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: LA to Dallas
Overview: The railroads appear to be less concerned with securing capacity for contractual intermodal shippers.
Highlights:
- Domestic intermodal and international intermodal have declined 3% and 14%, respectively, in the lane in the past week.
- The current domestic intermodal spot rate in the lane is $2.82 per mile, down 6% in the past week and the lowest level in more than a year.
- The current dry van spot rate is $2.58/mile, including fuel, down 10 cents a mile from the start of May.
What does this mean for you?
Brokers: Given current spot rates, you can continue to lower your bids for dry van capacity in the lane without fear of any spot loads moving via rail intermodal. When bidding for dry van capacity, keep in mind that the average dry van spot rate is $2.58/mile, with $2.73/mile and $2.44/mile representing rates in the 67th and 33rd percentiles, respectively.
Carriers: The LA freight market remains loose with a van outbound tender rejection rate of 2.1%. With few loads falling through routing guides to the spot market, accepting tendered loads is likely the best course of action. Dallas is a better market for dry van carriers with a van outbound tender rejection rate of 7.3% and a Van Headhaul Index of 78.
Shippers: With intermodal volume off its recent highs, the railroads appear to be less concerned with securing capacity for shippers with contracts, but are still not pricing intermodal spot rates to be competitive with dry van spot rates. Therefore, intermodal contractual shippers are more likely to see adequate service levels in the lane.
Watch: Carrier update
Lane to watch: Dallas to Indianapolis
Overview: Dallas rejections are back on the rise.
Highlights:
- Spot rates have started to increase in this lane after being relatively flat through the first half of the month.
- Dallas’ outbound rejection rates have increased about 1.2 percentage points over the past week to 6.8% – reversing a six-week downward trend.
- Dallas’ outbound tender volumes have increased 5.91% since April 21.
What does this mean for you?
Brokers: Expect slight upward pressure on spot rates in this lane. Dallas is one of the two major markets seeing capacity disruption and increasing rejection rates and will need monitoring for the next few weeks.
Carriers: Accept more loads into the Dallas market while volumes are on the rise. While there is minimal pressure on rates at the moment, there should be increasing reload potential.
Shippers: Call your carriers on loads moving out of Dallas to double-check availability. There may be slight disruptions to service, but still nothing like a few months ago.
One intermodal data point that stands out in the past week is the door-to-door spot rate to move 53-foot containers in the Dallas to LA lane, which jumped 104.5% w/w (from $1.07/mile, including fuel, to $2.19/mile, including fuel). Not much intermodal volume moves on the spot market, but there is information in that data point. The sharp increase indicates that the railroads have become incrementally more concerned with the availability of containers on the West Coast to serve their contractual shippers. So, they are intentionally pricing themselves out of the market (the higher-service truckload option is more economical at $1.88/mile according to SONAR Market Dashboard) to encourage more repositioning of empty domestic containers back to the West Coast without the additional time it takes to load and unload. Therefore, shippers moving domestic intermodal loads eastbound from LA should be more wary of intermodal service levels and equipment availability and may want to have modal contingency plans in place, particularly given the loosening truckload market on the West Coast.
