rates in the marketplace to see if other shippers are rebidding their intermodal freight, which may put downward pressure on contract rates. (However, SONAR data shows no evidence of that yet.) It’s also an important metric for financial analysts who may be trading shares of J.B. Hunt, Hub Group and Schneider. Based on the SONAR data shown below, those carriers appear set to once again post steep increases in revenue per load when they report their second quarter earnings in July.
Lane to watch: Denver to Phoenix
Overview: Spot rates have fallen in spite of rising outbound tender rejection rates.
Highlights:
- Spot rates decreased over the past 30 days, falling from an average rate of $2.26 per mile on May 7 to an average rate of $2 per mile.
- Overall outbound tender rejection levels out of the Denver market rose from 8% June 1 to 11.95% as outbound tender volumes rose from 180 bps to 213.69 bps.
- The Denver to Phoenix lane saw a similar rise in the past week, going from 4% at the end of May to 7.18% as rising volumes relative to trucking capacity caused an increase in rejection rates.
What does this mean for you?
Brokers: Outbound Colorado loads remain profitable due to volatile spot rates and the number of carriers competing for outbound load volumes. Declining spot rates will benefit those brokers that locked in higher contracted rates earlier in the year. For brokers doing ad hoc spot quotes, focus on driving down rates and pricing in adequate margin; however, the spread between the low rate of $1.99 and the high rate is $2.06. This leaves very little wiggle room for margin unless you have an adequate carrier routing guide or buying power.
Carriers: Rising volumes present an opportunity to solicit customers or overcommit on outbound Denver lanes if you have more capacity entering the Colorado market. If needed to move capacity, attempt to move at contract rates first before quoting on the spot market, as the declining spot market rates will lead to lower revenues. Overall, continue to be strategic when pricing into Colorado and adjust bids to cover the declining outbound spot rates.
Shippers: Declining spot rates will provide some relief to shippers that were seeing average spot rates of $2.50 to $2.75 during March and April. The current average rate of $2 per mile will encourage some shippers to either shift excess contracted freight to the spot market or attempt to drive down prices by utilizing more brokers or carriers depending on total quoted lane rates. During market shifts, the goal becomes to drive down transportation costs and attempt to locate the rate floor before adjusting the routing guide.