The highlights from Tuesday’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: Des Moines, Iowa, to Miami
Overview: Spot rates are up nearly 20 cents per mile since mid-February.
Highlights:
- In one of the nation’s most difficult and volatile lanes, spot rates have fallen 14 cents a mile since Feb. 24, but remain 18 cents a mile higher than Feb. 14 as a series of weather systems pummel the region.
- The Des Moines outbound rejection rate is currently around 43%, among the highest in the U.S.
- Miami’s outbound rejection rate has increased roughly 3 percentage points to 11.1% over the past week, but the market has one of the lowest outbound rejection rates in the country.
What does this mean for you?
Brokers: Put this lane at the top of the list of coverage priorities and do not accept any loads without verification from a carrier. This lane is normally extremely difficult to cover, but severe weather will make transactional freight even worse to deal with. Take any rate below $3.80 per mile and move on.
Carriers: Check with your shippers to make sure there have been no disruptions to their shipping schedules due to the weather. This lane should be extremely profitable for you to consider, though conditions in MIami are improving slightly in terms of reload potential.
Shippers: Communicate proactively with your carriers this week as weather could impact capacity. Consider rate increases in this lane as coverage will be difficult for a long time. The less competitive rates are, the less likely it will get covered. Carriers are placing much higher priority on loads to Dallas and Chicago.
Watch: Shipper Update
Lane to watch: LA to Chicago
Overview: The spread between intermodal and dry van spot rates shows a rational 15% discount compared to the highway.
Highlights:
- In the past week, loaded containerized intermodal volume in the lane was down 16% year-over-year (y/y), which breaks down to a 39% y/y decline in international volume and a 15% y/y increase in domestic volume.
- The spot rate to move 53-foot containers via rail intermodal door-to-door increased 13.7% in the past week to $2.52 a mile, including fuel. In contrast, the intermodal spot rate in the lane was around $4 a mile from August to December.
- The average dry van spot rate in the lane declined 11% in the past month to $2.95 a mile, including fuel surcharges.
What does this mean for you?
Brokers: Lower your bids for dry van capacity to reflect SONAR Market Dashboard data that shows dry van spot rates declining steadily in recent weeks. When bidding for capacity, keep in mind that $2.95/mile, $3.12/mile and $2.75/mile represent average spot rates, spot rates in the 67th percentile and spot rates in the 33rd percentile, respectively.
Carriers: With LA-Chicago being an “intermodal lane,” dry van loads tendered to you are likely to be time-sensitive, so be sure to get compensated accordingly. The Chicago Van Headhaul Index of 40 suggests that it should be easy to get reloaded in Chicago.
Shippers: Intermodal service levels that shippers experience in the lane will likely be tied to market segment (international or domestic) with port congestion impairing the fluidity of moving international containers inland. The current 15% spread between intermodal and dry van rates suggests that shippers moving less time-sensitive 53-foot containers, without more advantageous contract rates in place, could economically use rail intermodal.
Watch: Carrier Update
Lane to watch: Omaha, Nebraska, to Denver
Overview: Near 50% rejection rates out of Omaha make for a potential gold mine for carriers.
Highlights:
- The FreightWaves TRAC spot rate has climbed 20 cents a mile since the beginning of the month, to $5.66/mile.
- Outbound tender rejection rates in Omaha have dropped to 47.36% after peaking at 50% last week. However, Omaha is still among the tightest capacity markets in the country.
- Outbound tender volumes in Denver have started trending downward after spiking at 215 bps last week. Capacity overall in Denver hasn’t changed.
What does this mean for you?
Brokers: Capacity is tightening in Omaha; ship what you can now before spot rates begin to climb upward aggressively. With outbound rejection rates still hovering near 50%, lean on carrier relationships and work with the carrier to get your shipment moved because half of all loads are being rejected.
Carriers: There is upward pressure on spot rates with almost a 50% rejection rate in Omaha, which indicated that spot rates should be closer to $5.75 as the week moves on. This lane stands to bring in some additional profit as origin capacity is among some of the tightest in the country.
Shippers: Outbound tender lead times in both markets are over 3.5 days. Omaha is hovering at nearly four days, but with the capacity getting tighter be prepared to add time to that. Ship only what is essential as rates continue to climb. Anything that can wait should.