The highlight reel from Wednesday’s SONAR reports. For more information on SONAR — the fastest freight-forecasting platform in the industry — or to request a demo, click here.
Lanes to watch
By Zach Strickland, director, Freight Market Intelligence
ATLANTA to JACKSONVILLE (Florida)
Overview: Brokers should lower bids to reflect increased carrier compliance.
- The tender rejection rate in the lane declined 205 basis points (bps) in the past week to 19.5%, the lowest level since February.
- While Jacksonville is not as desirable a destination for carriers as it had been this summer, the Jacksonville dry van outbound tender rejection rate is 28.9%, well above the national dry van tender rejection rate of 20.5%.
- The average tender lead times for outbound Atlanta loads and inbound Jacksonville loads are both 2.9 days, indicating that shippers are still concerned with securing capacity in the lane.
What does this mean for you?
Brokers: Lower your bids to reflect carriers’ increased compliance in the lane. The decline in the tender rejection rate in the past week appears driven by greater carrier availability in the Atlanta market; the Atlanta outbound tender rejection rate is 16.9% after being as high as the mid-20s in September.
Carriers: Jacksonville is a more desirable destination than many freight markets and is a more desirable destination than it usually is given its high outbound tender rejection rate of 28.9% and a Headhaul Index of 2, which indicates that outbound and inbound loads are roughly in balance.
Shippers: Because tender rejection rates in the lane have declined significantly in recent days (to below the national tender rejection rate), keep loads out of the spot market. Keep lead time extended to 3 days, just above the average for similar loads, to help secure capacity.
DALLAS to LOS ANGELES
Overview: Market conditions soften in Dallas, pushing carrier rates down on the DAL–LAX lane.
- Dry van rejection rates fall to 20.46% in the Dallas market, pushing the average carrier rate down to $1.26 all-in rpm.
- The Los Angeles dry van headhaul score has declined, but remains elevated at 199.28 as shippers struggle to secure capacity for their outbound loads.
- Dallas shippers decrease tender lead times to 2.96 days as market conditions soften.
What does this mean for you?
Brokers: Brokers need to accept their contracted freight on the DAL–LAX lane since carrier rates are trending downward. Margins on spot market freight will be squeezed as shippers push rates down for both carriers and brokers. Keep downward pressure on carrier rates when searching for capacity since LAX is one of the hottest destinations in the nation.
Carriers: Dry van carriers averaged $1.26 all-in rpm last week on the DAL–LAX lane, which is the lowest carrier rates have been on that lane in 2021. Carriers should accept any contracted freight they are offered, and search the spot market for additional loads that will move their truck out to Southern California. Spot rates are extremely elevated in the Los Angeles market, and will continue to rise as we approach the holiday shipping season.
Shippers: Dallas shippers need to continue to keep downward pressure on carrier rates as market conditions in Dallas soften. Search for on-demand capacity for any load that delivers into Southern California, and try to keep your all-in rpm rate below $1.26.
DALLAS to BIRMINGHAM (Alabama)
Overview: Dallas’ outbound rejection rates continue to fall.
- Dallas’ outbound rejection rate has fallen from 22.3% on October 10 to 19.5% on the 18th, nearly reverting back to its long-running trendline of decline that started in July with relatively consistent demand.
- Lane-specific rejection rates to the low volume Birmingham market continue to move above the market average but with a pattern that is similar to Dallas.
- Birmingham rejection rates have been extremely erratic, currently trending lower in the long run but still well above the national average.
What does this mean for you?
Brokers: Expect easing conditions in this lane for now, but still slightly above average difficulty to find capacity. Make it a higher priority load out of Dallas for certain, thanks to Birmingham’s relatively low demand.
Carriers: Look for spot loads out of Birmingham if you are heading into the market without a solid preplan. Rejection rates are well above the national average even though they have fallen significantly since August.
Shippers: Keep lead times elevated on loads moving in this lane. Dallas capacity is easing, but demand remains high and will keep pressure on low priority lanes like Birmingham.
On the spot
Executive Publisher Kevin Hill and Senior Retail Analyst Andrew Cox return for this week’s On the Spot, taking a look at the spot rate markets across the country.
Spotlight on … Chicago market
By Jim Knuerr, SONAR account executive
What a difference two years can make. Over the last two years, Chicago has seen the Volume Index increase 34% compared to the US as a whole to 58%. While the volume climb is something to take into account, understanding which markets are the most affected in terms of price will help carriers partners position equipment and shippers understand budgets.
Chicago to a few major markets rates are listed below. As you can see, Chicago to Los Angeles has increased by 20%, but all other markets outlined below have increased by at least 46%, topping off at a 75% increase on Chicago to Atlanta.
Shippers: Understand which markets have been the most affected in cost and focus sourcing efforts around those markets.
Carriers: Position equipment accordingly and pay cost attention to if these markets and rates shift.
Brokers: Know where your safe bets are and the lanes that will be more at risk.
Lead Economist Anthony Smith and Senior Retail Analyst Andrew Cox look at upstream spending in key sectors in the Shipper Update.
Inside the Weighted Rejection Index
By Zach Strickland
The Weighted Rejection Index combines outbound tender market share (OTMS) and the weekly change in tender rejection rates (OTRIW). Using WRI maps and watchlists helps users pinpoint the most significant changes in capacity each day. Larger markets with tightening capacity will be valued more than smaller markets, making it easier to identify where to focus attention each day.
In essence, the WRI allows you to view which markets’ capacity changes impact the largest amount of freight each day.
Carriers can use the WRI to quickly see which markets are having the most significant changes in capacity on a daily basis. Identifying capacity shifts allows carriers to adjust spot market pricing faster than before.
Brokers can utilize the WRI in a similar manner to carriers — identifying which markets have the most significant changes in spot market pricing potential but also to identify which markets need to be prioritized to find capacity on a daily basis.
In the map below, the Ontario (California), Houston and Memphis markets have WRI scores over 4.0, indicating that market conditions have tightened, applying upward pressure to spot rates for on-demand capacity. The Dallas market has a WRI score below -4.0, indicating a softening in market condition, allowing shippers to push carrier rates down in the market.
Zach Strickland, director of Freight Market Intelligence at FreightWaves, and Senior Retail Analyst Andrew Cox take a look at the latests freight market trends in the Carrier Update presented by PowerFleet.