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: Kansas City, Missouri, to Milwaukee
Overview: Spot rates are down as market conditions tighten in Milwaukee.
Highlights:
- Milwaukee’s outbound tender volume is increasing and outbound tender rejection rates are falling, signaling that capacity is starting to tighten in that market.
- Spot rates have remained pretty constant throughout the last month. They are currently sitting at $2.89 per mile, while the highs for the month are just over $3.20 per mile.
- Kansas City’s outbound tender rejection rates are sitting at 10.9% and falling. They have dropped 2% in the last few days.
What does this mean for you?
Brokers: Capacity in Milwaukee is tightening, signaling rates will start to increase as conditions tighten further. It is likely that rates will not increase in a significant manner, but enough to warrant watching in order to not get affected by the increase. Do not expect to put downward pressure on rates for this lane; carriers will continue to hold firm on rates.
Carriers: Milwaukee could be the place to send some extra trucks as capacity continues to tighten. Hold firm on rates to ensure that costs are covered. Utilize relationships with shippers and brokers to get rates that are beneficial for all involved.
Shippers: Outbound tender lead times are about 2.5 days in Milwaukee and almost 3.5 days in Kansas City. The spot market might have some of the lowest rates in ages, but that doesn’t mean outbound tender lead times can slip. Keeping them at market average will ensure coverage for shipments instead of them potentially being delayed.
Watch: FreightWaves CEO Craig Fuller gives carrier update
Lane to watch: Chicago to Atlanta
Overview: As dry van spot rates fall, the Class I railroads keep intermodal spot rates high to protect capacity for intermodal shippers with contracts.
Highlights:
- According to Truckstop.com, the dry van spot rate in the lane is $2.68/mile, inclusive of fuel. That rate is down 28% from the start of the year.
- Meanwhile, the domestic intermodal spot rate to move 53-foot containers door to door has increased 16 cents year-to-date (from $3.74/mile to $3.90/mile), including fuel.
- In the past three months, domestic intermodal volume in the lane has increased 12%, while outbound Chicago van volume and inbound Atlanta van volume have declined 23% and 15%, respectively.
What does this mean for you?
Brokers: Continue to lower your bids in the lane to reflect a market-clearing spot rate that continues to fall. When bidding for capacity, keep in mind that the SONAR Market Dashboard shows that the average dry van spot rate is $3.11/mile, inclusive of fuel, with $3.34/mile and $2.95/mile representing buy rates in the 67th and 33rd percentile, respectively.
Carriers: Accepting tenders to Atlanta right now is a mixed bag. With other dry van carriers rejecting only 6.8% of tenders, the market is not as tight as most. However, it should be easy for carriers to get reloaded given the Atlanta Van Headhaul Index of 41.
Shippers: The Class I railroads increasing intermodal rates to above truckload rates highlight their concern with securing capacity for shippers with intermodal contracts in place. Therefore, intermodal shippers with contracts may want to be ready with highway alternatives if intermodal service deteriorates.
Housing starts moved up again in the March release, showing a 0.3% rise. Permits also increased, up 0.4%. The ongoing momentum is likely being fueled by buyers seeking to pull purchases forward to avoid higher mortgage rates. Starts may face some softness during the spring and summer months. A housing start is defined as ground being broken for construction, and framing material or other building products don’t necessarily have to be in place or onsite. This means that there is a slight delay in actual materials being hauled. Homes under construction were up 2.3% for the month and a staggering 24.1% on a year-over-year basis. Meanwhile, units completed are down 4.5% for the month and 13% from the year-ago level.
The coming week will have many releases to watch. Capital goods new orders will show how much momentum is behind B2B activity. Consumer spending will get an update, and spending on durable goods and services will be watched closely. The previous month showed a shift into spending more on services and will likely persist as we continue to see overall downward movement in volumes. Gross domestic product will be released for the first quarter of 2022, but isn’t the best barometer for the health of the freight market. The goods-adjusted GDP will be more telling for the health of the freight market as it takes away all of the service aspects that don’t necessarily have a direct impact on adding to volumes.
