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USA LOGISTICS MARKET ANALYSIS 1/10/2022


Today’s lanes to watch: Monday, January 10, 2022


Takeaways for today's lanes:

  • Spot rates hit new highs in the New Orleans to Atlanta lane.

  • Brokers should raise rates in the Chicago to Elizabeth, NJ lane to preserve margins as dry van spot rates rise to $4.50/mile, including fuel.

  • Outbound tender volumes are up 26% w/w, indicating that demand for outbound capacity is increasing.

New Orleans to Atlanta – New Orleans outbound rejection rates are up 4.5 percentage points this week.

SONAR Market Dashboard Spot Rates from New Orleans to Atlanta


Highlights:

  • The average spot rate from New Orleans to Atlanta increased 7 cents per mile last week (to $3.34 per mile).

  • The New Orleans outbound rejection rate increased from just under 24% to 28.5% this past week, but lane-specific rejection rates fell from 27% to 22%.

  • Atlanta’s outbound rejection rate has fallen back to around 16.5% (pre-Christmas levels).

What does this mean for you?


Brokers: Expect continued difficulty in this lane, but lane-specific rejection rates suggest carriers are finding their way back into position to cover what is typically an easy lane.


Carriers: Expect spot volumes to drop in this lane with lane rejections on the decline, but capacity remains tight in New Orleans. Spot rates are elevated, so it is worth looking in the spot market for some high margin loads.


Shippers: Double check with your carriers in this lane to make sure they are not tempted by high spot rates – especially if your contract rates are well below the average spot rate of $3.34 per mile.


Chicago to Elizabeth, NJ – Brokers should raise rates to preserve margins as dry van spot rates rise to $4.50/mile, including fuel.


SONAR Tickers: VOTRI.CHIEWR, INTRM.CHILIN


Highlights:

  • The Chicago van outbound tender rejection rate declined from 18.0% during the first week of the year to 16.6% currently.

  • The average lead time for long-haul loads outbound from Chicago declined from 3.3 days just after New Year’s Day to 2.6 days, which suggests that shippers have become somewhat less concerned with securing capacity in the Chicago market.

  • The door-to-door domestic intermodal spot rate in the lane is $3.34/mile (including fuel surcharges), which is 26% below the dry van spot rate of $4.50/mile (including fuel surcharges) shown in SONAR Market Dashboard.

What does this mean for you?


Brokers: To preserve margins, brokers may want to raise their rates in the lane to reflect spot rate data. The rates that brokers are paying for dry van capacity have increased from $4.33/mile just before Christmas to $4.50/mile. Those rates include fuel surcharges.


Carriers: Heading to Elizabeth is a mixed bag for carriers. The Elizabeth van outbound tender rejection rate of 15.1% is 520 basis points (bps) below the national van tender rejection rate, so the Elizabeth market is not as tight as most. But, it should still be easy for dry van carriers to get reloaded in Elizabeth given the current Van Headhaul Index of 32, which indicates that there is more outbound freight demand in Elizabeth than inbound freight demand.


Shippers: The current spread between intermodal and dry van truckload spot rates indicates that spot shippers moving loads that are less time-sensitive should consider rail intermodal. However, domestic intermodal volume has not yet recovered from the holidays in the lane, which may suggest that intermodal service levels in the lane are subpar.


Richmond to Chicago – Capacity is likely to get tighter in the days ahead as rejections climb over 5% week-over-week (w/w).


SONAR Market Dashboard Spot Rates from Richmond to Chicago


Highlights:

  • Outbound tender volumes are up 26% w/w, indicating that demand for outbound capacity is increasing.

  • The Headhaul Index in Richmond is up 22% w/w, signaling that there is a growing imbalance between outbound and inbound capacity.

  • Outbound tender rejections are already up 5.1%, but are likely to increase further as a result of the increase in demand for outbound capacity.

What does this mean for you?


Brokers: The Richmond truckload market is likely to tighten significantly in the days ahead. There already has been a 26% increase w/w in outbound tender volumes, and with large import volumes pouring into the Port of Norfolk over the last few weeks, demand for truckload capacity is likely to grow even more. Make sure you are getting your outbound Richmond loads booked earlier than usual, and watch for significant upward pressure on spot rates in the weeks to come.


Carriers: Stay firm on your rates, as you are likely to see pricing power shift further into your favor in the days ahead. Spot rates are already on an upward trend, and with a large percentage of import volumes into the Port of Norfolk moving into the Richmond market, outbound truckload volumes should continue to see a significant boost.


Shippers: Your shipper cohorts currently have tender lead times at 2.4 days, but that is not likely to be sufficient for the increase in demand that is expected in the weeks ahead. In the tightest markets historically, shippers in Richmond have increased lead times to between 3 and 3.5 days to help offset tightening conditions in the outbound truckload market.

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