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USA LOGISTICS MARKET ANALYSIS 11/15/2021


Today’s lanes to watch: Monday, November 15, 2021


Takeaways for today's lanes:

  • Reefer rejection rates climb on the Kansas City to Harrisburg lane as the Harrisburg reefer market deteriorates.

  • Capacity tightens surprisingly in the Stockton to Los Angeles lane.

  • Nashville to Elizabeth rejections are likely to increase as the Headhaul Index surges 21% w/w.

Kansas City to Harrisburg – Reefer market conditions soften in Harrisburg, pushing reefer rejection rates up to 58.22% on the MCI – MDT lane.


SONAR Tickers: ROTRI.MCIMDT, ROTRI.MCI/ROTRI.MDT, ROTVI.MDT


Highlights:

  • Reefer rejection rates increase from 46.64% to 58.22% over the past 6 days on the MCI – MDT lane, which is just below Kansas City’s market average of 63.92%.

  • Harrisburg’s reefer freight volumes decline to 52.65 index points as the demand for reefer equipment falls, pulling reefer rejection rates down to 20.14%.

  • Harrisburg shippers have increased reefer tender lead times to 4.63 days, indicating that shippers are still feeling pressure on capacity from the market.

What does this mean for you?


Brokers: Capacity has tightened on the MCI – MDT lane as market conditions in Harrisburg soften, allowing carriers to increase their rates for deliveries into that market. Brokers should search the spot market for reefer loads that run across the MCI – MDT lane, and increase your bids since carriers will increase their spot rates for on-demand capacity. SONAR’s Market Dashboard shows reefer carrier rates around $4800.00 all-in to the truck, indicating that brokers should bid around $5650.00 for a 15% margin on the load.


Carriers: Reefer carriers with excess capacity in the Kansas City market should search the spot market for reefer loads that deliver into Harrisburg. Capacity has tightened on this lane, pushing rejection rates back up to 58.22% as the volatility in rates increase on the lane. Reefer carriers are receiving rates between $4.49 - $4.75 all-in rpm on this lane, but your outbound rates from the Harrisburg market have declined.


Shippers: Harrisburg shippers need to keep downward pressure on carrier rates as market conditions soften. Reefer rejection rates are still over 20%, giving carriers the strength in rate negotiations, but the market is oversupplied with capacity and rejection rates are trending downward. Keep tender lead times extended, and secure capacity as early as possible.


Stockton to Los Angeles – Stockton rejection rates hit multi-month high.


SONAR Tickers: OTRI.SCK, OTRI.SCKLAX, OTRI.LAX


Highlights

  • Stockton’s outbound rejection rate bounced off a floor of around 11.5% on November 7 and are currently hitting a multi-month high around 15%.

  • Rejection rates to Los Angeles have moved similarly, which is surprising considering the backhaul nature of this lane.

  • Los Angeles’ outbound rejection rate has been relatively stable over the past few weeks, hovering around 16%.

What does this mean for you?


Brokers: Expect slight upward pressure on spot rates in this lane this week. This is still a favorable direction for carriers to move, but all the capacity is being pulled into southern California.


Carriers: Check the spot market for loads moving in this lane. This is basically free repositioning money if the pickup and delivery are efficient. Los Angeles brings some of the highest rates in the country and is showing no signs of demand side easing.


Shippers: Keep lead times elevated in this lane to increase your compliance. You will not be able to take capacity for granted even in the most unbalanced markets, thanks to the rate disparity between northern and southern California freight. That gap is narrowing slowly and rate increases may be a good near-term strategy if your compliance is below market levels.


Nashville to Elizabeth – Rejections likely to increase further as outbound volumes surge w/w.


SONAR Tickers: OTRI.PDX, OTRI.PDXSEA, OTRI.SEA, OTVI.PDX, OTVI.SEA


Highlights

  • Nashville outbound tender volumes are up 11% w/w, signaling that demand for outbound capacity is picking up.

  • The Headhaul Index in Nashville is up 21% w/w, and likely to increase further turning Nashville into a Headhaul market, where it is likely to remain through all of peak season.

  • Nashville outbound tender rejections are relatively flat w/w, signaling that the increase in outbound volumes has not yet caused a significant tightening in capacity.

What does this mean for you?


Brokers: Nashville tender rejections are relatively flat w/w, but are currently over 10% higher than the national average. With outbound volumes increasing 11% w/w, pushing the Headhaul Index up 21% w/w, it is likely that there is significant upward pressure on rates, so capacity is also likely to get tighter in the coming days. Nashville is likely to maintain consistent demand for outbound volumes, so be sure to account for the upward pressure on spot rates when pricing new opportunities and prioritizing coverage on your existing loads.


Carriers: Stay firm on your rates because there is significant upward pressure coming from both a decrease in supply and increase in demand w/w. Outbound tender rejections have already increased over 5% w/w, and with the Headhaul Index increasing 21% w/w, pricing power is likely to shift even further in your favor for outbound Nashville lanes. Keep an eye on outbound tender rejections. If they continue to rise, you can likely push your rates higher alongside them.


Shippers: Your shipper cohorts are currently average 2.8 days in tender lead times, and remain largely the same w/w. With outbound tender rejections on the rise alongside both outbound volumes and the Headhaul Index, you will likely need to push tender lead times well over 3 days to protect your company from at least some of the upward pressure being put on rates and causing a tightening of capacity.

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