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USA LOGISTICS MARKET ANALYSIS 1/18/2022


Today’s lanes to watch: Tuesday, January 18, 2022


Takeaways for today's lanes:

  • Tender rejections out of Seattle drop 33.8%, which indicates more capacity is entering the market.

  • Spot rates jumped 20 cents from Elizabeth to Chicago to start the year.

  • Cleveland to Atlanta spot rates are likely to increase as rejections rise alongside a 23% increase in the Headhaul Index week-over-week (w/w).

Seattle to Los Angeles – Tender rejections out of Seattle drop 33.8%, indicating more capacity entering the market amid high spot rates.

SONAR Tickers: OTRI.SEA, OTRI.USA, TSTOPVRPM.USA


Highlights:

  • Seattle outbound tender rejections decreased 33.8% to 17.21%, from a threemonth high of 26% reported on January 7th.

  • In comparison, nationwide outbound tender rejections fell to 21% with dry van spot rates reaching $3.83 per mile according to Truckstop.com data.

  • Spot rates remain elevated from Seattle to Los Angeles at $2.67 per mile, over $1 per mile higher than three months prior ($1.64 per mile on October 17th).

What does this mean for you?


Brokers: Focus on developing your carrier routing guide to drive down costs. Higher spot market rates cause greater risk for losses if a load falls off. Keep a close eye on the weather, because some carriers will reposition trucks to other locations if severe weather impacts the area.


Carriers: Spot rates remain elevated, and depending on customer commitments, there is an opportunity to gain extra revenue if contracted rates are less than the spot market. Be mindful of weather and chain laws. Also, newer drivers in the fleet may have difficulty with the conditions and that can impact tender compliance. If tender rejections continue to move lower, there will be greater pressure from existing customers to adhere to their original commitments.


Shippers: Falling tender rejections are a great opportunity to pressure carriers and brokers to honor their tender commitments. Focus on reducing spot market exposure by developing a larger routing guide or expanding the carrier list during the next RFP. Winter weather may affect operations; if disruptions occur be mindful of the impact from high spot market rates and prioritize “must go” loads accordingly.


Elizabeth to Chicago – It is time to make Elizabeth outbound loads a priority.

FreightWaves TRAC Market Dashboard – Elizabeth to Chicago


Highlights:

  • Spot rates from Chicago to Elizabeth have increased nearly 20 cents per mile since the start of the year.

  • Elizabeth’s outbound rejection rate has increased from 14.6% to 17.3% over the past five days.

  • Chicago’s outbound load demand is on par with August 2021, having not fully recovered to the levels seen in the fourth quarter of last year.

What does this mean for you?


Brokers: Pad your margins if you haven't handled any loads moving in this lane over the past two weeks as spot rates and rejections increased significantly during this period. Make sure you make outbound Elizabeth loads a higher priority this week.


Carriers: Check the load boards for loads moving in this lane. This is a favorable direction even though Chicago activity is operating at a relatively lower level. Spot rates are peaking after the traditional peak.


Shippers: Increase lead times in this lane as this upward pressure is more than likely not sustainable as carriers return to the area, which is typically oversupplied. Loads moving to Chicago are also in demand, although the weather can impact their desirability at this time of the year.


Cleveland to Atlanta – Capacity is likely to tighten further as the Headhaul Index increases 23% w/w

SONAR Market Dashboard TRAC Spot Rates from Cleveland to Atlanta


Highlights:

  • Cleveland outbound tender volumes are up 19% w/w, signaling that demand for outbound truckload capacity is increasing.

  • The Headhaul Index in Cleveland is up 16% w/w, signaling that capacity is likely to tighten further and put even more upward pressure on rates.

  • Cleveland outbound tender rejections are up 332 basis points (bps) w/w, signaling that capacity in Cleveland is likely already tightening.

What does this mean for you?


Brokers: Cleveland tender rejections are up 332 bps w/w. With outbound volumes increasing 19% w/w and the Headhaul Index increasing 16% w/w, outbound tender rejections are likely to be pushed even higher in the coming days. Make sure your operations team is aware of the major upward pressure on rates, and be sure to prioritize your existing outbound Cleveland lanes since there will be significant upward pressure on spot rates.


Carriers: If outbound volumes in Cleveland continue to increase, then it is likely that we will see outbound tender rejections continue to increase and put even greater upward pressure on spot rates, which are already close to their monthly highs. For these reasons, stay firm on your rates from Cleveland to Atlanta, and be sure to push them higher if rejections continue to increase as well.


Shippers: Your shipper cohorts are currently averaging 2.8 days in tender lead times, which is not going to be enough given the current market conditions in Cleveland. With the upward pressure that currently exists on spot rates, it would be wise to make sure that you push your tender lead times above 3 days to ensure you are getting this lane covered.

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