The highlights from Friday’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.
Lanes to watch
By Zach Strickland, director, Freight Market Intelligence
CHICAGO to HARRISBURG (Pennsylvania)
Overview: This is a solid lane for carriers because of plentiful reload opportunities.
Highlights:
- The domestic intermodal volume in the Chicago to Harrisburg lane was 360 containers/day in the past week. That is down 12.5% y/y, but is up 16.3% month-over-month (m/m), which suggests improvements in intermodal fluidity in the lane.
- In the past week, the intermodal spot rate in the Chicago to Harrisburg lane increased 6.6% to $3.69/mile. While that intermodal spot rate is elevated, it is still 16% below the van spot rate calculated by FreightWaves TRAC of $4.39/mile, which suggests the freight market is acting rationally.
- Both Chicago and Harrisburg are currently Headhaul markets for van carriers with Van Headhaul Index readings of 55 and 77, respectively.
What does this mean for you?
Brokers: Raise your rates in order to preserve margins given that spot rates have recently risen in the lane. When negotiating with carriers, highlight Harrisburg’s favorable outbound freight characteristics, which should make it easy for carriers to get profitably reloaded.
Carriers: Accept tendered loads. Harrisburg is an attractive destination currently with a van outbound tender rejection rate of 22.27%, which is 386 basis points (bps) higher than the national average. Plus, the Harrisburg Van Headhaul Index of 77 means it should be very easy for van carriers to get reloaded.
Shippers: With intermodal volume rising in the lane in the past month and network fluidity improving, shippers with intermodal contracts in place are more likely to experience adequate compliance and service levels. For highway shippers, look to keep your loads out of the spot market by keeping your lead times extended past 3 days, the average lead time for inbound Harrisburg loads.
INDIANAPOLIS to DALLAS
Overview: Rejections are likely to increase as the Headhaul Index increases 26% w/w.
Highlights:
- Indianapolis outbound tender volumes are up 6% w/w, signaling that demand for outbound capacity is increasing.
- The Indianapolis Headhaul Index is up 26% w/w, signaling capacity could potentially tighten further because of the growing imbalance between outbound and inbound volumes.
- Indianapolis outbound tender rejections are down 139 bps w/w, but that is likely to change as a result of the large w/w increase in the Headhaul Index.
What does this mean for you?
Brokers: Take notice of the 26% increase in the Headhaul Index w/w, as well as the 96 bps increase in outbound tender rejections w/w. If outbound volumes continue to increase, and inbound volumes decline or remain relatively flat, then the growing imbalance could cause rejections to rise even further in the days ahead. If capacity gets tighter in the near-term, and the Headhaul Index continues to climb, there will likely be significant upward pressure on rates.
Carriers: Stay firm on your rates in Indianapolis as the increase of over 26% in the Headhaul Index w/w, coupled with the 96 bps increase in outbound tender rejections is likely to cause even greater upward pressure on rates prior to “Black Friday.” Continue to watch outbound tender rejections, and if they continue to rise, adjust your pricing higher to reflect the tightening of capacity.
Shippers: Your shipper cohorts in Indianapolis are still averaging 2.8 days in tender lead times, but if outbound volumes continue to rise, you will likely need to push them out to between 3 and 3.5 days. It would be recommended to keep your lead times that high for the remainder of peak season.
PORTLAND to SEATTLE
Overview: Rejection rates soar out of Portland.
Highlights:
- Portland’s outbound tender rejection rate has increased from 11.8% on October 27 to 19% on November 10, with tender volumes trending higher.
- Rejection rates to Seattle have been extremely volatile over the past month, but have trended higher since Labor Day.
- Seattle is displaying easing conditions as outbound rejection rate volatility has declined along with tender volumes.
What does this mean for you?
Brokers: Expect tightening conditions in this lane with spot rates on the rise and coverage becoming more difficult. Pad margins where coverage is uncertain and make extra calls on loads scheduled to pick up this week.
Carriers: Divert more capacity to the spot market in this lane and prioritize loads moving south for contracted accounts. Seattle is showing easing conditions; reload potential will be on the decline out of this consistently oversupplied market.
Shippers: Offer increases in this lane if your compliance is consistently below the market, which is currently sitting at 78%. Confirm all scheduled pickups in this lane this week with your carriers.
TRAC: Savannah to Columbus, dry van
By Richard Daigle, SONAR account executive
The SONAR TRAC Market Dashboard shows spot rates on the Savannah, Georgia to Columbus, Ohio, lane ranging from $2.72 to $3.22, including fuel.
We can see that the load balance on this lane is tight with capacity in Savannah loosening. There is downward pressure on these spot rates here as capacity should be easier to find.
Tender rejections are at 25% and have been trending down on this lane.
Carriers: Capacity has loosened at the origin destination, however, the Columbus market is still a fairly tight market, making this lane a good lane to run.
Brokers: There is currently downward pressure on spot rates on this lane. Start with the TRAC rate and set your rate accordingly.
Shippers: Savanah has been a volatile market and has seen big swings. Now may be a good time to move freight will there is more available capacity.
Watch: SONAR data now available through Bloomberg
Focus on … domestic intermodal volume
By Zach Strickland
For the first time since June, domestic intermodal volume (measuring loaded containers only) is up year-over-year (y/y).
Contrary to the volume trend last year (and in most years), domestic intermodal volume is rising in mid-November rather than falling. In fact, daily domestic intermodal volume in the past week is up 10.8% from the average daily volume in August through September.
While that resurgence may be partially related to more transloading of imports from international containers to domestic containers, it is also related to improvements in rail network fluidity.
The chart on the right below shows those major lanes that are carrying more loaded domestic intermodal volume relative to last year at this time: L.A. to Dallas, Chicago to Dallas, Elizabeth, New Jersey, to Chicago and Chicago to Northern California.
While mixed on a y/y basis, relative to one month ago, that chart on the right is entirely “green” with loaded domestic intermodal volume rising in the past month in each of the major lanes, suggesting that the improvement in intermodal network fluidity is widespread.
