The highlights from Thursday’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.
Truckload sector highlights:
- Markets on the West Coast have increased their market share over the past month except Los Angeles, where market share fell to 2.56% of total outbound volume from 2.734% in May.
- At the same time, Atlanta has grown its market share from surrounding markets, increasing to 4.071% of total outbound volume from 3.931% in May, further solidifying itself as the largest market in the country.
- For those markets to increase market share others had to lose it. Harrisburg, Pennsylvania, is one of those markets; its market share percentage fell by 336 basis points (bps) month-over-month (m/m) to 2.655%.
Lane of the day: Atlanta to Lakeland, Florida
Overview: Rejection rates continue to climb out of Atlanta.
- Spot rates are up 6% over the past three weeks in this lane, with a relatively wide range of rate submissions.
- Atlanta’s outbound rejection rate has increased to its highest point since Memorial Day with a value of 8.8%.
- Lakeland’s rejection rate is surprisingly in line with Atlanta’s currently, even though it remains a well-supplied market in terms of freight flow.
What does this mean for you?
Brokers: Keep padding margins out of Atlanta, especially in headhaul lanes like this one. Target rates right around $1,800 including fuel on the buy side and put this lane near the top of your list of coverage priority.
Carriers: Keep funneling trucks into the Atlanta market while capacity is showing tightening signals and do not drop your spot rates. Do not expect Lakeland to have much spot market activity, but some secondary tenders are increasingly possible.
Shippers: Keep an active watch on your Atlanta outbound loads by communicating with your carriers and make sure your lead times are above three days in this lane.
The ISM Manufacturing Index remained in expansion territory in May, at 56.1 percentage points, a slight bump up for the month. This coincides with the expectation that there will be slower but steady growth for manufacturing in the coming months. This was a big week for employment updates. Job openings dipped to a still impressive 11.4 million in April. There was a substantial upward revision in March to 11.9 million openings and overall quit rates remained elevated at 4.4%. The unemployment rate remained at 3.6%, while there was an increase in participation. A strong labor market makes for an active consumer, which leads to more freight demand (barring consumers switching preferences to services from goods).
Consumer credit will be updated in the coming week along with the Consumer Price Index. Consumers have passed pre-pandemic levels of revolving credit utilization and are still being impacted by inflationary pressures. This is one of the reasons why the jobs market is so critical to any economic growth in the U.S. If there are significant layoffs and consumers find themselves overextended with debt, they will be in a tough position going into the final months of the year. Shippers need to be mindful of inventory levels and have the correct inventory on hand in the coming months.
Lane to watch: Allentown, Pennsylvania, to Chicago
Overview: Capacity is likely to tighten as outbound volumes rise 18% w/w.
- Allentown outbound tender volumes are up 18% w/w, signaling that demand for outbound capacity has increased slightly w/w.
- The Headhaul Index in Allentown is up 45% w/w, signaling that capacity is likely to tighten due to a growing imbalance between inbound and outbound volumes.
- Allentown outbound tender rejections are relatively flat w/w, but due to the growing imbalance in volumes, rejections are expected to rise in the days ahead.
What does this mean for you?
Brokers: Allentown outbound capacity has considerable room to tighten further, and we are likely to see rejections increase in the days ahead. Be sure to keep an eye on outbound tender rejections because that will be one of the best proxies for a significant tightening in the market. Rejections are relatively flat w/w, but be sure to take note of the growing imbalance in volumes and its potential impact on capacity via the Headhaul Index, which is already up 45% w/w.
Carriers: Allentown pricing power is shifting even further in your favor as the large surge of over 45% w/w in the Headhaul Index is likely to cause a significant tightening of capacity in the days ahead. With spot rates already about to breach their highest point in a month, we are likely to see spot rates hit a new monthly high in the coming days.
Shippers: Your shipper cohorts in Allentown are averaging three days in tender lead times, but it is highly recommended to push those out closer to four days if possible to prepare for tightening conditions. With spot rates expected to move higher in the coming days, pushing your lead times further out will help alleviate some of the upward pressure being put on these spot rates in the days ahead.