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USA LOGISTICS MARKET ANALYSIS 11/24/2021


Today’s lanes to watch: Wednesday, November 24, 2021


Takeaways for today's lanes:

  • Shippers should extend lead times in the Memphis to Chicago lane as both origin and destination markets continue to tighten.

  • Ontario to Dallas capacity is likely to get much tighter in the days ahead as the Headhaul Index surges toward a year-to-date high.

  • Atlanta capacity continues to loosen, keeping spot rates to Chicago flat into the holiday.

Memphis to Chicago – Shippers should extend lead times as both origin and destination markets tighten.


SONAR: Market Dashboard


Highlights

  • The van tender rejection rate in the lane increased 427 basis points in the past two weeks to 24.8%.

  • The van tender rejection rate in the lane is well below the 32.8% tender rejection rate for all van loads outbound from Memphis.

  • The Chicago van inbound tender lead time rose from 2.5 days earlier in the month to 2.8 days in the past week as shippers have become more concerned about securing capacity during the week of Thanksgiving.

What does this mean for you?


Brokers: Prioritize covering loads in this lane given the current tightness in the Memphis market and a rising tender rejection rate for inbound Chicago loads. FreightWaves Market Dashboard shows that other brokers are paying an average of $3.14/mile, including fuel, in the lane with $3.37/mile and $2.98/mile representing buy-rates in the 67th and 33rd percentiles, respectively.


Carriers: Memphis is a tighter van market than most currently with a van outbound tender rejection rate of 32.8%. Therefore, before accepting tenders to Chicago, seek out highlyrated spot loads.


Shippers: Extend lead times past the 2.8-day average for inbound Chicago loads as capacity tightens. Not only is capacity more challenging to secure during the holiday week, but Chicago has become less of a Headhaul market which may make securing inbound Chicago capacity more challenging (Chicago Headhaul Index declined from 90 in late October to 52 currently).


Ontario to Dallas – Capacity likely to get tighter as truckload volumes head towards their peak for 2021.


SONAR Tickers: OTVI.ONT, OTRI.ONT, HAUL.ONT, WCSTM.LAX


Highlights

  • Ontario outbound tender volumes are up 15% week-over-week (w/w), but with massive import volumes still inbound, the upward trend is expected to continue.

  • The Headhaul Index in Ontario is up over 78% w/w, signaling that capacity is likely to tighten in the coming days as volumes become increasingly imbalanced.

  • Ontario outbound tender rejections are already up 253 bps w/w, and are likely to rise higher in the coming days.

What does this mean for you?


Brokers: Outbound volumes are up 15% w/w, and are expected to continue increasing as port volumes continue getting transitioned from containers to the truckload market. Even though rejections are already up 253 bps w/w, the major increase of over 78% in the Headhaul Index is a signal that rejections are likely to move even higher in the coming days. Already, spot rates to Dallas are moving higher, and the surge of volumes is not over yet.


Carriers: The surge w/w in the Headhaul Index is likely to continue causing a significant tightening in capacity. Outbound volumes are booming and could break a record high for the year. For those reasons, stay firm on your rates while keeping an eye on outbound tender rejections.


Shippers: Your shipper cohorts in Ontario are currently averaging 2.6 days in their outbound tender lead times, and have been steadily increasing them over the last few weeks. However, 2.6 days is not likely to be enough time as outbound volumes head towards their peak for 2021. Historically, 3.5 to 4 days has been the target to help offset extremely tight conditions.


Atlanta to Chicago – Atlanta capacity eases into Thanksgiving break.


SONAR Tickers: OTRI.ATL, OTRI.ATLCHI, OTRI.CHI


Highlights:

  • Atlanta’s outbound rejection rate has been in steady decline since late June, falling from over 30% to near 16% over the past five months.

  • Rejection rates to Chicago have followed a similar pattern until the past two weeks when rates bounced from 17.5% on November 10 to over 20% currently. This uptick has had no impact on spot rates as they have been hovering around $2.69 per mile for the past week, but with a relatively wide range according to FreightWaves TRAC.

  • Chicago’s outbound rejection rates have been moving higher over the past month, increasing roughly 3 percentage points over this time.

What does this mean for you?


Brokers: Expect a slight uptick of spot volume for loads moving after the holiday with spot rates flat to lower. Atlanta is easing and this lane is stabilizing outside of the service sensitive freight. Rates above $3 per mile should be a rarity for standard freight.


Carriers: Divert more capacity to cover contract freight in this lane. Chicago is tightening while Atlanta is easing. Reload potential is on the rise out of the midwestern hub and spot rates are also on the climb unless the freight is moving back to Los Angeles.


Shippers: Expect easing conditions in this lane outside of the holiday and service critical impact. Some slight decline in compliance is evident, but not nearly as drastic as it has been in previous holidays this year thanks to easing aggregate demand and increasing lead times.

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