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USA LOGISTICS MARKET ANALYSIS 11/11/2021


Today’s lanes to watch: Thursday, November 11, 2021


Takeaways for today's lanes:

  • Reefer rejection rates climb back up in both the Indianapolis and Milwaukee markets.

  • In the Chicago to Dallas lane, rising tender rejection rates and rising spot rates highlight tightening capacity.

  • Greenville outbound rejection rates set to rise as outbound volumes continue to jump.

Indianapolis to Milwaukee – An increase in reefer rejection rates has pushed carrier rates up in both directions of the IND – MKE lane.

SONAR Tickers: TSTOPRRPM.INDMKE, ROTRI.IND/TSTOPRRPM.MKEIND, ROTRI.MKE


Highlights:

  • Reefer rejection rates have increased to 59.74% in the Indianapolis market, pushing the average carrier rate to $4.08 all-in rpm.

  • Reefer rejection rates have increased to 46.62% in the Milwaukee market, pushing the average carrier rate to $5.68 all-in rpm.

  • Indianapolis shippers have increased their reefer tender lead times to 3.87 days, which is still well below the national average of 4.36 days.

What does this mean for you?

Brokers: Capacity is tight on reefer loads that move between the Indianapolis and Milwaukee markets. Brokers should search the spot market for reefer loads that run in both directions of the IND – MKE lane. Increase your bids since rejection rates are trending upward in both markets, and keep downward pressure on your carrier rates. SONAR’s Market Dashboard shows current spot rates for on-demand capacity at $6.15 all-in rpm on the IND – MKE lane.


Carriers: Reefer carriers with excess capacity in the Indianapolis market should search the spot market for loads that deliver into the Milwaukee market. Last week, carriers averaged $4.08 all-in rpm on the lane, and $5.58 all-in rpm on the MKE – IND lane. SONAR’s Market Dashboard shows current spot rates for on-demand capacity at $6.15 all-in rpm on the IND – MKE lane, and $7.70 all-in rpm on the MKE – IND lane. Hold firm on your rates since rejection rates are trending upward in both markets.


Shippers: Indianapolis shippers need to increase reefer tender lead times since rejection rates are climbing in the market. Current tender lead times of 3.87 days are well below the national average of 4.36 days. Secure capacity as early as possible to help avoid the high rates carriers are charging for on-demand capacity. Prepare for market conditions to remain tight through the end of the year.


Chicago to Dallas – Rising tender rejection rates and rising spot rates highlight tightening capacity.


SONAR Tickers: VOTRI.CHIDAL, INTRM.CHIDAL


Highlights:

  • Door-to-door intermodal spot rates to move 53’ containers increased 15% in the past week – from $3.20/mile to $3.67/mile. Those rates include fuel surcharges.

  • In the past two weeks, the Chicago van outbound tender rejection rate increased 98 basis points (bps), while the nationwide van tender rejection rate declined 108 bps.

  • FreightWaves TRAC data shows the current average van spot rate in the lane of $3.20/mile, including fuel surcharges, with rates of $3.41/mile and $2.98/mile for rates in the 67th percentile and the 33rd percentile, respectively.

What does this mean for you?


Brokers: Raise your rates in this lane to preserve margins given that the recent trend in van spot rates is rising, according to FreightWaves TRAC. In light of FreightWaves TRAC data, use $3.20/mile as a benchmark for buy rates.


Carriers: Dallas is a Headhaul market with a Van Headhaul Index of 80.8, which means that it should be easy for van carriers to get reloaded in Dallas. Despite it being a Headhaul market, the Dallas van outbound tender rejection rate of 17.56% is 71 bps below the national van tender rejection rate, suggesting there is more available capacity in Dallas than in most markets.


Shippers: It’s clear from comparing van and intermodal spot rates that spot shippers are better off using the highway rather than rail intermodal. Rising spot rates and tender rejection rates in the lane indicate that shippers should extend lead times to at least the 2.5-day average for outbound Chicago van loads.


Greenville to Allentown – Rejections are likely to increase further after the Headhaul Index surge 36% week-over-week.


SONAR Tickers: OTVI.GSP, OTRI.GSPABE, OTRI.GSP, ITVI.GSP, ITRI.GSP


Highlights:

  • Greenville outbound tender volumes are up 6% week-over-week (w/w), signaling that demand for outbound capacity is picking up.

  • The Headhaul Index in Greenville is up 36% w/w, but could be poised to increase further as inland import rail container volumes head toward a record high.

  • Greenville outbound tender rejections are up 104 bps w/w, signaling that capacity is likely already tightening in the Greenville market.

What does this mean for you?


Brokers: Greenville tender rejections are already up 104 bps w/w, so with outbound volumes increasing 6% w/w and the Headhaul Index increasing 36%, outbound tender rejections are likely to be pushed even higher in the coming days. Make sure your team is aware of the upward pressure on rates, and be sure to prioritize your existing outbound Greenville lanes while this upward pressure continues.


Carriers: If outbound volumes in Greenville continue to increase, and inbound truckload volumes remain relatively flat (or continue dropping), then it is likely that we will see outbound tender rejections continue to increase. Outbound rejections are already up 104 bps w/w, so capacity is likely already tightening. If this current trend continues, the growing imbalance is likely to earn you even more pricing power in the days and weeks ahead.


Shippers: Your shipper cohorts have moderately increased their tender lead times w/w to 2.9 days. This is a signal that they are reacting to a likely tightening in capacity, which is also the same signal being sent by the 104 bps increase in tender rejections w/w. With the volume imbalance growing in Greenville alongside outbound tender rejections, it would be wise to make sure that you push your tender lead times to between 3 and 4 days to ensure you are getting this lane covered without paying above average premiums because of a lack of sufficient lead time.

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