SONAR sightings for April 14: Nashville to New Jersey, shipper update, more

Brokers: Nashville tender rejections are already up 350 bps w/w, but with outbound volumes increasing 12% w/w and the Headhaul Index up 21% w/w, capacity could tighten in the days ahead. Be sure to account for the upward pressure on spot rates when pricing new opportunities and prioritizing coverage on your existing loads.

Carriers: Stay firm on your rates because there is significant upward pressure coming from both a decrease in supply of available trucks and an increase in demand w/w. Outbound tender rejections have already increased over 350 bps w/w, and with the Headhaul Index increasing 21% w/w, pricing power is likely to shift back in your favor for outbound Nashville lanes.  

Shippers: Your shipper cohorts have increased lead times significantly w/w and are currently averaging 2.4 days. With outbound tender rejections on the rise alongside both outbound volumes and the Headhaul Index, you will likely need to push tender lead times to between three and four days to protect your company from at least some of the upward pressure being put on rates and tightening capacity. 

Watch: Shipper update

Lane to watch: Green Bay, Wisconsin, to Atlanta

Overview: Spot rates continue to fall as declining outbound tender volumes and rejection rates plummet.

Highlights:

• Spot rates continue to plummet, falling from a high of $4.51 per mile at the end of January to $3.45.
• Outbound tender rejection rates followed this decline, falling from between 27.5% and 30% during Q1 2022 down to 16.25% as Q2 began. 
• Outbound tender volume levels steadily declined from between 110 and 120 bps down to 86.43 bps. 

What does this mean for you?

Brokers: The declining volumes nationwide are having an impact on lanes that experienced high tender rejection rates. Focus on pushing down rates, because many carriers will have to adjust their rates inbound to Wisconsin to cover the declining costs and volumes moving outbound. This adjustment can increase broker margins depending on customer characteristics. There is a risk to margins if your customer mix is focused on lowering costs at the expense of service. 

Carriers: The shift in outbound tender volumes and their recent declines will put greater pressure on carriers entering the market, as fewer backhaul options will force more to take reduced revenue to book their trucks out or attempt to deadhead to a more favorable location. With outbound tender rejection levels at 16.25%, there is some opportunity for small wins on rates, but the trend indicates that carriers are rapidly losing pricing power in the market. 

Shippers: Warmer weather and better conditions will cause additional capacity to enter the market, pushing down spot rates and reducing transportation costs. Focus on developing and improving your internal routing guides as more carriers compete for fewer outbound load opportunities. The elevated outbound tender rejection rates show improvement, but don’t expect much leverage on pushing down contracted rates unless the outbound tender rejection rate falls below 5%. 

Watch: Carrier update