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USA LOGISTICS MARKET ANALYSIS 10/28/21


Today’s lanes to watch: Thursday, October 28, 2021 '


Takeaways for today's lanes:

  • Reefer rejection rates climb to over 60% in the Kansas City and Indianapolis markets.

  • Domestic intermodal volume rises in the L.A. to Atlanta lane.

  • Charlotte to Chicago capacity could tighten in the days ahead as the Headhaul Index surges over 37% week-over-week (w/w).


Kansas City to Indianapolis – Reefer capacity tightens in Kansas City and Indianapolis, pushing reefer rejection rates to over 60%.



SONAR Tickers: ROTRI.MCI, ROTRI.MCIIND/ROTRI.IND, RHAUL.IND


Highlights:

  • Reefer rejection rates have increased to 63.72% in the Kansas City market, but rejection rates on the MCI – IND are below the market average at 50.85%.

  • Indianapolis’ reefer Headhaul score has increased to 57.45 as capacity tightens, pushing rejection rates up to 62.07%.

  • Kansas City shippers have decreased reefer tender lead times to 4.30 days as market conditions tighten.


What does this mean for you?


Brokers: Reefer capacity has tightened in Kansas City, pushing rejection rates over 60%, forcing shippers to pay higher rates for spot capacity to move their shipments. Brokers should search the spot market for loads that run across the MCI – IND lane, but increase your bids since rejection rates are trending upward. Indianapolis is one of the best destinations for reefer carriers with heavy freight volumes and reefer rejection rates at 62.07%. Brokers will need to push carrier rates down to help increase their margins.


Carriers: Reefer carriers with excess capacity in the Kansas City market should search the spot market for loads that deliver into Indianapolis. Hold firm on your rates since rejection rates are trending upward on the lane, and are currently at 50.85%. The MCI – IND lane will keep your truck running between two tight markets with reefer rejection rates over 60%, increasing your truck utilization and average rates. Shippers: Market conditions have tightened in Kansas City as reefer rejection rates climb to over 60%, but shippers have decreased tender lead times to 4.30 days.


Shippers need to increase tender lead times to help open capacity options, and secure capacity as early as possible. Avoid on-demand capacity since carriers will increase their rates as rejection rates increase.


Los Angeles to Atlanta – Domestic intermodal volume rises in the L.A. to Atlanta lane.


SONAR Tickers: ORAILDOML.LAXATL, ORAILINTL.LAXATL, OTRI.LAXATL, LITRI.ATL, OTRI.ATL


Highlights:

  • Domestic intermodal volume in the past week averaged 337 containers/day in the lane, which is the highest level since late April. Meanwhile, international intermodal volume in the lane totaled only 19 containers/day in the past week, the lowest volume in the past year. That suggests more transloading on the West Coast.

  • The door-to-door domestic intermodal spot rate in the lane is $4.11/mile, including fuel surcharges. In contrast, the dry van spot rate shown in the SONAR Predictive Rates tool is $1.68/mile, including fuel surcharges.

  • The truckload tender rejection rate in the lane is 21.3%, which declined from 25% in the first week of October. That drop has been driven by carriers becoming more accepting of long-haul inbound Atlanta loads.


What does this mean for you?


Brokers: Lower your bids in the lane. With Atlanta currently a backhaul market, the main capacity constraint in the lane has been finding carriers willing to head to Atlanta. While that may still be a challenge, the long-haul Atlanta inbound tender rejection rate dropped from 33% to 28% in the past week, suggesting that issue is lessening.


Carriers: Despite other carriers being more accepting of inbound Atlanta loads in recent weeks, heading to Atlanta has some drawbacks to consider before accepting tendered loads. The Atlanta outbound tender rejection rate is 231 basis points (bps) below the national average and the Van Headhaul Index is -14, indicating that Atlanta is currently a backhaul market.


Shippers: With domestic intermodal volume rising in the lane in recent weeks, shippers that have existing domestic intermodal contracts in place may be more likely to have those contracts honored. Meanwhile, spot shippers will likely have to utilize the highway given the currently elevated intermodal spot rates.


Charlotte to Chicago – Capacity could tighten in the days ahead as the Headhaul Index surges over 37% w/w.

Sonar Tickers: OTVI.CLT, ITVI.CLT, OTRI.CLT, ITRI.CLT


Highlights:

  • Charlotte outbound tender volumes are up 9% w/w, which is a major increase in demand for outbound capacity.

  • The Headhaul Index in Charlotte is up 37% w/w, signaling that capacity is likely to tighten because of a growing imbalance between outbound and inbound volumes.

  • Charlotte outbound tender rejections are relatively flat w/w, and with inbound tender rejections increasing as well, this is putting upward pressure on rates.


What does this mean for you?


Brokers: The 37% increase w/w in the Headhaul Index is being driven primarily by a large increase of 9% in outbound volumes w/w. Outbound tender rejections are relatively flat w/w, but if this trend continues, you can expect capacity to get even tighter as the imbalance between inbound and outbound volumes grows. This could put even greater upward pressure on rates.


Carriers: Stay firm on your rates as the large surge of over 37% in the Headhaul Index is likely to shift pricing power further into your favor. It appears as if outbound volumes are positioned to climb further, so if you find any opportunities in that market, they are likely going to be paying a premium to secure capacity during the lead-up to the weekend.


Shippers: Your shipper cohorts in Charlotte are averaging 2.3 days in tender lead times. If the Headhaul Index and Outbound Tender Rejection Index continue to increase, you will likely need to increase your tender lead times to between 3.5 and 4 days to ensure that you are able to cover your freight leading up to holidays. Expect to pay a premium for any last-minute or ad hoc shipments from now through the end of the year.

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