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SONAR sightings for April 26: LA to Atlanta, shipper update, more

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: LA to Chicago

Overview: Intermodal volume declines are causing the Class I railroads to be less concerned with securing capacity for contracted shippers.

Highlights:

  • The average daily domestic intermodal volume in the past week was 306 units. That is below the recent high of 325 units/day and well below the 375/day of last year’s peak.  
  • The domestic intermodal spot rate in the lane to move 53-foot containers door to door is $2.31/mile, which is close to a one-year low.
  • The average dry van spot rate in the lane is $2.54/mile, according to SONAR Market Dashboard, 8.3% below the rate just one month ago. 

What does this mean for you?           

Brokers: Brokers are likely to see less activity in the lane with fewer loads falling to the spot market. When brokering loads in the lane, cite the Atlanta van headhaul index of 29 when negotiating with carriers, which indicates that there is more outbound than inbound demand. 

Carriers: In addition to keeping you productive, accepting tenders in the lane will get you into a somewhat tighter freight market; the Atlanta van outbound tender rejection rate is 7.9% as compared to the 3.2% LA van outbound tender rejection rate.

Shippers: The Class I railroads have placed domestic intermodal spot rates at their 52-week low, suggesting that they are less concerned with protecting intermodal capacity in the lane for shippers with contracts. Highway shippers are likely to see better coverage in the contract market than they have in recent months with carriers rejecting 6.3% of dry van loads in the lane. 


Watch: Shipper update


Lane to watch: Cape Girardeau, Missouri, to Vandalia, Ohio

Overview: Spot rates continue to fall in spite of rising outbound tender rejection rates.

Highlights:

  • Spot rates from Cape Girardeau to Vandalia continue to trend downward, falling from an  average rate of $4.75 per mile to $3.88 per mile in the last 30 days. 
  • Outbound tender rejections climbed from a three-month low of 20% on April 13 to 29.89% as outbound load volumes increased. 
  • Cape Girardeau outbound tender volumes remain volatile, declining from a 90-day high of 75 basis points (bps) on Feb. 24, down to 53.89 bps. 

What does this mean for you?

Brokers: Recent volume volatility for outbound tender volumes and rejection rates indicate a possible special project or seasonal surge out of the Cape Girardeau region. With rising outbound tender rejection rates but lower spot market rates, there is an opportunity to increase margins for brokers that have an extensive routing guide around the Neely’s Landing area, which is home to a very large and well-known consumer products manufacturer. 

Carriers: The increase in outbound tender rejection rates should provide some relief as service and capacity challenges appear to be impacting all carriers in the outbound Cape Girardeau market. If spot quotes or special projects out of this area become available, focus on preload solutions if the extra equipment is available, to buy more time and attempt to gain a premium rate in light of these capacity challenges. 

Shippers: Expect service disruptions in the market as the outbound tender rejection rate has risen to 29.89% (which means one out of three loads is being rejected due to either rate or lack of capacity in the market). The Cape Girardeau market is smaller in outbound volume percentages relative to the entire region, which means it will take additional time to reposition trucking capacity to cover this uptick in demand.   


Watch: Carrier update


Lane to watch: Kansas City, Missouri, to Chicago

Overview: Rejection rates support a carrier preference towards Chicago as a destination.

Highlights:

  • Spot rates have resumed their descent after hovering around $2.90 through mid-April. There is still a wide range of rates coming in, but the scope is slowly narrowing and favoring the lower end.  
  • At 10.08%, rejection rates to Chicago are among the lowest and fastest declining at the lane level out of Kansas City — falling from 12.2% on April 17.
  • Chicago’s outbound rejection rate has slowed its descent in April, but is still on a downward trend, falling 3.5 percentage points to 10.4% since the start of the month. 

What does this mean for you?

Brokers: Target buy side rates at or below $1,430 or $2.81 per mile. Contract compliance should be on the rise as well for managed accounts. Prioritize markets based on their current rejection rate levels, isolating a few lanes to get a lead on direction. 

Carriers: Make sure you recognize the rapid easing out of Kansas City and plan accordingly. Chicago is relatively stable compared to most destinations with rejection rates above the national average. 

Shippers: Make sure your compliance and service levels are improving in line with the market. This lane should be noticeably improved over last month. Evaluate your rates compared to the market and carriers if you are not seeing improvement and your acceptance rates were below 80% in March.