SONAR sightings for Oct. 14: Lanes to watch, carrier and shipper updates

Highlights

• Dry van rejection rates bounced back up to 23.46% in the Indianapolis market, allowing carriers to increase their average rates to $4.06 all-in rpm on the IND–BWI lane.
• Dry van rejection rates have declined to 15.24% in the Baltimore market, but carrier rates are still elevated at $2.53 all-in rpm on the BWI–IND lane. 
• Baltimore shippers have increased their dry van tender lead times to 2.17 days, which is well below the national average of 2.68 days.

What does this mean for you?

Brokers: Dry van capacity remains tight in the Indianapolis market, which has pushed rejection rates back up to 23.46%. Brokers should search the spot market for dry van loads that run across the IND–BWI lane, but increase your bids since both rejection rates and the Truckstop.com average rate per mile are trending upward. Carriers will be pushing their rates up for on-demand capacity since the Baltimore market is softening. 

Carriers: Dry van carriers with excess capacity in the Indianapolis market should search the spot market for loads that run between Indianapolis and Baltimore. Carriers averaged $4.06 all-in rpm on the IND–BWI lane, and $2.53 all-in on the BWI–IND lane, which is a $3.30 all-in rpm average on round-trip loads. Push your rates up on the IND–BWI lane since the Baltimore market is softening, and hold firm on your return rates. 

Shippers: Baltimore shippers need to continue to monitor rejection rates, freight volumes and the SONAR Headhaul Index, and continue to keep downward pressure on carrier rates since market conditions are softening. If market conditions start to tighten, increase your tender lead times and avoid seeking capacity from the spot market.

LOS ANGELES to DALLAS

Summary: Congestion impairs international intermodal volume as more loads are transloaded into domestic containers.

Highlights

• The latest dry van spot rate between Los Angeles and Dallas per Truckstop.com is $3.62/mile including fuel surcharges. That’s $0.02/mile below the prior week, but is the second-highest value in the data set. One month ago, the rate was $3.35/mile, including fuel surcharges.  
• Domestic intermodal volume, with an average of 499 units/day in the past week, is at the high end of its range during the past year. However, international intermodal volume was 613 units/day in the past week, well below the volume of 750 units/day in August and September. 
• The tender rejection rate in the lane has been volatile, and at 17.3%, is at its lowest level since February (likely coinciding with the Chinese New Year).

What does this mean for you?

Brokers: Lower your bids in the lane to reflect carriers’ increased willingness to head to Dallas, which is reflected in the tender rejection rate that has recently declined. When negotiating with carriers, highlight Dallas’ attractive Headhaul Index of 94, which should make it easy for carriers to get reloaded. 

Carriers: The congestion on the West Coast that is impairing intermodal volume has led to a steady increase in long-haul demand outbound from Los Angeles, setting up more opportunities for carriers. Dallas is also a solid destination for dry van carriers given that its Van Headhaul Index is 94, indicating that it should be easy to get reloaded, and its van outbound tender rejection rate exceeds the national tender rejection rate. 

Shippers: The overall drop in intermodal volume in the lane is yet another indicator that intermodal congestion on the West Coast is rampant, but it should be noted that the decline is concentrated in international intermodal (primarily 40’ containers), so shippers with loads in that category are most susceptible to delays.

HOUSTON to MEMPHIS

Summary: The Port of Houston just experienced its largest weekly import volumes on record, which is likely to cause a surge in outbound truckload volumes.

Highlights

• Houston outbound volumes are up 12% week-over-week (w/w), but are likely to surge in the days ahead as weekly import volumes just smashed the Port of Houston’s all-time record.
• The Houston Headhaul Index is up 13% w/w, and is likely to move higher as outbound volumes are likely to explode in the days and weeks ahead.
• Houston outbound tender rejections are down 159 basis points (bps) w/w, but are likely to increase rapidly in the coming days due to the increasing imbalance between inbound and outbound volumes.

What does this mean for you?

Brokers: Outbound tender rejections may be down 159 bps w/w, but with the Headhaul Index increasing 13% over the same time period, do not expect Houston capacity to loosen in the coming days. The Port of Houston has been breaking records for containerized import volumes in 2021, and this past week it smashed its all-time record for weekly import volumes. Once these volumes get shifted into the truckload market, outbound volumes are likely to explode.

Carriers: Stay firm on your rates, and expect there to be significant upward pressure on rates due to the large increase in the Headhaul Index. The Port of Houston just smashed its all-time record for weekly import volumes, so the resulting outbound tender volumes will likely put significant upward pressure on outbound spot rates in the Houston market.

Shippers: Your shipper cohorts in Houston have tender lead times averaging 3.1 days, but with an expected increase in import volumes, a 13% increase in the Headhaul Index w/w, and outbound tender rejections expected to increase rapidly in the coming days, you will likely need to push these lead times closer to 4 days if possible.

Watch: Shipper and carrier updates

Lead Economist Anthony Smith and Senior Retail Analyst Andrew Cox look at this week’s initial jobless claims, and producer pricing in the Shipper Update.

Zach Strickland, director of Freight Market Intelligence at FreightWaves, and Senior Retail Analyst Andrew Cox take a look at import demand slowing down in the Carrier Update presented by PowerFleet.