The highlights from Friday’s SONAR reports are below. For more information on SONAR — the fastest freight-forecasting platform in the industry — or to request a demo, click here. Also, be sure to check out the latest SONAR update, TRAC — the freshest spot rate data in the industry.
Lane to watch: Chicago to Elizabeth, New Jersey
Overview: Elizabeth becomes a less desirable destination for carriers as dropping outbound demand makes the market more balanced.
- The domestic intermodal spot rate declined 11% in the past two weeks to $3.49/mile, including fuel, the steepest decline of the major intermodal lanes.
- The average dry van spot rate in the lane is $3.56/mile, inclusive of fuel. That average rate has fallen 14% in the past month.
- Dry van carriers are rejecting 8.6% of tenders in the lane, 50 basis points (bps) below the national dry van tender rejection rate.
What does this mean for you?
Brokers: Brokers should lower bids in order to preserve margins. The narrow spread between intermodal spot rates and dry van spot rates provides little incentive to broker intermodal loads.
Carriers: Elizabeth is not as attractive a destination for carriers as it typically is. Outbound tender volume has dropped, and while outbound volume still exceeds inbound tender volume, a Van Headhaul Index of 11 is one of the lowest readings in the past year.
Shippers: Shippers moving loads under intermodal contracts should interpret the recent decline in intermodal spot rates to mean that the Class I railroads are less concerned with securing capacity for contracted shippers. Spot shippers should utilize highway carriers with highway rates and domestic intermodal rates nearly at parity.
Watch: Shipper update
Lane to watch: Detroit to Allentown, Pennsylvania
Overview: In spite of rising volumes, outbound tender rejection levels continue to decline.
- Spot rates have continued to decline in the past 30 days, falling from an average of $4.44 per mile down to $3.92 per mile.
- Outbound tender volumes remain volatile, from 175 bps to below 120 bps on April 20, then rising back to 222.03 bps as of April 28.
- Outbound tender rejection levels continue to decline from the Detroit outbound market, falling from 17.5% March 28 to 7.33% in the past month. The Detroit to Allentown lane continues to perform better than the overall market, falling from 15% to 7.97% in the past 30 days as well.
What does this mean for you?
Brokers: Recent declines in outbound tender rejection levels relative to a rise in outbound tender volumes indicate that additional trucking capacity appears to have entered the market. This is reflected in the declining spot rates, which will open up opportunities to push down rates now that there is greater carrier competition and lead to greater margins. Additionally, now that prices are declining there is an opportunity to grow business for those brokers that have an extensive internal carrier routing guide, as customers seek greater savings.
Carriers: Declining spot rates going into the Northeast mean that there is a larger supply of truckload capacity relative to demand. Knowing this, focus on tender compliance and if spot quotes become available there are still localized opportunities for greater revenue relative to contracted lanes depending on the location and customer.
Shippers: More trucking capacity and lower spot rates should provide some transportation cost savings. The rise in volumes relative to the decline in outbound tender rejections means that there are increased opportunities to not only push down rates but to also focus on service levels.