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SONAR sightings for April 4: Chicago to LA, weekly port update, more

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: LA to Chicago

Overview: Carriers are now avoiding the overcorrected LA market.

Highlights:

  • Spot rates from Chicago to LA have risen gradually over the past two months in this lane, increasing from $1.87 per mile on Feb. 2 to $1.96 per mile currently. Rising fuel costs could be a factor in the increase of this backhaul lane.   
  • Rejection rates in this lane have fallen from 15% to 9.7% over the past month, averaging 5% lower than the broader Chicago market. 
  • LA rejection rates have fallen below 5%, making it one of the softest markets in the U.S. 

What does this mean for you?           

Brokers: Target rates around $1.95 per mile in this lane with an eye on the DOE fuel price that comes out this afternoon. Carriers can no longer afford to price this lane at a loss with the LA spot market easing rapidly. If fuel prices spike, rates could increase further on the spot market.  

Carriers: Make sure you have a solid preplan for reloading out of LA as the spot market will not provide many opportunities. Inbound rates are showing some small inflationary pressures that should help, but you can no longer expect to pay for any inbound loads’ losses. 

Shippers: Expect contract compliance to improve in this lane. If carriers come to you asking for increases into LA, there is an argument for decreases out of LA, taking your service expectations into account. 


Maritime port update

East Coast:

What started as perhaps a bad April Fool’s joke, dwell time at the Port of New York and New Jersey has begun to increase so far in these first few days of April. Still currently owning the majority of the port market share at 21.9%, dwell time was at 4.39 days as of Sunday. The outbound truckload volume for Elizabeth, New Jersey, experienced a steady, trickling decline through the entire month of March. Dropping more than 100 basis points (bps) in the last month, the area can continue to see that number decline as dwell time at its major port continues to increase.

After a quick spike at the end of March, dwell time at the Port of Savannah, Georgia, has begun to drop so far this month. Currently at 3.25 days, outbound truckload volume for the Savannah market was unaffected by the minor jump in dwell time at its port. Seeing a simultaneous steady climb in outbound volume in the final week of March, OTVI for Savannah has flatlined at or around 121 bps so far this month.

West Coast:

Meanwhile, dwell times at the Port of LA are dropping this month while they are rising for Long Beach. The LA port has settled down at 5.35 days, while Long Beach is currently at 5.97. With these two ports being so close in proximity to one another and sharing the same truckload market, the effect of this data countering the other is causing the truckload markets of LA and Ontario, California, to become stagnant, leaving LA to float around 355 bps and Ontario at roughly 505 bps. As a result of the flatline in volume, rejections have fallen below 5%,as stated above in the lane to watch.


Watch: Shipper update


Lane to watch: Atlanta to Lakeland, Florida

Overview: Spot rates remain stable but tender rejection and volume rates have fallen sharply. 

Highlights:

  • Outbound tender volume rates continue their decline that began in March, falling from around 640 basis points (bps) to 540 bps in the past 30 days. 
  • Due to declining volumes, outbound tender rejections from the Atlanta market declined from 16% to 10.15%.
  • The Atlanta to Lakeland lane experienced similar outbound tender rejection rate declines – from around 17% in early March to 12.09%, with a precipitous decline over the past two weeks.

What does this mean for you?

Brokers: Florida remains a major driver domicile state and should experience a slight softening of spot rates due to the recent decline of volumes and tender rejections over the past two weeks. Current data indicates that FreightWaves TRAC spot rates are between $3.84/mile and $4.29/mile, with a median rate of $4.01/mile. Due to that price difference, continue to push down rates as lower tender rejections mean carriers have fewer options to choose from on the spot market and will focus on contracted lanes. 

Carriers: Due to downward movements in tender rejection and volume rates, expect a slight softening of rates as we enter what has historically been a busy produce season. Declining tender rejection rates will put greater pressure on service levels with the risk that some shippers may attempt to tender lanes to lower-cost carriers or brokers if service levels are not up to par. 

Shippers: Lower tender rejection and volume rates mean capacity will drive down rates, as carriers undercut their bids in an attempt to book dwindling load volumes. While contracted volumes will see improved service, take this opportunity to develop a detailed routing guide of brokers and carriers to identify the lower spot rate options, as well as potentially tender loads to newer carriers seeking to undercut incumbents on rate.


Watch: Carrier update