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SONAR sightings for April 1: LA to Dallas, shipper update, more

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: LA to Dallas

Overview: Capacity is loosening for both dry van and domestic rail intermodal.

Highlights:

  • The door-to-door intermodal spot rate declined 18% in the past week from $3.58/mile to $2.94/mile, which is the lowest rate in nearly one year. 
  • The average dry van spot rate that brokers are paying in the lane is $2.84/mile, including fuel surcharges, 10% below the rate from one month ago. 
  • The van tender rejection rate in the lane is 8.2% while the tender rejection rate for all outbound LA van loads is 4.7%. Those rates are the lowest since May 2020. 

What does this mean for you?           

Brokers: Lower your bids in the lane to reflect data that shows carriers are willing to accept lower rates in the lane than they had been in recent weeks. It’s still not worthwhile to attempt to broker intermodal loads in the lane in most cases, but if rates continue to fall, that may change. 

Carriers: As the LA freight market continues to weaken, accepting tenders for the three-day trip to Dallas is looking increasingly compelling. Dallas has a van outbound tender rejection rate of 10.7%, which is 270 basis points (bps) below the national rate, but has an attractive Van Headhaul Index of 80, which indicates that Dallas has more outbound demand than inbound demand. 

Shippers: While the intermodal spot rate decline is unlikely to persuade many spot shippers to use intermodal rather than truckload, it is an indicator that the Class I railroads are less concerned with protecting intermodal capacity for their contracted customers. Therefore, intermodal shippers with contracts in place are likely to see improved service in the lane.


Watch: Shipper update


A look at Atlanta’s outbound market

Overview: Atlanta continues to see falling outbound tender rejections relative to declining volume levels.

Highlights:

  • Outbound tender rejections in the Atlanta market have continued to decline over the past three months, falling from 19.25% at the beginning of January down to 11.04%.
  • Outbound tender volumes continued to experience volatility during that same three- month period but declined from an early March high of 650 bps to 541.81 bps.
  • The lower volumes and rejections appear to be impacting all Atlanta outbound lanes with mean weekly outbound tender rejections decreasing between 14% to 21%.

What does this mean for you?

Brokers: Focus on increasing margin as tender volume decreases continue to put negative pressure on spot rates and outbound tender rejection levels. The market remains tight for capacity, with the four-week capacity trends score for van around 86 (with 100 being the tightest market conditions and 1 being the loosest). Knowing internal carrier costs can help strategically take this extra margin when possible. 

Carriers: The market remains tight for capacity but declining tender volume levels and rejection levels for all lanes out of Atlanta will place greater pressure on customer load tender compliance. Continue to focus on service levels and if there is heavy lane density out of Atlanta, focus on ensuring all inbound loads to this area are covered if the market mix favors contracted loads. For spot rate-exposed carriers, adjust rates inbound into Atlanta to cover for the declining spot market conditions. 

Shippers: Macro economic trends and inflation continue to have an impact on consumer buying decisions, as evidenced by lower outbound tender volumes over the past three months. Focus on ensuring carriers and brokers are adhering to their weekly load volume agreements, as the 11% outbound tender rejection rate is at its lowest level since early Q2 2020.


Watch: Carrier update


Lane to watch: Baltimore to Chicago

Overview: Spot rates are likely to increase slightly in the coming days because the Headhaul Index increased 12% w/w. 

Highlights:

  • Baltimore outbound tender volumes are up 7% w/w, signaling that demand for outbound capacity has increased since last week, but remains on a downward trend.
  • The Baltimore Headhaul Index is up 12% w/w, signaling that there is a growing imbalance between inbound and outbound volumes. 
  • Baltimore outbound tender rejections are up 15 bps w/w, signaling that capacity is likely tightening (slightly) w/w.   

What does this mean for you?

Brokers: The 12% increase w/w in the Headhaul Index signals that capacity is likely to get even tighter in the days ahead. With rejections already up 15 bps w/w, it is reasonable to expect that the Baltimore market will tighten slightly. 

Carriers: Stay firm on your rates coming out of Baltimore. With a 12% w/w increase in the Headhaul Index, and rejections already trending upward (15 bps w/w), pricing power is likely to shift even further into your favor.

Shippers: Your shipper cohorts in the Baltimore market have outbound tender lead times averaging 2.6 days, but with outbound volumes on the rise, shippers will need to get these lead times closer to three to 3.5 days if possible. This will help ensure your carriers/brokers have adequate lead time to secure capacity while conditions continue to tighten in the days ahead.