Turndowns outbound from Philadelphia skyrocket

Toby, a Nor’easter storm on the first day of spring, brings snow and ice to Philadelphia, Wednesday, March 21, 2018. (Photo: Shutterstock)

Generally speaking, truckers don’t want to haul into the northeast because it’s a backhaul market, in which more comes in than goes out. It can also be challenging to get in, especially when the weather is bad. This year, it has been especially bad. The area has been hit by a record four nor’easters in a single season. Toby hit the region and hit it hard. Parts of New Jersey picked up over 6 inches of snow, including Newark-Liberty Airport (7.9 inches). Toms River picked up 6.5 inches of snow in just 3 hours on March 21.

Central and southern Pennsylvania into northern Maryland was buried in over a foot of snow in several locations. Harrisburg, PA had its second heaviest late-March snowstorm in records dating to 1941, picking up 14.2 inches. Only a snowstorm almost 60 years ago to the day produced more late-March snow in Pennsylvania’s capital city, than Toby.

Many other locations across Pennsylvania Dutch country picked up over a foot of snow, including 14 inches in York and just over 15 inches near Gettysburg. Toby was the heaviest spring snowstorm in Philadelphia in 60 years, with 7.6 inches measured at Philadelphia International Airport. According to Weather.com, only a late March 1958 snowstorm (11.4 inches) and early April 1915 storm (19.4 inches) were snowier during the spring in Philadelphia records dating to 1884.

While the storm’s effect impacted a wide variety of freight markets, some cities recovered faster than others. In Philadelphia right now, according to FreightWaves’ turndown data, carriers are being more selective or do not have the capacity to haul the available loads in the market. Tender rejections in the market are over 29%, suggesting that carriers being highly selective, or overwhelmed. 

DAT numbers back this up. They report 2,566 loads and a mere 698 trucks in the area.

Why would a backhaul market, which historically has depressed pricing and is perpetually underbooked all of a sudden surge?

Carriers have been avoiding the area due to weather and therefore there is a lack of equipment to haul the loads.  

The Turndown Rate Index (TRI) is an indicator of tender turn-downs and can give us some indication of market rates, but it not necessarilly coorelated. In fact, carriers that tend to generate a large portion of their business from the tender market, receive a smaller portion from the spot market. The TRI is a great indicator of route-guide compliance and route-guide variance, but if rejections increase over historical moving averages, shippers will be forced to purchase capacity from the spot market, driving up the rates. 

TRI is suggesting that the spot rates in the northeast will soon show continued increases, as shippers scramble to secure incremental capacity.  

FreightWaves readers that study the TRI a leg up on the competition as we track over 150 technical indicators in the freight market, trying to undertand all of the things that impact the economics of the industry. 

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