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USA LOGISITCS MARKET ANALYSIS 8/4/2021




Today’s Lanes to Watch: Wednesday, August 4, 2021


Takeaways for today's lanes:


Chicago becomes a less attractive destination for carriers following a drop in outbound demand in the past week.


Both Houston and Dallas markets experience a week-over-week (w/w) increase in rejection rates as market conditions tighten.


Kansas City rejection rates surge while Los Angeles remains an active outbound market.


Elizabeth to Chicago – Chicago becomes a less attractive destination for carriers following a drop in outbound demand in the past week



Highlights


The 20.7% tender rejection rate in the lane is roughly in line with the national average; that is a departure from the lane tender rejection rate being well above the national average this spring.


In the past week, domestic intermodal spot rates (for door-to-door movements of 53’ containers) were 22% below truckload spot rates (both data series include fuel surcharges).


In the past week, a decline in outbound Chicago demand has led to a decline in the Chicago Van Headhaul Index from 45 to 17. What does this mean for you?


What does this mean for you?


Brokers: Raise your rates in the lane in order to preserve your margins given that carriers are more reluctant to head to Chicago than they are to most freight markets. When negotiating with carriers, stress that Chicago is still a headhaul market even with the drop in outbound tenders in the past week.


Carriers: Chicago has become a less desirable destination for carriers with an outbound tender rejection rate that is 230 basis points (bps) below the national tender rejection rate and a Headhaul Index that has fallen sharply in the past week. (This suggests that the Chicago market may loosen further in the coming days.) Therefore, you may want to look for loads to a tighter freight market before accepting tenders to Chicago.


Shippers: Spot shippers moving loads that are less time-sensitive should look to utilize domestic rail intermodal with door-to-door intermodal spot rates meaningfully below dry van spot rates. For shippers moving loads that are more time-sensitive, keep lead times extended to at least the 2.8-day average for all inbound Chicago loads.


Houston to Dallas – Dry van rejection rates climb to 24.95% on the HOU – DAL lane as conditions tighten in both markets.



Highlights


Dry van outbound tender rejection rates have increased to 24.95% on the HOU – DAL lane as freight volumes increase in the Houston market.


Dallas’ headhaul score has declined but remains extremely high at 107.84, which has allowed carriers to increase their spot rates for on-demand capacity.


Houston shippers extend tender lead times to 2.94 days as pressure builds from the shift in market conditions. What does this mean for you?


Brokers: Houston’s WRI score has increased to 8.91 as dry van rejection rates increase in the market, and Dallas’ headhaul score remains elevated at 107.84. Market conditions are favorable for brokers in both markets as spot rates increase. Brokers should search the spot market for loads that run in both directions between the Houston and Dallas markets. Keep your bids elevated since market conditions are tightening in both markets.


Carriers: Dry van carriers with trucks inbound into the Houston market should search the spot market for loads that deliver into the Dallas market. Rejection rates have increased to 24.95% on the lane, allowing carriers to increase their spot rates for on-demand capacity. The Dallas market has been tight on capacity for the past several weeks, which has held rejection rates over 24% since mid-June.


Shippers: Shippers in the Houston market have felt the pressure as capacity tightens in the market from an increase in outbound freight volumes. Tender lead times have been extended to 2.94 days as rejection rates increased to 23.33%. Shippers need to keep tender lead times extended, and secure capacity as early as possible. Keep downward pressure on carrier rates, and monitor dry van rejection rates for any shifts in the market.


Kansas City to Los Angeles – Rejection rates are back on the rise out of Kansas City.



Highlights


Kansas City’s outbound rejection rate has climbed from 22.2% on July 20 to 27.7% on Monday after falling through most of the summer.


Lane-specific rejection rates to Los Angeles are among the lowest out of the market at 16.3%, but have increased from about 14.5% over the past two weeks.


Los Angeles’ outbound rejection rate has hovered around 18% over the past week even though tender volumes have increased 7% over the same time.


What does this mean for you?


Brokers: Make this lane the lowest priority out of Kansas City and focus your attention on other lanes. Capacity is tightening out of this market once again and carriers will be more willing to head back to southern California than anywhere at this point.


Carriers: Accept more loads into Kansas City but do not expect as much spot market action to Los Angeles as some other markets. Los Angeles continues to be a hotbed of freight activity but most carriers have priced themselves back into this market.


Shippers: Increase lead times out of Kansas City, but keep an eye on carrier performance in this lane. If you have seen compliance or service levels slide into Los Angeles over the past few months it may be time to deepen the route guide.

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