The highlights from Tuesday’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.
Lane to watch: Chicago to Minneapolis
Overview: Spot rates are down more than 30 cents a mile over the past month.
Highlights:
- Average spot rates have fallen in this lane from $4.22 to $3.90 over the past month, with some acceleration in decline over the past few days.
- Chicago’s outbound rejection rates have fallen from 21.6% to 19.3% over the past week. Reaching its lowest point so far this year, this number is likely to begin climbing back up if the yearly trend holds.
- Now at its lowest point since the beginning of the year, Minneapolis’ ITVI looks like it may begin to increase in the days to come. This has proved to be a relatively consistent market, dipping every couple of months only to be back on the rise shortly after.
What does this mean for you?
Brokers: Expect continued easing in this lane; target buy rates below $3.90 per mile. Demand has been volatile out of Chicago this year with wild fluctuations in the OTVI. Rejection rates have plummeted to their lowest value since mid-December, although they are still relatively high from a historical perspective.
Carriers: Do not get greedy in this lane because rates and rejections have fallen quickly over the past week. Minneapolis demand is relatively stable but it is largely a regional market. Capacity is also easing on the return trip, so it shouldn’t be too difficult to find a load coming out.
Shippers: Expect improving conditions in this lane this week with compliance rates rising rapidly. Capacity is still tighter here than out West, so it should remain a higher-priority area than many Southern tier origins.
Watch: Shipper Update
Lane to watch: Los Angeles to Dallas
Overview: Spot rates continue to decline as volatile tender volumes edge downward.
Highlights:
- Spot rates continue their downward trend; they have fallen from $4.03 on Jan. 1 to $2.94 over the past three months, signifying that there are more contract rates coming out of LA in recent months.
- Outbound tender volumes continue to decline but remain volatile, hovering between 425 and 350 basis points (bps) in the past month.
- Outbound tender rejections for the LA to Dallas lane declined from 20% at the beginning of 2022 to 10.09%. The Los Angeles market fell even farther (to 5.65%) from a high of 18.17% on Jan. 1, signifying that there are fewer loads coming out of what historically has been a strong headhaul market.
What does this mean for you?
Brokers: Volumes and spot rates continue to decline out of Los Angeles, with the downward movement and volatility providing opportunities to increase margins. The backlogs at the ports remain, but the declining volumes are causing greater downward pressure. With LA’s total outbound market rejection rate at 5.65%, there is the opportunity to push carrier pricing down by more contracted rates.
Carriers: Declining outbound tender rejections (below 10%) will put greater pressures on tender compliance from shippers and possibly brokers. The challenge will be the volatility, but declining volume and lower tender volumes can create a situation in which shippers may not fully meet their commitments, causing internal load balance disruption.
Shippers: The lower spot rates and better tender compliance should provide some relief to the high rate/ high rejection situation of the past six months. While it may seem premature to attempt to negotiate lowered contracted rates, this current volatility will help reduce total transportation costs in the near term. There is the potential to take advantage of this opportunity and ship lower-priority loads before the spring surge takes capacity further east, creating a situation in which spot rates may increase.
Watch: Carrier Update
Lane to watch: Chicago to Harrisburg, Pennsylvania
Overview: Intermodal spot rates hit a new high but remain 19% below dry van spot rates.
Highlights:
- The door-to-door intermodal spot rate to move 53-foot containers hit a new high in the past week of $3.71 a mile, including fuel surcharges.
- SONAR Market Dashboard shows that the average dry van spot rate in the lane is $4.59 a mile, including fuel surcharges, which is 8% below the average of one month ago.
- Carriers have become more willing to accept inbound Harrisburg tenders. This is reflected in the Harrisburg dry van inbound tender rejection rate, which has declined from over 25% in early February to a current rate of 18.8%.
What does this mean for you?
Brokers: Lower your bids in the lane to reflect an easing of capacity as carriers have become more willing to head to Harrisburg. Use Harrisburg’s van outbound rejection rates and Van Headhaul Index when negotiating with carriers.
Carriers: Harrisburg is a solid destination for carriers currently, which explains why they are accepting a higher percentage of loads headed to that market. The Harrisburg van outbound tender rejection rate is nearly 400 bps above the national van tender rejection rate, and the Harrisburg Van Headhaul Index of 50 highlights Harrisburg as a headhaul market.
Shippers: The current spread between intermodal and dry van spot rates shows that spot shippers may want to consider using rail intermodal for loads that are less time-sensitive.