The highlight reel from Tuesday’s SONAR reports. For more information on SONAR — the fastest freight-forecasting platform in the industry — or to request a demo, click here.
Lanes to watch
By Zach Strickland, director, Freight Market Intelligence
PHOENIX to LOS ANGELES
Overview: Carriers accept low rates on the PHX–LAX lane as spot rates increase in Southern California.
Highlights
- Phoenix’s dry van Headhaul Index has increased, but remains extremely low at -95.81, indicating a surplus of capacity as inbound trucks outnumber outbound loads.
- Los Angeles’ dry van headhaul score has increased to 209.25 as capacity issues continue to plague Southern California, pushing rates up over $3.50 all-in rpm on multiple lanes.
- Phoenix shippers have decreased dry van tender lead times to 2.01 days as conditions soften in the market.
What does this mean for you?
Brokers: The Phoenix market has a surplus of capacity as inbound trucks outnumber the market’s outbound loads. Many of these carriers are searching for loads that will shift their trucks into the overbooked Southern California market. Brokers should search the spot market for loads that run across the PHX–LAX lane, adjusting their bids to capture as many loads as possible. When searching for capacity, push carrier rates down since many of these carriers will run these loads just to cover their costs.
Carriers: Carriers with trucks inbound to Phoenix need to search the spot market early for loads that will help them shift their trucks into the LAX market. Accept any contracted freight offered by shippers, or the rates offered by brokers. Spot rates continue to rise on multiple long-haul lanes out of Southern California as shippers struggle to find capacity.
Shippers: Phoenix shippers need to push rates down on freight that delivers into the Los Angeles market. The Phoenix market is saturated with capacity, and many carriers are running their trucks empty into the Los Angeles market. Search the load boards for on-demand capacity. Carriers should be willing to cover the freight near their costs rather than running their trucks empty.
HOUSTON to MEMPHIS
Overview: The Port of Houston continues to handle massive import volumes that are likely to soon shift into the truckload market.
Highlights
- Houston outbound volumes are up 2% 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 25% 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 up 147 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 only be up 147 bps w/w, but with the Headhaul Index increasing 25% over the same time period, we are likely to see rejections move higher in the coming days. The Port of Houston is still handling record import volumes, and once these volumes get shifted into the truckload market, it is likely to cause a major increase in outbound truckload volumes.
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. With import volumes remaining high, we should see outbound volumes increase even further, which is likely to cause an even greater imbalance between inbound and outbound volumes.
Shippers: Your shipper cohorts in Houston have tender lead times averaging 3.1 days, but with an expected increase in import volumes, a 25% 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.
ONTARIO to CHARLOTTE
Overview: Ontario is becoming more volatile as demand pressure increases.
Highlights
- Ontario’s outbound rejection rate bounced off a multi-month low last week, rising back to nearly 18% as outbound tender volumes continue to trend higher for the third consecutive month.
- Lane-specific rejection rates to Charlotte have moved in a similar pattern, but the rates did not rise to their previous early October levels.
- Charlotte’s outbound rejection rate plummeted to 19% last week after being around 25% on October 5.
What does this mean for you?
Brokers: Expect less pressure on rates in this lane compared to previous weeks. Spot volumes should also be less prevalent. This lane should still take coverage priority over lanes with lower rejection rates, but it is in the top quarter percentile of most rejected lanes.
Carriers: Expect less activity in this lane this week. Also, expect lower reload potential in Charlotte compared to earlier in the month. There is no sign of demand declining in Ontario, but capacity is becoming more erratic.
Shippers: Expect better compliance in this lane this week, but Ontario should still receive a lot of attention in order to mitigate spot market exposure. Missing loads here will cost a premium compared to missing loads in the East.
Carrier update
Zach Strickland, director of Freight Market Intelligence at FreightWaves, and FreightCaster Michael Vincent take a look at spot rates in the Carrier Update presented by PowerFleet.
Dry van outbound tender rejection vs. volume
By Zach Strickland
The national average for dry van outbound tender rejection rates has held steady around 20.50% over the past few days, halting the downward trend that started in late September. Dry van freight volumes have increased to 11,093.06 index points, indicating the demand for dry van equipment remains elevated as we approach the retail/holiday shopping season.
Shippers in the Cape Girardeau, Cedar Rapids, Dubuque, Sioux Falls, Des Moines, Augusta and Omaha markets are struggling with rejection rates over 35%, and rejection rates are over 30% in the Bowling Green, Nashville, Rock Island, Tifton, Jacksonville, Evansville, Louisville and Memphis markets as market conditions tighten.
Carriers will find the most opportunities for dry van freight in the Ontario, Atlanta, Los Angeles, Dallas, Elizabeth, Harrisburg, Allentown, Indianapolis, Joliet, Houston and Columbus markets, which are the largest dry van freight markets by volume in the nation.
Shipper update
Lead Economist Anthony Smith and FreightCaster Michael Vincent look at what is happening in key upstream sectors in the Shipper Update.