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.
Lane to watch: Seattle to Chicago
Overview: Intermodal volume rises, prompting carriers to increase spot rates to protect capacity for contracted shippers.
Highlights:
- The average domestic intermodal volume of 293 containers a day in the past week is 23% higher than the 2021 average and 27% above the year-ago level.
- International intermodal volume has risen to 277 containers/day in the past week, the highest level since August 2021.
- The current intermodal spot rate to move 53-foot containers door to door is $2.71 a mile, including fuel. Meanwhile, the SONAR Market Dashboard shows a dry van spot rate of $2.46/mile, down from $2.70/mile one month ago.
What does this mean for you?
Brokers: Lower your bids in the lane in order to preserve margins. The average spot rates that other brokers are paying for on-demand capacity has declined 9% in the past month and Seattle outbound van tender rejection rates have fallen to their lowest level in the past year.
Carriers: Seattle is currently a tough market to get out of since it is even more of a backhaul market than usual (the current Seattle Van Headhaul Index is -19 compared to a 2021 average of -13). With other dry van carriers rejecting only 6% of tendered loads (compared to the 16% national average), you will likely want to accept a load when one is tendered.
Shippers: The pickup in intermodal volume in the lane likely reflects the recent surge in imports coming into the Port of Seattle and also suggests that contracted intermodal shippers are finding value in rail intermodal in the lane. Spot rate data suggests that spot shippers (i.e., those that do not already have intermodal contracts in place) should utilize highway carriers.
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Lane to watch: Charlotte, North Carolina, to Atlanta
Overview: Spot rates plummet, then find a floor.
Highlghts:
- Spot rates have fallen from $4.81/mile on March 3 to $4.24/mile, stalling out just above the 2022 low.
- Rejection rates in this lane have fallen from 23.5% to 19.93% over the past nine days, its lowest value since July 2020.
- Atlanta’s Outbound Tender Volume Index (OTVI) has fallen 5.4% over the past week, while rejection rates have declined over one percentage point to 13.4%.
What does this mean for you?
Brokers: Expect improving compliance in this lane, but possibly without the added deflationary pressure on spot rates. Capacity is improving but increasing contract rates and fuel prices may be preventing spot rates from falling further.
Carriers: Demand has waned out of the Atlanta market, but improving contract compliance is also adding to the declining load availability as shippers are not falling as far down their route guide. Expect to rely less on the spot market for reloading.
Shippers: Expect rapidly improving compliance in this lane, but keep priority higher than lanes with lower rates of rejection. No further rate increases are necessary at this time, but making sure your rates are relatively close to the market average of $800-$1,000 will help your carrier reliability.
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Lane to watch: Dallas to Atlanta
Overview: Spot rates stabilize as tender rejections decline relative to outbound tender volumes.
Highlights:
- FreightWaves TRAC spot rates stabilize at around $2.75/mile after falling from a 30-day high of $2.94/mile.
- Dallas to Atlanta outbound tender rejections dropped sharply – from 20.48% at the end of the first week in March to 16.68%.
- Dallas outbound tender volumes appear to have influenced this drop, decreasing from around 490 basis points on March 3 down to 449.08, causing downward movement on rates and tender rejections.
What does this mean for you?
Brokers: The recent downward trend in volumes and spot levels can present an opportunity to aggressively push down rates prior to the traditional spring surge in the Southeast. Any volatility in rates can be a boon for brokers, as the difference in market price and price paid allows one to pad margins compared to risks with contracted committed freight. Examine and improve existing carrier routing guides to take advantage of carriers’ loss of buying power.
Carriers: Any downward movement in tender rejection levels will put attention on tender compliance and tender volume commitments. While pressure may come from shippers to accept all tendered obligations, there could be a situation in which volumes decline due to rising fuel prices, negatively impacting customer fuel surcharges and overall transportation spend. Focus on lane service levels, as some carriers may continue to struggle for capacity if their inbound lanes become disrupted.
Shippers: Better tender compliance and lowered spot rates translate into some transportation cost savings at a time when fuel surcharges are climbing. Outbound tender lead times declined from 2.86 days on March 7 to 2.671 days. This indicates that other shippers feel confident in tendering loads closer to the actual ship date as spot rates decline, providing more opportunities to hold both brokers and carriers to their original tender volume obligations.