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USA LOGISTICS MARKET ANALYSIS 11/4/2021


Today’s lanes to watch: Thursday, November 4, 2021


Takeaways for today's lanes:


  • Rejection rates increase on the Atlanta to Memphis lane.

  • In the Dallas to L.A. lane, both dry van truckload and domestic intermodal spot rates increased in the past week.

  • Ontario capacity is likely to tighten as truckload volumes head toward their peak for 2021.

Atlanta to Memphis – Dry van rejection rates increase to 18.40% on the ATL – MEM lane, which is above the market average of 15.84%.



SONAR Tickers: VOTRI.ATL, VOTRI.ATLMEM/VOTRI.MEM, MOTRI.MEM


Highlights:

  • Atlanta’s dry van rejection rates have declined to 15.84%, but rejection rates on the ATL – MEM lane have increased to 18.40%.

  • Dry van rejection rates have declined to 33.17% in the Memphis market, but rejection rates on mid-haul lanes remain well above the market average at 42.67%.

  • Atlanta shippers increase dry van tender lead times to 2.73 days as pressure is felt from changing market conditions.

What does this mean for you?


Brokers: Monitor rejection rates in the Atlanta market. Shippers are starting to feel more pressure from the current market conditions, which could be a signal of carriers pushing spot rates up in the market. Search the spot market for loads that run across the ATL – MEM lane, and increase your rates since rejection rates have climbed to 18.40% on that lane. Memphis is still a strong market for carriers, so keep downward pressure on the rates you receive.


Carriers: Dry van carriers with excess capacity in the Atlanta market should search the spot market for loads that deliver into the Memphis market. Dry van rejection rejection rates have declined in both markets, but rejection rates are still over 30% in the Memphis market. If you are searching for regional freight, mid-haul rejection rates are over 40% in the Memphis market.


Shippers: Atlanta shippers need to keep tender lead times extended as market conditions begin to shift. Dry van rejection rates have held steady the past few days around 15%, and rejection rates on multiple lanes have started to increase. Keep downward pressure on carrier rates, and secure capacity as early as possible. Spot rates for on-demand capacity will increase over the next few weeks.


Dallas to Los Angeles – Spot rates increase for both dry van and domestic intermodal.


SONAR Tickers: INTRM.DALLAX, TSTOPVRPM.DALLAX, ORAILDOML.DALLAX, ORAILDOME.DALLAX


Highlights:

  • The tender rejection rate in the lane increased 125 basis points (bps) in the past week to 16.3% which is 390 bps below the national tender rejection rate.

  • The domestic intermodal spot rate increased 10.5% in the past week to $1.20/mile, including fuel surcharges. That intermodal spot rate is 12.4% below the latest dry van truckload quote of $1.37/mile.

  • Since the first week of October, loaded domestic intermodal volume in the lane decreased from 360 units/day to 318 units/day while the volume of empty domestic intermodal units increased from 70 units/day to 170 units/day.

What does this mean for you?


Brokers: Despite the backhaul status of the lane, recent changes in spot rates suggest that it is probably not worth brokers’ effort to source intermodal capacity. Raise your rates to preserve margins in light of the recent appreciation in both dry van and intermodal spot rates.


Carriers: Carriers will likely want to accept tendered loads in this lane given that it will be easy to get reloaded in Los Angeles. Elevated import volume is contributing to a L.A. Van Headhaul Index of 160, which indicates there is far more outbound L.A. demand than inbound L.A. demand.


Shippers: The narrowing gap between dry van truckload rates and domestic intermodal rates, which suggests that carriers are incentivizing the quick repositioning of domestic containers to the West Coast, may be enough to discourage shippers from using domestic intermodal given the lingering intermodal congestion issues.


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

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


Highlights:

  • Ontario outbound tender volumes are up 8% 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 36% w/w, signaling that capacity is likely to tighten in the coming days as volumes become increasingly imbalanced.

  • Ontario outbound tender rejections are relatively flat w/w, but are likely to rise in the coming days as outbound volumes head towards their 2021 peak.


What does this mean for you?


Brokers: Outbound volumes are up 8% w/w, and are expected to continue increasing as port volumes continue getting transitioned from containers to the truckload market. Even though rejections are relatively flat w/w, the major increase of over 36% in the Headhaul Index is a signal that rejections are likely to move higher in the coming days. Already, spot rates to Dallas are moving higher, and the surge of volumes is far from over.


Carriers: The surge w/w in the Headhaul Index is likely to continue causing a significant tightening in capacity. Outbound volumes are likely on the rise, and headed towards a peak for 2021. 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 2.4 days in their outbound tender lead times, and have been steadily increasing them over the last few weeks. However, 2.4 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.

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