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USA LOGISTICS MARKET ANALYSIS 11/22/2021


Today’s lanes to watch: Monday, November 22, 2021


Takeaways for today's lanes:

  • Shippers moving less time-sensitive loads from Elizabeth, NJ to Chicago should utilize rail intermodal.

  • Joliet to Nashville rejection rates hit highest point since September.

  • Richmond to Atlanta capacity is likely to get tighter in the days ahead as rejections climb more than 5% week-over-week (w/w).

Elizabeth, NJ to Chicago – Shippers moving less time-sensitive loads should utilize rail intermodal.


SONAR Tickers: ORAILDOML.EWRCHI, ORAILDOME.EWRCHI, INTRM.LINCHI, TSTOPVRPM.EWRCH


Highlights

  • In the past two weeks, the van tender rejection rate in the Elizabeth to Chicago lane increased 269 basis points to 19.8%, 30 basis points above the national van tender rejection rate.

  • SONAR Market Dashboard shows that brokers are currently paying carriers $2.45/mile, including fuel surcharges, in the lane.

  • The door-to-door intermodal spot rate in the lane to move 53’ containers is $1.45/mile, including fuel surcharges.

What does this mean for you?


Brokers: Raise your rates in the lane. While the overall tender rejection rate has increased modestly leading up to Thanksgiving (although, it has risen less before the holiday than it typically does), the tender rejection rate specifically in the Elizabeth to Chicago lane has risen more than most lanes in the past two weeks.


Carriers: Dry van carriers should have an easy time getting reloaded in Chicago given the Chicago Van Headhaul Index of 48, which suggests there is significantly more demand to move outbound van loads than inbound van loads. Meanwhile, the Chicago outbound tender rejection rate of 18.6% is 90 basis points below the national average.


Shippers: Spot shippers moving less time-sensitive loads should look to utilize domestic intermodal given the wide current spread between intermodal and dry van spot rates. With current lead times on similar loads averaging 2.6 days, shippers are unlikely to get loads moved in the lane before Thanksgiving.


Joliet to Nashville – Joliet rejection rates on the rise before the holiday.


SONAR Tickers: OTRI.JOT, OTRI.JOTBNA, OTRI.BNA, OTVI.JOT, OTVI.BNA


Highlights

  • Outbound rejection rates have increased nearly two percentage points over the past week from the Joliet market, making it one of the more significant tightening markets in the U.S. when taking volume into account.

  • Lane rejection rates to Nashville have moved similarly and at their highest level since late September.

  • The Nashville market is easing significantly with rejection rates falling to their lowest point since February.

What does this mean for you?


Brokers: Pad margins without secured capacity. Average spot rates have not increased yet, but there is a wide range of rates according to TRAC which leaves a large margin for error when quoting. Do not take Joliet capacity for granted this week.


Carriers: Divert more capacity to the spot market in this lane. Nashville is easing significantly and will produce less opportunities for both contract and spot freight. Do not accept loads without a solid preplan.


Shippers: Prioritize outbound Joliet freight over most other areas. Expect more upward pressure on spot rates and declining capacity in this lane than many other markets save for Los Angeles.


Richmond to Atlanta – Capacity is likely to get tighter in the days ahead as rejections climb over 5% week-over-week (w/w).


SONAR Tickers: OTVI.RIC, OTRI.RIC OTRI.RICATL, WICSTM.USORF


Highlights:

  • The Port of Norfolk’s weekly maritime import shipment volumes have been at near record highs for multiple weeks in the past 4 months.

  • The Headhaul Index in Richmond is up 16% w/w, but is positioned to climb further in the next week as the rush before “Black Friday” pushes outbound demand higher.

  • Outbound tender volumes in Richmond are already up 15% w/w, and are expected to move higher before the Thanksgiving Holidays.

What does this mean for you?


Brokers: The Richmond truckload market is likely to tighten significantly in the days ahead. Already, there has been a 16% w/w in outbound tender volumes, and with record import volumes pouring into the Port of Norfolk for the last 4 months, demand for truckload capacity in Richmond is likely to grow close to (and possibly surpass) record highs as the holidays approach. Make sure you are getting your outbound Richmond loads booked earlier than usual, and be on watch for significant upward pressure on spot rates in the weeks to come.


Carriers: Stay firm on your rates, as you are likely to see pricing power shift further into your favor in the days ahead. A large percentage of import volumes into the Port of Norfolk move inland via drayage carriers into the Richmond market, so with record import volumes moving into the Port of Norfolk over the last few months, outbound truckload volumes in Richmond stand to benefit and the increase in demand will put even more upward pressure on spot rates.


Shippers: Your shipper cohorts currently have tender lead times at 2.6 days, but that is not likely to be sufficient for the increase in demand that is expected in the weeks ahead. In the tightest markets historically, shippers in Richmond have increased lead times to between 3 and 3.5 days to help offset tightening conditions in the outbound truckload market.

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