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USA LOGISTICS MARKET ANALYSIS 1/19/2022


Today’s lanes to watch: Wednesday, January 19, 2022


Takeaways for today's lanes:

  • Brokers should raise rates in the Chicago to Harrisburg lane to reflect rising purchased transportation costs.

  • Spot rates are moving higher in the highly rejected Columbus to Des Moines lane.

  • Dallas to Chicago spot rates are likely to move higher in the coming days as the Headhaul Index surges 22% week-over-week (w/w).

Chicago to Harrisburg – Brokers should raise rates to reflect rising purchased transportation costs.

FreightWaves TRAC Market Dashboard – Chicago to Harrisburg


Highlights:

  • In the past two weeks, the dry van tender rejection rate has increased 193 basis points (bps) to 22.8%, while the national dry van tender rejection rate declined 90 bps to 20.5%.

  • The intermodal spot rate from Chicago to Chambersburg is $3.69/mile, including fuel surcharges, which is up 36% y/y and 24% below the average dry van truckload spot rate in the lane.

  • Average van inbound tender lead time for the Harrisburg market is currently 2.9 days, compared to 2.6 days for the U.S. dry van market as a whole.

What does this mean for you?


Brokers: Raise your rates in the lane to reflect the higher rates that brokers are paying for capacity. Rates have risen about $0.30/mile since Christmas. When negotiating with carriers, stress that Harrisburg is a headhaul market with a relatively high tender rejection rate.


Carriers: Some carriers consider the lane to be unattractive because, at 661 miles, it is considered a “tweener” lane that can lead to downtime associated with a 1.5-day trip. However, carriers should be able to find highly rated spot loads in the lane and Harrisburg has the favorable characteristics of being a headhaul market (Harrisburg Van Headhaul Index is 78) that is tighter than most (Harrisburg van outbound tender rejection rate is 24.1%).


Shippers: The Chicago to Harrisburg lane is relatively tight for dry van capacity, primarily due to some carriers’ reluctance to head to Harrisburg (the Harrisburg inbound van tender rejection rate is 24.7%). For less time-sensitive shipments, intermodal looks to be a cost-saving option. For more time-sensitive shipments, keep highway lead times extended past 3 days to help secure capacity.


Columbus to Des Moines – Rates continue to climb across the MIdwest.

FreightWaves TRAC Market Dashboard – Columbus to Des Moines


Highlights:

  • Spot rates from Columbus to Des Moines have increased 25 cents per mile since January 4 to $3.78.

  • Columbus’ outbound rejection rates have increased over 2 percentage points in the past week; lane-specific rejection rates to Des Moines have trended higher since January 3.

  • Des Moines’ outbound rejection rate has been averaging above 40% since September 2021 on signs of growing outbound demand.

What does this mean for you?


Brokers: Do not quote this lane without checking with your carriers first. Rates have increased sharply since the first of the year and Des Moines is one of the most rejected destinations out of the Columbus market. Expect continued upward pressure on rates.


Carriers: Find your way into Columbus if you have customers in Des Moines. Check the load boards or with your customers for any lucrative spot moves heading west. Also, now is the time to target new accounts out of the Des Moines market because of its growing demand and low compliance.


Shippers: Consider a rate increase if your compliance is lower than 75% in this lane over the past three months. Keep lead times between four and seven days and contact carriers that have a need to move into the Des Moines market.


Dallas to Chicago – Rejections are likely to increase further with the Headhaul Index up 22%.


SONAR Market Dashboard TRAC Spot Rates from Cleveland to Atlanta


Highlights:

  • Dallas outbound tender volumes are up 9% w/w, signaling that demand for capacity is increasing slightly w/w.

  • The Headhaul Index in Dallas is up 22% w/w, signaling that capacity is likely to tighten further in the coming days as outbound demand outpaces inbound volumes.

  • Dallas outbound tender rejections are down 187 bps w/w, but are likely to climb higher in the coming days due to the growing volume imbalance in Dallas.

What does this mean for you?


Brokers: The w/w change of 22% in the Headhaul Index is a large shift in the Dallas market, and it is being driven primarily by a 9% increase in outbound volumes. Outbound tender rejections may be down 187 bps w/w, but this increase in the Headhaul Index is signaling that capacity in Dallas is likely to tighten in the days ahead. Expect significant upward pressure on spot rates this week and for capacity to be especially tight.


Carriers: Dallas pricing power is likely to shift even further in your favor in the coming days due to a growing imbalance between inbound and outbound volumes. Keep an eye on outbound tender rejections, and if they reverse their current trend and shift higher, then you are likely to see significant upward pressure on spot rates.


Shippers: Your shipper cohorts in Dallas are still averaging 2.8 days in tender lead times, but history would show that when capacity tightens quickly in Dallas, lead times should be between 3.5 and 4 days to help relieve some of the pressure being put on capacity and spot rates.

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