In late March, our markets analyst Zach Strickland wrote an article called “The South heats up, but Atlanta is burning with freight,” citing a sudden spike in the rate of rejected loads outbound from Atlanta (SONAR code: otri.atl) to about 25%. The month of May saw an incredible explosion in rejected loads, the volatility cooled off in the first week of June, but now the market is starting to accelerate once again. Turndowns have moved up from 24% of all tendered outbound loads to 28.68% in the past ten days.
The chart below displays the outbound tender rejection index for Atlanta:
Last week in our story “The Dallas freight market is leading the country” we wrote that Chinese freight inbound to the West Coast had reawakened Los Angeles and now the capacity was moving through the national network, hitting Dallas first. We predicted that the nation’s other logistics hubs, including Chicago, Philadelphia, and Atlanta, would heat up next, and now we’re definitely seeing upward volatility in Atlanta, with the turndown rate dramatically leading its 14 day average, even with 103% of its average trucks in market (SONAR code: truk.atl).
The rate of turndowns is linked to the number of trucks in a given market for obvious reasons—an excess of trucks puts pricing power in the hands of the shippers, and should make turndowns fall, while a truck deficit means that carriers will be able to reject loads and play in the spot market—and we actually saw Atlanta’s trucks in market temporarily fill to 124% of its average capacity on June 10, which coincided with a brief lull in turndowns.
That moment of extreme overcapacity has ended, though, and strong demand is keeping the market running tight, even with 103% capacity remaining in Atlanta. The high volume Atlanta to Chicago lane for dry vans has seen significant price inflation in the past few weeks, according to DAT’s RateView tool. The month of May averaged $1.81 per mile for a dry van, excluding fuel surcharges, but in the past seven days that lane is averaging $2.15 per mile, an increase of 18.7%. Atlanta to Philadelphia is also running hot: while that lane averaged $2.83 per mile excluding fuel surcharges in May, over the past seven days dry vans are bringing in $3.28 per mile (net fuel), an increase of 15.9%.
There doesn’t seem to be a single cause for the surging turndowns and spot rates out of Atlanta. Rather, we think that because trucking capacity is extremely tight on an industry-wide scale, small movements in demand create outsized reactions in turndowns and and the spot market. There is not very much slack in the system, so it’s especially sensitive to disruptions.
That being said, the southeast region manager for a nation-wide freight brokerage told FreightWaves this morning that he’s seeing a glut of onions coming out of Georgia. Last Thursday, the Georgia Ports Authority reported that last month was a record May for container volumes coming into Savannah and the second busiest month ever at that port, the second-largest on the east coast.
“The Georgia Ports Authority is on track to have the most successful year in its history, on a number of fronts,” said GPA Board Chairman Jimmy Allgood in a press release about the May numbers. “Record growth in trade, teamwork and a strong relationship with our local communities and elected officials have helped to put our ports over the top,” said Allgood.
Atlanta isn't alone, of course: we're also seeing high turndowns in and out of Chicago, and signs of spot rate volatility in that market. FreightWaves' data scientists and market analysts anticipate a very strong next few weeks for spot freight in the United States, but correctly positioning your fleet to take full advantage will be critical.
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