• ITVI.USA
    15,097.280
    -2.920
    0%
  • OTLT.USA
    2.895
    0.003
    0.1%
  • OTRI.USA
    19.150
    0.030
    0.2%
  • OTVI.USA
    15,068.770
    -2.780
    0%
  • TSTOPVRPM.ATLPHL
    2.960
    0.380
    14.7%
  • TSTOPVRPM.CHIATL
    3.710
    0.160
    4.5%
  • TSTOPVRPM.DALLAX
    1.290
    -0.010
    -0.8%
  • TSTOPVRPM.LAXDAL
    3.720
    0.010
    0.3%
  • TSTOPVRPM.PHLCHI
    2.240
    0.100
    4.7%
  • TSTOPVRPM.LAXSEA
    4.160
    0.060
    1.5%
  • WAIT.USA
    132.000
    -5.000
    -3.6%
  • ITVI.USA
    15,097.280
    -2.920
    0%
  • OTLT.USA
    2.895
    0.003
    0.1%
  • OTRI.USA
    19.150
    0.030
    0.2%
  • OTVI.USA
    15,068.770
    -2.780
    0%
  • TSTOPVRPM.ATLPHL
    2.960
    0.380
    14.7%
  • TSTOPVRPM.CHIATL
    3.710
    0.160
    4.5%
  • TSTOPVRPM.DALLAX
    1.290
    -0.010
    -0.8%
  • TSTOPVRPM.LAXDAL
    3.720
    0.010
    0.3%
  • TSTOPVRPM.PHLCHI
    2.240
    0.100
    4.7%
  • TSTOPVRPM.LAXSEA
    4.160
    0.060
    1.5%
  • WAIT.USA
    132.000
    -5.000
    -3.6%
Chart of the WeekTruckload Indexes

Freight flow imbalance is the real capacity issue

Spot rates moving into Los Angeles have declined over the past year while outbound lanes increase over 20%

Chart of the Week: Truckstop.com 7 Day Van Rate Per Mile Los Angeles to Dallas and Dallas to Los Angeles  SONAR: TSTOPVRPM.LAXDAL, TSTOPVRPM.DALLAX

The biggest reason for the current truckload capacity shortage is the exacerbation of the majority of goods moving from west to east. This relationship is reflected in the spot rate for freight moving from Los Angeles to Dallas and the return trip. Rates are currently almost three times as expensive moving east than west for the exact same mileage.   

One of the biggest questions being asked right now is why haven’t dramatic contract rate increases and more fluid pricing models had more impact on carrier compliance. The simplest answer is the fact that trucks are consistently out of position for picking up the freight. 

In a chart of the week a few weeks ago, we looked at tender rejection rates for loads moving more than 800 miles into specific regions of the U.S. The West Coast region’s inbound rejection rate was by far the lowest, but still above 10%. Over the past few weeks, that direction has shifted and inbound rejection rates have increased into the region, a sign that carriers are having increasing trouble covering desirable lanes. 

The elevated spot rates out of Southern California illustrate exactly why carriers so desperately want to get back to Los Angeles at this point. Outbound demand is outpacing inbound by 43% in the Los Angeles and Ontario markets. Magnify this over the course of a year and there simply is too much freight exiting Southern California and too little coming into the area.  

With an average length of haul over 800 miles out of the two markets, pricing round trips is extremely costly. The only solution is for the imbalance to lessen either by reduction of outbound demand or increasing inbound freight flows in relation to one another. 

Even if demand eases out of the West, there is a strong likelihood that it will also slow simultaneously from the East. This imbalance is driven by the disproportionate amount of goods being imported from Asian countries as industrial manufacturing has been pushed overseas where labor is relatively cheap. 

Even with all the talk of near- or reshoring production, there appears to be little to no change as the economics have become worse in the U.S. as wage growth accelerated and blue-collar labor has become more scarce after a large portion of the workforce experienced furloughs or temporary layoffs during the pandemic and went on to find other careers. 

Railroad bottlenecks due to limited drayage capacity have also exaggerated the problems as Union Pacific shut down service from Los Angeles to Chicago earlier in the year. Rail ramps and yards have been clogged and shipping companies need to keep containers as close as possible to the ports for return trips. 

Demand easing would help, but the imbalances are not new and the rise of e-commerce may help keep these large gaps in freight balance in place well beyond the upcoming holiday season.  

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

The FreightWaves data science and product teams are releasing new data sets each week and enhancing the client experience.

To request a SONAR demo, click here.

Zach Strickland, FW Market Expert & Market Analyst

Zach Strickland, the “Sultan of SONAR,” curates the weekly market update. Zach is also one of FreightWaves’ Market Experts. With a degree in Finance, Strickland spent the early part of his career in banking before transitioning to transportation in various roles and segments, such as truckload and LTL. He has over 13 years of transportation experience, specializing in data, pricing, and analytics.

2 Comments

  1. here we go again, using that Tender rejection BS, Ca running of trucks , simple, they caused it, They have always been draconian , no parking around LA area, fuel is high, and the brokers take 50% so go figure………….

  2. I’m a owner operator and it’s true…to a point. We’re at a bad area in the East because frieght pays better coming out of California especially Los Angeles we also eat that profit to go to a shipper needing to go back west for pennies per mile if not a dollar A mile…..the person in the middle I say is the problem or the company….but if it would pay better or the same going back to Los Angeles or some where close to a port in the west coast we truck drivers would love to stay out here to put food n clothes on shelves.longer then we stay. Gas,maintance,and also support our own Families at home …..TAKES MONEY. WE DONT GET RICH OUT HERE. BUT WE SEE THE STRUGGLE BEFORE IT HITS THE HOME.
    THANKS, ESTEBAN MARTINEZ.

Leave a Reply

Your email address will not be published. Required fields are marked *

We are glad you’re enjoying the content

Sign up for a free FreightWaves account today for unlimited access to all of our latest content

By signing in for the first time, I give consent for FreightWaves to send me event updates and news. I can unsubscribe from these emails at any time. For more information please see our Privacy Policy.