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SONAR sightings for March 31: Harrisburg to Indianapolis, 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: Harrisburg, Pennsylvania, to Indianapolis

Overview: Spot rate declines along this lane are likely to continue as capacity in both markets continues to loosen.

Highlights:

  • FreightWaves TRAC spot rates on this lane are down 48 cents a mile since the beginning of the month and are currently at $3.01 per mile.
  • Capacity in both markets has loosened significantly; rejection rates in both Harrisburg and Indianapolis are down over 300 basis points (bps) week-over-week.
  • Like most of the country, volumes in both markets are down significantly over the past week, but volume out of Indianapolis is holding up better than other large markets.

What does this mean for you?           

Brokers: Pad your margins in this lane. Given the capacity dynamics in the markets, covering loads should be relatively easy, especially compared to other markets as indicated by the Weighted Rejection Index. That should allow you to push down spot rates in the lane that are already down 14% in a month. 

Carriers: Shippers have clawed back pricing power in the lane, as indicated by the decrease in spot rates. The ability to get loaded is still relatively easy and if you are able to keep the rate near $3 per mile, that’s a good thing for a lane that is likely to see further declines in the coming days. 

Shippers: The pricing power is shifting into your hands as capacity has loosened significantly and rejection rates continue to slide. Getting a load covered should be easier and cheaper than it has been over the past month, so put increased downward pressure on spot rates. 


Watch: Shipper update


Lane to watch: Green Bay, Wisconsin, to Atlanta

Overview: Spot rates and tender volumes continue to rapidly decline as the lane reaches the lowest spot rate in six months. 

Highlights:

  • Spot rates continue to rapidly deteriorate, falling from late February highs of $4.23/mile to $3.75/mile. 
  • The Green Bay outbound market saw a rapid decline in outbound tender volumes during that period, falling from late February highs of around 123 bps to 96.88 bps. 
  • Outbound tender rejections from Green Bay remain volatile but are falling, with tender rejections declining to 23.33% from a Q1 seasonal range of 28% to 31%. 

What does this mean for you?

Brokers: Focus on improving margins amid declining rates and volumes, as supply of outbound loads will force greater carrier competition. Additionally, the adjacent Chicago market is experiencing outbound spot rate and tender declines, creating a situation in which deadheading south may prove costly for carriers because of higher fuel prices. Outbound tender rejections remain strong, presenting an opportunity for ad hoc opportunities, but remain focused on pricing, as the lane high of $3.93 and low of $3.51 present a marginal swing potential of $405.30 if you subtract the range of 42 cents per mile at 965 miles per trip. 

Carriers: Focus on increasing prices into the Green Bay market to account for falling spot rates in non-contracted lanes. For contracted lanes inbound to Green Bay, focus on booking further in advance to secure an outbound load as volumes are declining and spot rates are falling. Depending on fuel costs and spot volumes, there appears to be declining spot rates from Chicago, indicating that deadheading may be a last resort if a backhaul cannot be secured. 

Shippers: Outbound tender rejections remain high at around 23%, but are still an improvement compared to historical first-quarter ranges of 28% to 31%. The recent drop in spot rates will provide some relief to transportation costs but bear in mind that the longer length of haul from Green Bay may cause higher fuel surcharges for contracted lanes. With nationwide declines in outbound tender volumes and rejection rates, there may be the potential for additional negotiating opportunities in the coming weeks.


Watch: Carrier update


Lane to watch: Greenville, South Carolina, to Allentown, Pennsylvania

Overview: Rejections are likely to increase as outbound volumes surge 8% w/w along with a 7% increase w/w in the Headhaul Index.

Highlights:

  • Greenville outbound tender volumes are up 8% w/w, signaling that demand for outbound capacity is increasing. 
  • The Greenville Headhaul Index is up 7% w/w, but could be poised to increase further as inland import rail container volumes head toward a record high.
  • Greenville outbound tender rejections are already up 53 bps w/w, but are likely to rise even higher in the coming days. 

What does this mean for you?

Brokers: Greenville tender rejections are already up 53 bps w/w, but with outbound volumes increasing 8% w/w and the Headhaul Index increasing 7%, outbound tender rejections are likely to move even higher in the coming days. Make sure your team is aware of the upward pressure on rates, and be sure to prioritize your existing outbound Greenville lanes while this upward pressure continues. 

Carriers: If outbound volumes in Greenville continue to increase, and inbound truckload volumes remain relatively flat (or drop), then it is likely that outbound tender rejections will increase significantly. Even though outbound rejections are already up 53 bps w/w, capacity is likely already tightening. If this current trend continues, the growing imbalance is likely to earn you even more pricing power in the days and weeks ahead. 

Shippers: Your shipper cohorts currently have their tender lead times at three days, but with the volume imbalance growing in Greenville (as well as outbound tender rejections), you should push your tender lead times to between three-and-a-half and four days to ensure you are getting this lane covered without paying above-average premiums because of a lack of sufficient lead time.