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SONAR sightings for March 30: Nashville to Toledo, shipper update, more

The highlights from Wednesday’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: Nashville, Tennessee, to Toledo, Ohio

Overview: Spot rates continue to decline relative to volumes as the lane experiences significant rate volatility. 

Highlights:

  • Spot rates have fallen significantly over the past three months – from a mid-January high of $4.20/mile to $3.72/mile, falling back in line with fourth-quarter 2021 levels. 
  • Nashville outbound tender volume levels fell sharply over the weekend, falling from a high of 165 basis points (bps) to 130.10 bps. 
  • The decline in load volumes caused Nashville outbound tender rejections to decline from 23% to 13.12%. The Nashville to Toledo lane declined from a 19% to 11.63% rejection rate during that four-day span. 

What does this mean for you?           

Brokers: The Nashville market’s declining spot volumes present an opportunity to push down rates and increase margins, as the HAUL market index of -7.75 shows relatively even inbound to outbound load ratios. The Toledo market continues to overperform with a Headhaul Index score of 52.36, indicating that carriers may take a rate cut to return to Toledo and adjacent Midwestern markets for loads. 

Carriers: Nashville’s decline in rates and volumes presents the potential to deadhead into the Memphis market if rates permit the extra cost. The Midwest continues to have higher Headhaul indices, so it may be better to reposition assets if downward pressures on rates and volumes persist. 

Shippers: Declining tender rejection and volume levels should provide some relief for loads hitting the spot market. Nashville tender rejections have not been this low for the past 12 months, providing the opportunity to ship items that otherwise would not have had capacity.


Watch: Shipper update


Lane to watch: LA to Houston

Overview: In the Los Angeles to Houston lane, carriers are only rejecting 5% of dry van tenders despite Houston’s status as a backhaul market.   

Highlights:

  • The average daily domestic and international intermodal volume in the lane in the past week was 85 containers and 75 containers, respectively. International intermodal volume in the lane had been as high as 200 units/day last spring. 
  • The current door-to-door domestic intermodal spot rate in the lane is $3.40/mile, including fuel surcharges. 
  • The current dry van spot rate, according to the SONAR Market Dashboard app, is $2.79/mile, including fuel surcharges. 

What does this mean for you?

Brokers: Lower your bids in the lane to preserve margins. Brokers are paying 10% less for on-demand capacity than they were one month ago. Keep in mind that the current average dry van rate that brokers are paying for on-demand capacity is $2.79/mile, including fuel, with $2.98/mile and $2.68/mile representing rates in the 67th and 33rd percentile.  

Carriers: Carriers are rejecting only 5.6% of dry van tenders in the lane, which primarily reflects a loosening LA freight market. SONAR tender data suggest that Houston is currently a less attractive destination than most markets. The Houston outbound dry van tender rejection rate is 10.7% compared to the 14.1% national rate and its Van Headhaul Index is -14, indicating there is more inbound than outbound dry van demand.  

Shippers: Importers that have become accustomed to utilizing international intermodal in the lane may have to rely on domestic transportation options this year with carriers sending fewer international containers inland. Spot shippers should use the highway rather than domestic rail intermodal and will benefit from the 10% drop in door-to-door van spot rates in the past month.   


Watch: Carrier update


Lane to watch: Allentown, Pennsylvania, to Grand Rapids, Michigan

Overview: This lane is recording its lowest spot rates in over one month.

Highlights:

  • Allentown has an overwhelming amount of outbound loads in relation to inbound loads. Its Headhaul Index is at 73.88 and rising. 
  • Spot rates for this lane are the lowest in over a month with rates averaging $2.93/mile.
  • Grand Rapids’ outbound tender volumes are starting to rise again after dropping almost 20 bps a few weeks ago. 

What does this mean for you?

Brokers: Rates are hitting historic lows around the time they typically start to increase as spring and summer shipping takes off. Be mindful of the upward pressure that comes after these record low rates. Watch the Outbound Tender Rejection Index, currently sitting at 16.82 and falling for Allentown and 18.21 and falling in Grand Rapids as well. When those start to increase, the rates will increase as well. 

Carriers: Allentown has an overwhelming amount of outbound shipments. The market’s headhaul score is 73.88 and rising. If you have excess capacity, send it to Allentown; there shouldn’t be a problem getting an outbound load. Capacity is technically loosening in the market, but with so many major freight hubs around Allentown, it shouldn’t be hard to get there and find a competitive rate to book out. 

Shippers: Low rates and loosening capacity make for the perfect shipping conditions. Any extra loads that can be pulled forward should be. Ship now, ideally keeping a three-day buffer for outbound tender lead times, to save some of the transportation spend from getting out of control.