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SONAR sightings for March 17: Denver to Salt Lake City, shipper update, more

The highlights from Thursday’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: Denver to Salt Lake City

Overview: Spot rates have stabilized after a brief early January surge, while tender rejection rates have risen.

Highlights:

  • Spot rates stabilized to $2.40 to $2.45 per mile for the past two months following a January surge to about $3 per mile. 
  • Denver outbound tender rejections remained volatile at around 17% to 20% during that same period, with the early January spot rate surge corresponding to a 32% tender rejection level on Jan. 5. 
  • The Denver to Salt Lake City outbound tender rejections have largely mirrored overall Denver outbound tender movement, but remain elevated at 21.85% compared to the overall market rejection rate of 19.89%.

What does this mean for you?           

Brokers: The Denver to Salt Lake City lane continues to experience higher outbound tender rejection levels relative to the overall Denver outbound market. While spot rates have leveled off at $2.41/mile, the Salt Lake City destination market is experiencing tender rejection declines greater than Denver, currently settling at 14.9%. This indicates spot rates may rise slightly as capacity increases relative to volume, forcing carriers to increase prices to cover the lower outbound rates from Utah. 

Carriers: The spring weather should provide some relief to poor road conditions in parts of Utah and Colorado, but expect continued snow in Colorado until April, when the low temperature averages finally rise above freezing. Colorado snow chain laws are in force from Sept. 1 through May 31, so this may prevent owner-operators and other capacity from entering the Denver-Utah corridor until early April. If so, that can potentially put downward pressure on rates as greater capacity relative to volume will decrease spot rates. 

Shippers: Falling tender rejection levels are a welcome sign, as are the stabilizing spot rates, allowing greater ability to predict potential transportation spend. Continue to focus on tender compliance. Outbound tender lead times remain elevated at 3.346 days, as both markets suffer from lower capacity levels compared to major metro areas. If outbound tender volumes and tender lead times fall we may see the potential for lower rates, as lower volumes relative to capacity can provide some transportation savings.


Watch: Shipper Update


Lane to watch: Dallas to Lakeland, Florida

Overview: Rejections fall to an annual low out of Dallas.

Highlights:

  • The Dallas outbound rejection rate hit a new low for 2022, falling from 15% to 12.6% over the past week. 
  • Rejection rates to Lakeland have also fallen, but at a much slower rate (still lower than the national average). Spot rates have trended lower since the start of the month, falling 3 cents to $2.97 per mile. 
  • Lakeland’s rejection rate has increased four percentage points to 12.37% to start the month, driven by both van and reefer capacity tightening.

What does this mean for you?

Brokers: Target spot rates below $3 per mile in this lane, which should still remain one of the highest priorities for finding coverage out of the Dallas market. 

Carriers: Expect improving conditions out of Lakeland this week with rejection rates continuing to climb. This could be an issue of contract rates being too low, but carriers should see increasing optionality compared with February. Do not get greedy with rates out of Dallas because it is easing rapidly. 

Shippers: Expect slightly better compliance in this lane this week, but make sure it is one of the first lanes you book on outbound Dallas loads.


Watch: Carrier Update


Lane to watch: Toledo, Ohio, to Charlotte

Overview: Rejections are on the rise as the Headhaul Index increases over 6% w/w.

Highlights:

  • Toledo outbound tender volumes are up 8% w/w, signaling that demand for capacity is increasing.
  • The Headhaul Index in Toledo is up 6% w/w, signaling that capacity is likely to tighten.
  • Toledo outbound tender rejections are up 264 bps w/w, signaling that capacity is likely already tightening.

What does this mean for you?

Brokers: Outbound tender rejections in Toledo have increased 264 bps w/w. This increase in rejections is a signal that capacity is tightening significantly. For that reason, you will likely find it more difficult to source capacity for outbound freight headed to Charlotte. If the Headhaul Index continues to rise, it will put even more pressure on capacity and spot rates. Let your team know that they will need to prioritize the Toledo market for coverage while ensuring they are accurately pricing any loads looking to ship out of Toledo for the next few weeks. 

Carriers: Rejections are up 264 bps in the Toledo market, which has likely started putting significant upward pressure on rates. If outbound volumes continue to increase relative to inbound volumes, stay firm on your rates in the coming days to ensure your rates reflect the tightening of capacity that is likely to continue as demand increases. 

Shippers: Your shipper cohorts in Toledo currently have tender lead times at 2.8 days, but with the 264 bps increase in Toledo tender rejections w/w, it would be wise to get a jump on your competition for truckload capacity by pushing your tender lead times closer to four days. This will help ensure you maintain adequate capacity if/when the market tightens again.