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USA LOGISTICS MARKET ANALYSIS 11/17/2021


Today’s lanes to watch: Wednesday, November 17, 2021


Takeaways for today's lanes:

  • Rejection rates increase in both directions of the Chicago to Kansas City lane.

  • Spot rates increased 19% over the past week in the Portland to Los Angeles lane

  • Shippers should keep lead times extended in the Chicago to Atlanta lane.

Chicago to Kansas City – Capacity has tightened between Chicago and Kansas City, pushing spot rates upward in both directions of the lane.


SONAR Tickers: VOTRI.CHIMCI, VHAUL.CHI/VOTRI.MCI, VOTRI.MCICHI


Highlights:

  • Dry van rejection rates have increased to 18.20% on the CHI – MCI lane as Chicago’s Headhaul score climbed to 56.04.

  • Dry van rejection rates jumped to 21.19% on the MCI – CHI lane, which is just below the market average of 22.52%.

  • Kansas City shippers increase dry van tender lead times to 3.18 days, which is well above the national average of 2.67 days.

What does this mean for you?


Brokers: Spot rates are climbing on freight that moves between Chicago and Kansas City, as capacity tightens on the lane. Brokers should search the spot market for dry van loads that move across both the CHI – MCI and MCI – CHI lanes. Increase your bids since rejection rates are trending upward on the lanes, and SONAR’s Market Dashboard shows an increase in the rates paid to carriers.


Carriers: Dry van carriers with excess capacity in either Chicago or Kansas City should search the spot market for loads that move between the two major markets. SONAR’s Market Dashboard shows spot rates have increased to $4.04 all-in rpm on the CHI – MCI lane with some carriers receiving rates as high as $4.42 all-in rpm. Carrier spot rates have increased to $2.89 all-in rpm on the MCI – CHI lane, with some carriers receiving rates as high as $3.33 all-in rpm. Do not let shippers or brokers push your rates down as we approach the Thanksgiving holiday.


Shippers: Kansas City shippers need to keep dry van tender rejection rates extended as rejection rates climb in the market. Upward pressure is being applied to spot rates, squeezing capacity options for shippers. Secure capacity as early as possible, and try to avoid putting your loads on the spot market. Volatility has increased in carrier spot rates, forcing shippers to pay extremely high rates for on-demand capacity.


Portland to Los Angeles – Portland rejection rates top 20% for first time in a year.

SONAR Tickers: Market Dashboard - Portland to Los Angeles, OTRI.PDX, OTRI.PDXLAX, OTRI.LAX


Highlights:

  • Portland’s outbound rejection rate has climbed from 15.5% on November 8 to 20.5% on November 15, the highest level since November 2020.

  • Rejection rates to Los Angeles have increased from 12.6% to 14.7% over the same time, while all-in spot rates have climbed from $1.73 to $2.07 per mile according to FreightWaves’ TRAC.

  • Los Angeles remains active with outbound rejection rates climbing over a percentage point this past week to 17%.

What does this mean for you?


Brokers: Pad your margins in this lane. Rates have increased significantly as capacity has tightened dramatically over the past week. There is a pretty wide distribution of rates at this point with a $0.40 difference between the bottom and top tertiles, meaning you will need to cast a wide net to get the best rate.


Carriers: Accept more loads into the Northwest and take advantage of an active spot market and increasing load availability moving out of the region. Rates are still low in comparison to many other markets like Los Angeles, but this will help your compliance rates with your existing customers and allow you to be more profitable while maintaining better service.


Shippers: Make the extra call to all your carriers for loads moving over the next few weeks in this lane. Compliance rates are still relatively high in comparison to most other markets, but this is the time of the year when capacity should not be taken for granted in the Pacific Northwest.


Chicago to Atlanta – Shippers should keep lead times extended as carriers become more reluctant to head to Atlanta.

SONAR Tickers: VOTLT.CHI, VITLT.ATL, ORAILDOML.CHIATL


Highlights:

  • In the past week the domestic intermodal door-to-door spot rate increased 13%, from $3.09/mile, including fuel, to $3.56/mile, including fuel. That spot rate is 10% below the current dry van spot rate in the new Market Dashboard tool.

  • Domestic intermodal volume has been fairly stable since late September at around 275 units/day, the highest level since this spring, which suggests a lack of excess intermodal capacity.

  • The average tender lead time for inbound Atlanta dry van loads is 2.9 days, which suggests that shippers are concerned with sourcing inbound Atlanta dry van capacity.

What does this mean for you?


Brokers: Prioritize covering this lane given some carriers’ reluctance to head to Atlanta. You may also want to raise your rates in this lane to preserve margins given that a falling Atlanta outbound tender rejection rate is making the city a less desirable destination for carriers.


Carriers: Before accepting tendered loads to Atlanta, be sure to get compensated for Atlanta having a below-average van outbound tender rejection rate (15.27% compared to 18.96% nationally) and for Atlanta’s current status as a backhaul market (the Atlanta Van Headhaul Index is -16).


Shippers: Push lead times out to 3 days or longer given that most other shippers are concerned with securing inbound Atlanta capacity amid a 23.4% Atlanta van inbound tender rejection rate. For spot shippers, the 10% discount via the highway is likely not enough of a discount to use rail intermodal given the potential for lingering intermodal service issues.

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