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SONAR sightings for April 11: Kansas City to Dallas, US import/export 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: Kansas City, Missouri, to Dallas

Overview: Rates are falling but are still well above where they were.

Highlights:

  • Spot rates have dropped 17 cents per mile to start the month but are still 40 cents higher than they were around Thanksgiving. 
  • Kansas City’s outbound rejection rate has dropped over 4 percentage points (to 17%) since the start of the month, while rejection rates in this lane are closing in on 14%. 
  • The Dallas market continues to ease with outbound rejection rates falling below 10%. 

What does this mean for you?

Brokers: Target rates below $2,000 all-inclusive. There are still questions around where the floor on rates will form in this lane, but rejection rates are falling rapidly and rates still appear to have room to dip.

Carriers: As is the case with many other lanes in the U.S. at this point, you can expect falling rates and declining spot volumes. Accept any load that pays above $2,000 and do not expect a lot of help from spot volumes in Dallas. 
                
Shippers: 
Expect improving conditions in this lane and others out of Kansas City. Kansas City’s rejection rates are still high relative to other U.S. markets, but are now falling more rapidly. 


For the week ahead, the ocean container industry will have much of its focus on China and the COVID-driven lockdowns that seem to be worsening every day in Shanghai and other parts of the country. With the U.S. posting a new record high recently in its trade deficit, and China remaining our nation’s No. 1 trading partner (by far) for containerized imports, the current (and potential) supply chain disruptions caused by the COVID lockdown measures are certainly top of mind for anyone who is a part of this portion of the global supply chain. Over the past two years, many of these same people and companies have endured the most disruptive period ever for ocean container shipping, including (but not limited to): container shortages; record container volumes; record-high ocean container rates; record port congestion; etc. Now these same parties are faced with another round of COVID lockdowns in China while a war between Russia and Ukraine puts enormous upward pressure on prices for oil, fertilizers, chemicals and other key inputs for agricultural supply chains that help keep much of the world’s population fed.  

For the ocean container industry, even before the recent COVID lockdowns began in China, there were many data points indicating that a continuation of the remarkable “bull run” in the ocean container industry (with record-high ocean container rates and record ocean carrier profits)  seemed implausible. Most notably, before the lockdowns materialized, there was already a significant drop in container volumes departing many of the largest origins for U.S. imports. But now we are seeing that this downward trend in volumes is likely to accelerate due to the faster drop in new container bookings taking place each day. Having the ability to look at volumes on the date of booking enables us to see one of the industry’s best leading indicators of what lies ahead from a volume/demand perspective. While it may be easy for some to solely blame the lockdowns in China for this material decline in new container bookings, it is likely just one other signal that global consumer demand is “drying up,” and an economic recession is nearing.


Watch: Shipper update


Lane to watch: Indianapolis to Atlanta

Overview: The lowest spot rates in weeks make for a prime opportunity to review contract rates. 

Highlights:

  • Spot rates have hit the lowest levels in a monthlong period and average $3.56 per mile. 
  • Indianapolis’ outbound tender volume has steadily decreased as the month continues.
  • Atlanta’s outbound tender rejections have leveled out (9.20% rejections). 

What does this mean for you?

Brokers: Spot rates are hitting the lowest they’ve been in weeks. The market has taken a massive dip, not usually seen this time of year, so use these rates to your advantage and reevaluate current contracts with trucking companies. 

Carriers: Capacity is fairly unchanged in this lane. Volumes will always be there in Atlanta to get out of the area, but those loads are a little harder to come across this time of year. Look to broker partners to help get contracted rates on this lane for consistent volumes. 

Shippers: Outbound tender rejection rates are at record lows in both markets. Low spot rates make it a good time to reevaluate contract rates with carriers. Outbound tender lead times are hanging around three days in both Indianapolis and Atlanta, meaning the more time available for carriers to move into the market the better rates and shipping times available.


Capacity continued to ease rapidly last week to start off what is typically the slowest month of the second quarter for demand. April is the first month of the quarter and includes Easter, which occurs next Sunday. There is typically a small contraction in demand during this period, which may not be as noticeable this year due to the overall falloff in trucking volumes. There is still regional disparity in terms of contract compliance, with the northern tier of the U.S. having some of the highest rejection rates. The Midwest remains one of the tightest areas of the country, but since March 20 it has also eased at the fastest rate of any other region. The West Coast is seeing compliance level patterns similar to prior to the pandemic. Contract rates are much higher than they were, however. Expect capacity to continue to ease, potentially at a slower rate as we approach Easter, but whatever impact is felt will be nothing in comparison to where the market was just over a month ago.


Watch: Carrier update