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: Dallas to LA
Overview: Intermodal spot rates have fallen below $1 a mile and empty container volume rises to more than 100 per day, highlighting the rising amount of excess intermodal capacity in the backhaul lane.
Highlights:
- The Dallas to LA lane stands out because, in the past week, the door-to-door intermodal spot rate declined 35% – from $1.45/mile, including fuel, to 94 cents/mile – which suggests an increase in the available intermodal capacity in that backhaul lane as carriers reposition domestic containers back to the LA market.
- Highlighting the excess domestic intermodal capacity in the lane, an average of 112 empty domestic containers moved daily in the lane in the past week.
- Dry van carriers are rejecting 10% of tenders in the lane and SONAR Market Dashboard shows that brokers are paying an average of $1.59/mile, including fuel, in the lane.
What does this mean for you?
Brokers: Carriers remain willing to accept relatively low rates in this backhaul lane. The rates that brokers are paying for dry van capacity in the lane have been fairly stable during the past month and the current $1.59/mile average reflects excess capacity in the backhaul lane.
Carriers: The excess intermodal capacity in the lane may mean that shippers are using the highway because shipments are service-sensitive and they are using that as a negotiating point. Before accepting loads to the West Coast, you may want to look for loads that would take you to a tighter market – the LA outbound van tender rejection rate is 8% compared to the 18% national rate.
Shippers: After a period of about one month (from early February to early March) when intermodal and dry van spot rates were close to parity, a wide 40% spread has opened up between dry van and intermodal spot rates. Shippers should utilize rail intermodal for their less time-sensitive shipments and should be able to keep more time-sensitive highway shipments out of the spot market.
Watch: Carrier Update
Lane to watch: Columbia, South Carolina, to Atlanta
Overview: Outbound demand surges from Columbia.
Highlights:
- Columbia’s outbound tender volumes are up 24% since mid-December, while rejection rates have increased nearly 4 percentage points.
- Lane-specific rejection rates to Atlanta are well above the market average and have been trending higher since early February. Spot rates are trending slightly higher week-over-week (w/w).
- Atlanta’s outbound tender volumes have increased 5% since mid-December, while rejection rates have fallen 1.8 percentage points.
What does this mean for you?
Brokers: Make this lane a high priority out of Columbia. Contracted loads are being declined 25% of the time, which will push more loads into the spot market. Pad your margins in this lane and be ready to pay $800 to $1,100 on the spot market.
Carriers: Expect more contract and spot volume out of Columbia with relatively high-margin freight available in this lane. Expect consistent demand out of Atlanta, but flat to easing conditions from a w/w perspective for the most part as more loads are staying within contract. In other words, make sure there is a contract load waiting.
Shippers: Contact your carriers to double-check for capacity in this lane. Increase lead times, especially on loads paying well below the current spot market rate of $800.
Watch: Shipper Update
Lane to watch: Phoenix to Kansas City, Missouri
Overview: The lowest spot rates in three months make for the best shipping conditions.
Highlights:
- Phoenix has an outbound tender rejection rate of 8.87% and it is falling. It is among the lowest rejection rates in the country.
- The FreightWaves TRAC spot rate is $2.74/mile, the lowest rate per mile in over three months.
- Kansas City’s outbound tender lead time hasn’t dropped below three days in the last six months and don’t expect it to drop anytime soon.
What does this mean for you?
Brokers: Spot rates are hitting an all-time low. Now is the time to ship as much as possible. Work with shippers to pull forward loads. Rejection rates are at 8%, indicating that it’s actually preferable to run on contract rates over the spot market. This might be a good place to make up some lost margin on other loads.
Carriers: The spot market is not the place to be at this time. Instead, you should focus on contracted freight out of Phoenix to get up to Kansas City, where capacity is loosening, but there is still a good balance of loads. Spot rates will continue to fall; make sure to hold firm on rates.
Shippers: Maximize cost savings by shipping now. With the lowest rates in months, now is the time to pull forward what you can and ship while the market is hot. There is a plethora of inbound freight into Phoenix; be the outbound freight. Outbound tender lead times are coming in at 2.5 days and given the low rates, tendering under that window isn’t the end of the world.
