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USA LOGISTICS MARKET ANALYSIS 11/19/2021


Today’s lanes to watch: Friday, November 19, 2021


Takeaways for today's lanes:

  • Memphis to Kansas City capacity is likely to tighten as the Headhaul Index increased 21% week-over-week (w/w).

  • Dry van spot rates in SONAR’s Market Dashboard for the MDT - CHI lane highlight the cost advantage of domestic rail intermodal.

  • Spot rates are back on the rise following a rejection rate spike in the Ontario to Columbus lane.

Memphis to Kansas City – With the Headhaul Index increasing over 21% w/w, capacity is likely to tighten significantly in the days ahead.


SONAR Tickers: OTVI.MEM, ITVI.MEM, OTRI.MEM, OTRI.MEMMCI


Highlights:

  • Memphis outbound tender volumes are up 10% w/w, signaling that demand for outbound capacity is increasing.

  • The Memphis Headhaul Index is up 21% w/w, signaling that the imbalance between inbound and outbound volumes is growing.

  • Memphis outbound tender rejections are down 4.4% w/w, but that trend is likely to accelerate as demand for capacity increases.

What does this mean for you?


Brokers: It is likely that outbound tender rejections will continue to rise as the Headhaul Index surges 21% w/w. With a major 46% increase year-over-year (y/y0 in inbound international containers moving into Memphis via rail, this surge in outbound volumes is likely to continue, and is likely to stay strong during the remainder of 2021. With outbound tender volumes up 10% w/w, outbound tender rejections are very likely to move higher in the coming days and weeks.


Carriers: Stay firm on your rates as outbound tender rejections are likely to increase in the coming days, and that is likely to shift pricing power into your favor. With inbound international volumes seeing significant growth into Memphis, outbound volumes are likely to continue growing through the remainder of the year. Keep an eye on outbound tender rejections and use this index to confirm tightening conditions are indeed driving upward or downward pressure on rates.


Shippers: Your shipper cohorts in Memphis are still averaging 2.7 days in tender lead times. The Headhaul Index in Memphis is up 21% w/w, and outbound tender rejections likely to continue increasing in the coming days. It would be wise to keep your tender lead times between 3 and 4 days through the next couple of weeks to ensure you are able to secure capacity in the market.


Harrisburg to Chicago – Dry van spot rates in SONAR’s Market Dashboard highlight the cost advantage of domestic rail intermodal.


SONAR Tickers: Harrisburg to Chicago Market Dashboard


Highlights

  • The new SONAR Market Dashboard tool shows an average dry van spot rate of $2.61/mile, including fuel, from Harrisburg to Chicago and $2.73/mile, including fuel, from nearby Chambersburg to Chicago.

  • The intermodal spot rate from Chambersburg to Chicago is $2.05/mile, up 10% from the prior week, but it is still 25% below the dry van spot rate.

  • The dry van tender rejection rate in the Harrisburg to Chicago lane is 22.09%, which is 279 basis points (bps) above the national van tender rejection rate, and represents an increase of 229 bps during the past two weeks.

What does this mean for you?


Brokers: Brokers could potentially minimize purchased transportation costs by brokering an intermodal load in the lane, but make sure that the load is less time-sensitive before going that route. When negotiating with highway carriers in the lane, stress that Chicago remains a Headhaul market.


Carriers: Chicago looks like a solid destination for dry van carriers given its Van Headhaul Index of 57, which means it should be easy for carriers to get reloaded. The Chicago van outbound tender rejection rate is 17.88%; that tender rejection rate is 142 bps below the national average, but it is still indicative of a tight market.


Shippers: For spot shippers with less time-sensitive loads (there are fewer of those this time of year), the savings associated with using domestic intermodal look attractive. Shippers with more time-sensitive loads may want to extend their lead times past the 3.2- day average for all outbound Harrisburg loads.


Ontario to Columbus – Ontario’s outbound rejection rates continue to spike leading into the holiday.


SONAR Tickers: Market Dashboard, OTRI.ONT, OTRI.ONTCMH, OTRI.CMH


Highlights:

  • Ontario’s outbound rejection rate has spiked to its highest point since July 4th with rejection rates to Columbus increasing above 24%.

  • FreightWaves TRAC spot rates had leveled off in this lane until about a week ago; they have now increased about 3 cents per mile in the last day to $3.58 per mile.

  • Columbus’ outbound rejection rate is back on the rise as well, climbing from under 18% to 19.67% in the past week.

What does this mean for you?


Brokers: Secure as much capacity out of Ontario as you can, making this origin one of the highest priorities over the next week. There are not a lot of drivers domiciled in Los Angeles for over the road fleets and capacity will be much less available in this region than others as carriers reposition for home time.


Carriers: Expect a lot more spot market activity out of Ontario over the next week. Accept all the loads you can into this market at this point as the rates will be trending higher than $3.58 per mile in this lane. Loads out of Columbus should be equally as easy to find.


Shippers: Hold non-essential freight until after Thanksgiving if possible. Rejection rates should ease at that point as they traditionally do, making the spot market moves less necessary. Conversely, if something needs to move, prioritize securing capacity in this lane now. Be prepared to pay a premium for it.

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