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  • Jesse Rogers

USA LOGISTICS MARKET ANALYSIS 7/13/2021


In today’s Daily Lane Planner, we'll provide actionable perspectives for market-to-market lane management for shippers, carriers, and brokers. Dry Van Outbound Tender Rejection Index vs Dry Van Outbound Tender Volume Index The national average for dry van outbound tender rejection rates rebounded slightly over the weekend to 24.42%, breaking a five-day downward trend as rejection rates declined from the 4th of July holiday peak. Shippers are feeling some relief as spot rates for on-demand capacity decline, but shippers in the Duluth, Cedar Rapids, Dubuque, Cape Girardeau, Tifton, Jacksonville, Des Moines, Mobile and Shreveport markets are still averaging over 40% of their contracted freight being declined as tight market conditions push spot rates up in these markets. Carriers will find the most opportunities for dry van freight in the Atlanta, Ontario, Harrisburg, Dallas, Los Angeles, Elizabeth, Houston, Allentown, Columbus and Indianapolis markets, which are currently the largest dry van markets by volume.




Today’s Lanes to Watch: Tuesday, July 13, 2021


Takeaways for today's lanes: Capacity from Baltimore to Memphis is likely to stay tight through at least the next 5 months because of the continuing onslaught of import volumes. Dry van capacity loosened in both Houston and Dallas, but Houston’s headhaul score has fallen back into the negative. Milwaukee to Cleveland rejection rates pull back to a consistent 24%. Baltimore to Memphis – Import volumes are likely to push outbound volumes to a new all-time high


Highlights


Baltimore outbound tender volumes are up 11% week-over-week (w/w), signaling that demand for outbound capacity has increased significantly from last week. The Headhaul Index in Baltimore is up 38% w/w, signaling that there is a major (and growing) imbalance between inbound and outbound volumes. Baltimore outbound tender rejections are up 14% w/w, signaling that capacity has likely tightened in a major way w/w. What does this mean for you?


Brokers:


The massive 38% w/w increase in the Headhaul Index is signaling that capacity is likely to get even tighter in the days ahead. With rejections already up 14% w/w, and the import volumes that are still shipping to the Port of Baltimore, it is reasonable to expect that the Baltimore market will likely remain tight for months to come. We are not even in peak season yet, but it is starting earlier than expected, so there is not likely to be much of a break in demand for at least the next five months.


Carriers:


Stay firm on your rates coming out of Baltimore. A massive 38% w/w increase in the Headhaul Index, rejections already up 14% w/w, and more import volumes still heading this way combine to shift even more pricing power in your favor for the Baltimore market. You are likely to see record rates out of this market for months to come.


Shippers:


Your shipper cohorts in the Baltimore market have outbound tender lead times averaging 2.1 days, which is likely in response to the incredible tightening we have seen in the last week (as is visible in the 14% w/w increase in outbound tender rejections). Sometimes, tender lead times get smaller as shippers are simply running out of time to find capacity. However, it will not be long before we see shippers get these lead times under control and get them further out to between 3.5 and 4 days, which is likely what it will take in order to help offset some of the incredibly tight conditions this market is currently experiencing.


Houston to Dallas – Houston’s dry van headhaul score has fallen to -18.09, but rejection rates on the HOU – DAL lane have rebounded to 27.90%



Highlights


Houston’s dry van headhaul score has dropped to -18.09, but spot rates have picked back up on the HOU – DAL lane, pushing rejection rates back up to 27.90% Dry van rejection rates have rebounded to 27.09% in Dallas despite the drop in the dry van headhaul score, which remains elevated at 68.67. Houston shippers have extended dry van tender lead times to 2.82 days as rejection rates rebound over the weekend.


What does this mean for you?


Brokers:


Dry van capacity has loosened in Houston, which has allowed rejection rates to fall to 25.32% in the market. Capacity is a lot tighter in the Dallas market, which will entice carriers to shift their equipment. Brokers should search the spot market for dry van loads that move across the HOU – DAl lane, but increase your bids since rejection rates have climbed back up to 27.90% on this lane. Push carrier rates down since Houston’s headhaul score has dropped to -18.09, which will help increase margins on the lane.


Carriers:


Dry van carriers with available trucks in the Houston market should search the spot market for loads that deliver into the Dallas market. Capacity has loosened in both markets, but the Houston market has an excess of inbound trucks while the Dallas market is still tight on capacity. Carriers will be able to better utilize their equipment in the Dallas market, and secure better rates as rejection rates rebound in Dallas.


Shippers:


Houston shippers need to keep extending dry van tender lead times since rejection rates are trying to rebound in the market. With a dry van headhaul score of -18.09, shippers should have more available trucks this week, enabling them to push carrier rates down. If shippers do not keep downward pressure on carrier rates while the market is softening, carriers will be able to push spot rates back up even if the market conditions are loose.


Milwaukee to Cleveland – Cleveland keeps getting tighter despite waning demand.



Milwaukee’s outbound rejection rate has fallen back under 22% after spiking to 23% around the 4th of July holiday. The market remains much tighter than it was one month ago. Lane-specific rejection rates to Cleveland fell from 27.5% to 24.3% over the past week, but remain well above the market average. Cleveland’s rejection rates continue to trend higher even though volumes are moving in the opposite direction. Capacity is as scarce as it was in April.


What does this mean for you?


Brokers:


Expect slightly softer conditions in this lane this week and use Cleveland’s tightness to encourage carrier coverage. Spot rates should be flat to down.

Carriers: Accept more loads in this lane with Cleveland capacity continuing to struggle. Contract demand is waning, but there should be more opportunities on the spot market. Shippers: Increase rates or add providers in this lane if your carrier compliance is below 75% to avoid dropping in the route guide and reduce spot market exposure. A few cents more per mile will save a lot of time and money in the long run.


Carriers:


Accept more loads in this lane with Cleveland capacity continuing to struggle. Contract demand is waning, but there should be more opportunities on the spot market


Shippers:


Increase rates or add providers in this lane if your carrier compliance is below 75% to avoid dropping in the route guide and reduce spot market exposure. A few cents more per mile will save a lot of time and money in the long run

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