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USA LOGISTICS MARKET ANALYSIS 1/14/2022


Today’s lanes to watch: Friday, January 14, 2022


Takeaways for today's lanes:

  • Intermodal spot rates decline further from LA to Chicago, and are now down 39% month-over-month (m/m).

  • Salt Lake City to Chicago is experiencing a mid-month dip before rates spike up before the end-of-month rush.

  • Memphis to Kansas City spot rates are likely to move higher as the Headhaul Index increases 23% week-over-week (w/w).

LA to Chicago – Intermodal spot rates decline further, and are now down 39% m/m.

SONAR Tickers: INTRM.LAXCHI, ORAILDOML.LAXCHI


Highlights:

  • Suggesting that the Class I railroads have become less concerned with protecting capacity for contracted shippers, intermodal spot rates from LA to Chicago declined significantly for a second consecutive week. In the past month, door-to-door domestic intermodal spot rates are down 39% in the lane to $2.51/mile, including fuel surcharges.

  • Domestic intermodal volume averaged 1,131 containers/day in the past week, which is 8% below the daily average of 1,240 units/day in early December.

  • The average dry van spot rate that brokers are paying for capacity in the lane is $3.73/mile, including fuel surcharges, which is $0.10 higher than what they paid one month ago.

What does this mean for you?


Brokers: In light of Market Dashboard showing that spot rates have risen, brokers may want to raise rates slightly in order to preserve margins. When bidding for capacity, keep your purchased transportation costs below the average of $3.73/mile (includes fuel), but note that bidding less than $3.54/mile, including fuel (the spot rate in the 33rd percentile) may prove to be too aggressive.


Carriers: For van carriers that are willing to make the four-day trip, this is a solid lane. While the Chicago van tender rejection rate of 18.0% is 210 basis points (bps) below the national van tender rejection rate, the Chicago Van Headhaul Index has improved from below 20 to 43. This suggests that the Chicago market is tightening and it should be an easy location for carriers to get reloaded.


Shippers: In contrast to the past year, the respective intermodal and dry van spot rates suggest that it is economical to use rail intermodal to move spot loads. However, the subpar intermodal volume in the lane, as well as the elevated outbound LA intermodal tender rejection rate of 11% (low single-digits is more typical), suggest that intermodal shippers are likely to face delays.


Salt Lake City to Chicago – Mid-month lulls for both markets make it an opportune time to ship.

SONAR TRAC Market Dashboard Salt Lake City to Chicago


Highlights:

  • Salt Lake City’s rejection rates dropped to 26% after hitting 33% last week. Outbound volumes hit a three-month high.

  • Chicago rejection rates are coming in at 23%, which is a return to normal for this market after the rates skyrocketed to a three-month high.

  • Spot rates are coming in at $2.84/mile for this lane, which is about average for this lane for this time of the month.

What does this mean for you?


Brokers: Rejection rates in Salt Lake City historically spike upward in the last two weeks of the month. Be prepared for an upswing as we come into the final weeks of the month. Brace for increased spot rates.


Carriers: As Chicago braces for its end-of-month upswing, know your worth and don't settle for less. In other words, hold strong rates and brace for tightening conditions. If you have some extra trucks, get them a load to Chicago.


Shippers: The dip won’t last for long. Try to ship out as much as you can before next week. Otherwise, keep tender lead times at a minimum of 3.5 days to ensure they get covered and rates won’t be over-inflated as a result of tight capacity.


Baltimore to Chicago – Spot rates are increasing; capacity is expected to get even tighter as outbound rejections rise 6.9% w/w.

SONAR TRAC Market Dashboard Baltimore to Chicago


Highlights:

  • Salt Lake City’s rejection rates dropped to 26% after hitting 33% last week. Outbound volumes hit a three-month high.

  • Chicago rejection rates are coming in at 23%, which is a return to normal for this market after the rates skyrocketed to a three-month high.

  • Spot rates are coming in at $2.84/mile for this lane, which is about average for this lane for this time of the month.

What does this mean for you?


Brokers: Rejection rates in Salt Lake City historically spike upward in the last two weeks of the month. Be prepared for an upswing as we come into the final weeks of the month. Brace for increased spot rates.


Carriers: As Chicago braces for its end-of-month upswing, know your worth and don't settle for less. In other words, hold strong rates and brace for tightening conditions. If you have some extra trucks, get them a load to Chicago.


Shippers: The dip won’t last for long. Try to ship out as much as you can before next week. Otherwise, keep tender lead times at a minimum of 3.5 days to ensure they get covered and rates won’t be over-inflated as a result of tight capacity.

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