The highlights from Monday’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: Atlanta to Laredo, Texas
Overview: Spot rates remain volatile as rates and outbound tender rejections rise slightly.
Highlights:
- Spot rates from Atlanta to Laredo rose over the past four days, from an average of $1.96 per mile to $2.06 per mile. Overall spot rates remain volatile with a high of $2.27 and a low of $1.88.
- Atlanta outbound tender rejection rates continued to decline, falling from 20% at the beginning of 2022 to 9.5% at the beginning of Q2 and settling at 7% as outbound tender volumes decline.
- The Atlanta to Laredo lane mirrors these overall Atlanta market tender rejection trends, falling to 7.64% as greater capacity pushes down rates relative to declining volumes.
What does this mean for you?
Brokers: The Atlanta to Laredo lane remains volatile, but you should focus on adding a margin buffer as the lane can be priced between $2.27 and $1.88 per mile. The outbound Laredo market continues to see falling spot rates and tender rejections stand at 4.03%, indicating that carriers may request a higher rate going inbound to Laredo to compensate for the lower outbound rates.
Carriers: The continued downward trend in outbound volumes and rejection rates from Atlanta indicates greater carrier competition for fewer available loads. Knowing the declining spot rates, focus on trying to increase tender volumes over committed levels if customers have extra freight at contracted prices before attempting to solicit on the spot market.
Shippers: The declines in volumes and rejection rates will create opportunities for greater service and transportation cost savings. Continue to focus on expanding a robust carrier base and routing guide to take advantage of these savings while carriers compete with themselves, thereby driving down prices.
Watch: Carrier update
Lane to watch: Atlanta to Chicago
Overview: All outbound Atlanta lanes are showing increasing rejection rates.
Highlights:
- Atlanta’s outbound rejection rates have jumped from 6% on May 6 to 7.6% this past weekend, making it the most significant movement of the week.
- Spot rates in the high-volume Atlanta to Chicago lane are up about 2% over last week, reversing a six-week trend.
- FreightWaves’ National Trucking Index Daily (NTID) value hit its highest point in a month.
What does this mean for you?
Brokers: Prioritize loads out of Atlanta as it has had the most significant increase in tender rejection rates among all the markets. Even high-volume lanes like Chicago are seeing increases on the spot market. Most markets have at least stabilized, so do not expect much downward pressure on rates leading into the Memorial Day holiday.
Carriers: Find additional loads into the Atlanta market while capacity is tightening. All outbound Atlanta lanes are seeing rejection rate increases, which should lead to more spot market activity as well as contract volume.
Shippers: Increase lead times out of Atlanta, but also double-check with your carriers on all loads scheduled to move over the next two weeks to make sure they are on schedule.
Fuel prices continue to have a notable impact on smaller trucking carrier operations, with the diesel truck stop actual price per gallon reaching a new high of $5.60 over the weekend. Additionally, spot market rates continue to decline in spite of projected seasonal trends. May and June are traditionally busy times of the year for truckload volumes and can rival the holiday retail season peak rates. For smaller carriers, these declines in spot market rates and rising fuel costs will continue to put downward pressure on their operating margins. For larger enterprise-level carriers, they have been mostly insulated from spot market volatility, with many keeping a target contract business mix around 85% to 90%. This insulation from spot market rates extends their rate runway until shippers gain confidence that the spread between contract rates and spot rates warrants a rate renegotiation. This process is already underway for some customers, but expect to see some rate renegotiation and downward movement on contract rates in the coming months barring any mass freight volume injection event, such as the potential for ports in China to immediately reopen to full capacity and flood U.S. port facilities on the West Coast. Continue to monitor spot rates and tender volumes to see if a spring surge materializes, as continued downward movement can paint ominous signs to large carriers’ contracted lane rates.
Lane to watch: Denver to Dallas
Overview: As the Headhaul Index surges over 18% w/w, it is likely that capacity will tighten.
Highlights:
- Denver outbound tender volumes are up 16% w/w, signaling that demand for capacity is increasing and likely putting upward pressure on spot rates.
- The Headhaul Index in Denver is up 18% w/w, signaling that capacity is likely to tighten as Denver becomes increasingly imbalanced between outbound and inbound volumes.
- Denver outbound tender rejections are relatively flat w/w, signaling that capacity has likely not started tightening quite yet.
What does this mean for you?
Brokers: Outbound tender rejections in Denver are relatively flat w/w, but are likely to rise as outbound volumes rise 16% w/w alongside an 18% increase in the Headhaul Index. With a growing imbalance between inbound and outbound volumes, expect capacity to get tighter and put greater upward pressure on spot rates.
Carriers: The pricing power is very likely to shift further in your favor on outbound Denver lanes. With the Headhaul Index in Denver surging over 18% w/w alongside a 16% increase w/w in outbound volumes, Denver market conditions are signaling that there will likely be significant upward pressure on spot rates in the coming days.
Shippers: Your shipper cohorts in Denver have tender lead times at 3.5 days, so it would appear that they have already been experiencing tightening conditions. While these lead times may be above the national average, historically shippers have pushed lead times closer to four days whenever market conditions are deteriorating. It would be wise to go ahead and get them into that range to help offset tightening conditions.
