Market InsightNews

The South heats up, but Atlanta is burning with freight

(Photo: Wikimedia Commons Kenneth Rogers New York Times Photo Archive Great Atlanta Fire 1917)

The Atlanta freight market is seeing its largest increase in load rejections of the year, according to the tender rejection index (TRI). The TRI measures the number of loads rejected by carriers as a percent of the total loads offered by shippers. Currently the 7-day moving average is showing carriers are rejecting approximately a quarter of the loads tendered in the Atlanta area. The southeastern parts of the country appear to be heated with markets like Nashville and Jacksonville showing late winter spikes in rejection volume.   

The 3 cities do not appear to be correlated, but experienced upticks in mid-March. These numbers show there is a potential shortage in truck availability at the appropriate rate. In other words, the carriers are demanding a higher rate to cover the existing freight available in the market. Higher turndowns could be due to the lack of equipment in proximity to the regions. This suggests the demand (freight) is exceeding supply (capacity).  

Nashville has a higher percentage of turndowns than either of the other two markets, but the actionable information is in the movement of the percentage. More rejections in short time frames equal more volatility. Looking at a graph in terms of turndowns as a percent of daily change illustrates this more clearly.

 Atlanta Outbound TRI Daily % Change
Atlanta Outbound TRI Daily % Change

The outbound Atlanta market had a rapid growth day in terms of number of turndowns. The chart illustrates rapid changes in the number of turndowns compared to prior day on March 21st. The spike is an example of high volatility. Highly volatile markets provide the most opportunities for monetary gains and losses. Just ask any hedge fund manager on Wall Street.

Who can benefit from this information? If you are a carrier you should be looking to increase rates in the Atlanta market or re-position trucks to take advantage of increasing market rates as shippers burn through carriers’ route guides with increasing speed. The rapid movement can lead to surges in spot rates.

The takeaway if you are a shipper is you should be aware of freight volumes coming out of your facilities. Sending out advanced requests and managing shipment volumes are two ways to mitigate some of these increases in cost. Note that the turndown numbers do not recede after they increase. A higher sustained turndown rate indicates the market may be attaining a new level of a truckload demand that is outpacing capacity.

Atlanta is no stranger to spikes in market pricing. Look no further than June of last year, when capacity dried up suddenly and drove the carriers to the spot market for prices well beyond what they had been experiencing. That was the first of two events in the last year where spot rates exceeded the contract market. We’ll take the Atlanta to Philadelphia dry van lane as an example. According to DAT, in June the average spot rate rose from $2.33 to $2.74, an 18% increase in freight cost month over month. Atlanta to Dallas rose from $1.68 to $1.88 in the same time frame.

Shippers and carriers who rely on purchased transportation to fill overflow were forced to pay 3 times what they had paid the previous month to provide service to their customers. Carriers with trucks in the area were able to capture large margins. That same scenario does not appear to be occurring…yet. But the market is worth watching: as the weather warms and freight volumes increase, keep looking to FreightWaves for more targeted market insights.

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Zach Strickland, FW Market Expert & Market Analyst

Zach Strickland, the “Sultan of SONAR,” curates the weekly market update. Zach is also a one of FreightWaves’ Market Experts. With a degree in Finance, Strickland spent the early part of his career in banking before transitioning to transportation in various roles and segments, such as truckload and LTL. He has over 13 years of transportation experience, specializing in data, pricing, and analytics.