The highlights from Tuesday’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: Harrisburg, Pennsylvania, to Indianapolis.
Overview: Harrisburg’s outbound rejection rates bounce and flatten above 20%.
- Harrisburg’s outbound rejection rate has bounced back, after falling below 20% last week. Though the overall downward trend remains in place, the Northeastern hub is one of the slowest markets to loosen in the U.S.
- Rejection rates to Indianapolis also bounced after falling below 22%. Spot rates had been falling in this lane but are showing early signs of stalling after hitting $3.25 per mile late last week.
- Indianapolis’ outbound rejection rate has stalled just above 21% after falling rapidly from 26% in early February.
What does this mean for you?
Brokers: Expect spot rates to be flat to slightly higher this week in this lane. Harrisburg is one of the few places in the country showing week-over-week (w/w) tightening. Make sure this area is a high priority for coverage.
Carriers: Keep an eye on the Northeast for continued capacity disruptions. Rates moving into the Midwest are not the lowest in the U.S. among similar mileage bands and therefore can be very profitable if you time your inbound appropriately. With most of the country loosening, now may be the time to rethink moving into the Northeast and building your network.
Shippers: Do not take capacity for granted in this lane. Keep lead times elevated and make sure your contract rates are not too far out of line from the spot market as that will lead to lower compliance.
Watch: Carrier update
The latest Logistics Managers’ Index showed record growth in inventory levels in February, which may mean that many shippers are struggling to find places to put the surge of goods. The sudden influx of inventory may be contributing to the declining truckload demand, which has been evident in the OTVI this month. The index has dropped over 7% since March 3; rejection rates have fallen from 18.5% to 16.3% over the same period. This does not mean shippers will be able to relax in the long run, as warehouse capacity is tight and going for record premiums. In other words, there is still a lot of potential for disruption as the flow of goods into the U.S. continues to be strong. Spot rates for van and reefer loads have been declining, but do not expect the bottom to fall out with increasing fuel and contract prices keeping the floor relatively high. We are still in a very unstable environment with the end of the quarter coming up.
Lane to watch: Columbia, South Carolina, to Jacksonville, Florida
Overview: Rejection rates slowly climbing mean spot rates will soon follow.
- Spot rates are at $4.33 a mile and on the rise, but are not the highest rates over the last month.
- Columbia’s outbound tender rejection index is rising still, but not anywhere near last week (when the rejection rates were closer to 20%).
- Jacksonville is also bouncing back (at 15.67%) after rejection rates aggressively plummeted last week.
What does this mean for you?
Brokers: Spot rates are slowly starting to increase again. While they aren’t as high as they have been, they aren’t at rock bottom. Watch the Outbound Tender Rejection Index closely to know when to start prioritizing loads on this lane so that your margins are not severely impacted.
Carriers: Capacity is pretty even in both markets. Getting yourself out of one or the other shouldn’t be too tricky. Hold firm on rates as rejections start to increase. With capacity loosening across the country, now is the time to position fleets for planting season and summer peaks.
Shippers: Outbound tender lead times in both markets are both just above two-and-a-half days and still under three days. As long as you are giving carriers and brokers at least two days’ notice you shouldn’t be hit with insane rates. Now is a good time to review carrier compliance and slide in new carriers that might suit the network better.
During the past week there were several major releases and all expectations held true. Retail sales increased 0.3% in February while January had an upward revision to 4.9%. The slight bump was anticipated as outlined in last week’s outlook; however, the underlying trends such as the 3.7% drop for nonstore retailers and the 5.3% rise for sales at gas stations are telling. Energy prices were on an upward trajectory before the ramp-up in sanctions and the higher gas prices seen in March. It’s important to understand some of the ongoing movements that were already in place and not get too lost in the noise. The ramifications from the Russia-Ukraine conflict will be dictated by the length and depth of the measures taken. China’s landing will also have a larger impact on domestic trends. Slower growth was anticipated before the conflict and it’s still the expectation now. The Producer Price Index rose another 0.8%, while industrial production had a slight bump. Producer prices upstream will continue to make their way to final consumers in the weeks ahead. Freight demand for flatbed trailers will likely remain elevated as we move into warmer months and more housing and manufacturing activities occur. However, a peak in the rate of growth for both segments is expected imminently.
Capital goods new orders will be updated in the coming week and this will be a measure of B2B activity and will feed into the flatbed capacity mentioned above. The general growth trend for capital goods will also see a peak in the rate of growth; however, this doesn’t mean there will be a falloff in the segment. The recent hike in interest rates will start to make its way to some of the upstream activity and there may be an attempt to push some orders forward in order to get ahead of anticipated rate increases.