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 LA
Overview: Shippers without strict time constraints should utilize a portion of the roughly 50 empty domestic intermodal containers per day being repositioned in the lane.
- In the past week, an average of 869 loaded domestic intermodal containers per day moved in the lane, the highest level since late February. Meanwhile, an average of 53 empty domestic intermodal containers per day moved in the lane, which is also above the recent average.
- The intermodal spot rate to move 53-foot containers door to door in the lane is $1.13 a mile, including fuel. That rate is down from its recent high of $1.48 a mile but up 13% year-over-year.
- Dry van truckload carriers are currently rejecting 6.3% of tenders in the lane, a slight increase from the recent low of 5%.
What does this mean for you?
Brokers: While the LA Van Headhaul Index has fallen from 150 to 125, it still makes sense to sell capacity providers on the favorable reload data in LA. When bidding for capacity, brokers can use the Market Dashboard average dry van spot rate of $1.79 a mile but should keep in mind that spot rate data is thin in that lane, which may make estimated spot rates less accurate.
Carriers: Highway carriers that are tendered loads in this lane should recognize that the loads are likely to be time-sensitive and price accordingly. So far this year, many carriers have priced themselves into the LA market, which has created plentiful capacity in LA and resulted in the relatively low LA dry van outbound tender rejection rate of 3.1% (compared to the nationwide 8.9% dry van tender rejection rate).
Shippers: Shippers moving non-time-sensitive loads can take advantage of the currently low intermodal spot rates as carriers reposition containers to the West Coast. However, industry data shows that intermodal service is still not optimal, and for more time-sensitive loads, shippers should extend lead times past the 2.7- and 2.4-day average for outbound LA long-haul loads and Chicago inbound long-haul loads, respectively. In this case, it may make sense to extend lead times for pickup after Memorial Day.
Watch: Carrier update
Lane to watch: Houston to Chicago
Overview: Spot rates are likely to rise ahead of the holiday weekend as the Headhaul Index increases 9% w/w.
- Outbound tender volumes are up 2% w/w, indicating that demand for outbound capacity is increasing, but at a slightly slower pace.
- The Headhaul Index in Houston is up 9% w/w, signaling that there is a growing imbalance between inbound and outbound capacity.
- Outbound tender rejections are already up 192 basis points (bps) but are likely to increase further as the demand for outbound capacity increases as well.
What does this mean for you?
Brokers: The Houston truckload market is likely to tighten in the days ahead from a 2% increase w/w in outbound tender volumes and a 9% increase in the Headhaul Index w/w. Outbound rejections are also up 192 bps w/w, so be sure to prioritize this lane and let your team know that there is upward pressure on spot rates before the weekend.
Carriers: Stay firm on your rates; you are likely to see pricing power shift further in your favor in the days ahead. Spot rates are down about 30 cents a mile from their six-month highs, but with the growing imbalance in volumes and increasing tender rejections, Houston’s market conditions are very favorable for carriers.
Shippers: Your shipper cohorts currently have tender lead times at 3.2 days, but that is not likely to be sufficient for the increase in demand ahead of the holiday weekend. Historically, in the tightest markets, shippers in Houston have increased lead times closer to four days to help offset tightening conditions in the outbound truckload market.
Trucking capacity continues to be more available as the market continues to correct. Spot rates fell ever so slightly for dry van and reefer shipments last week, with flatbed remaining fairly consistent. As we head into major storm season in the Midwest, flatbed rates could rebound faster than other modes as a result of FEMA shipments. Shippers that are not involved in flatbed shipping should be seeing volumes slightly increase and rates similar to those of a few months ago. Tender volumes for contracted loads did increase quite a bit last week, indicating some shippers may be resuming activity as capacity becomes more reliable with rejection rates falling below 9%. Shippers should continue to push freight at this point since there will be little resistance and lower costs. Despite rising fuel costs, carriers are looking for consistent contractual freight, so if you have freight available, ship it out.