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USA LOGISTICS MARKET ANALYSIS 11/9/2021


Today’s lanes to watch: Tuesday, November 9, 2021


Takeaways for today's lanes:

  • Surplus capacity builds in the Phoenix market, applying downward pressure on outbound rates to Los Angeles.

  • Elizabeth to Chicago spot rates are likely to increase significantly in the weeks to come as maritime import volumes shatter daily records at the Port of NY/NJ.

  • Memphis to Columbia has become much easier to cover over the past week.


Phoenix to Los Angeles – Average dry van carrier rates decline to $1.65 all-in rpm on the PHX – LAX lane.

SONAR Tickers: TSTOPVRPM.PHXLAX, VHAUL.PHX/TSTOPVRPM.LAXPHX, VHAUL.LAX


Highlights:

  • Dry van carriers averaged $1.65 all-in rpm last week on the PHX – LAX lane, but additional capacity has built up in the market as inbound trucks outnumber outbound loads.

  • Dry van carriers averaged $4.56 all-in rpm last week on the LAX – PHX lane as capacity issues continue to plague Southern California markets.

  • Phoenix shippers increased dry van tender lead times to 2.18 days, which is still well below the national average of 2.60 days.

What does this mean for you?


Brokers: Brokers should search the spot market for loads that run across the PHX – LAX lane, but expect shippers to push your rates down on the lane. There is a surplus of trucks in the Phoenix market looking to shift to the Los Angeles or Ontario markets, which has loosened capacity on that lane. When searching for capacity, search for Phoenix-based carriers first, and push their rates down to create margin. Phoenix-based carriers can take advantage of the $4.56 all-in rpm average return rate, which might entice them to reduce their rates on the PHX – LAX lane.


Carriers: Dry van carriers with trucks inbound into the Phoenix market need to plan ahead and search the spot market for loads that deliver into the Los Angeles market instead of moving your truck empty on the lane. Accept what you are offered on the lane, which should allow you to break even, or clear a small margin on the load. Los Angeles and Ontario markets are the hottest markets in the nation. Multiple lanes are averaging $4.00-plus all-in rpm out of the Southern California markets, and shippers might pay a lot more for on-demand capacity.


Shippers: Phoenix shippers need to keep downward pressure on carrier rates as a surplus of dry van equipment builds in the market. The Phoenix dry van Headhaul score has declined to -121.86, indicating there are many more trucks inbound into the market than outbound loads. If you are shipping freight into the Los Angeles market, search the spot market for capacity, and push rates down near $1.00 rpm to start negotiations.


Elizabeth to Chicago – Rejections may be down week-over-week, but outbound volumes are likely to hit even higher all-time highs before the end of November.

SONAR Tickers: OTVI.EWR, OTRI.EWR, OTRI.EWRCHI, WICSTM.USNYC


Highlights:

  • Elizabeth outbound volumes are up 3% week-over-week (w/w), but with maritime import volumes hitting a new all-time high for daily volumes, demand is likely to surge higher.

  • Elizabeth’s outbound tender rejections are down 338 basis points (bps) w/w, but outbound volumes and maritime import volumes hitting record highs could cause that trend to reverse.

  • The Port of NY/NJ has hit a new record high in daily volumes, and is likely to continue hitting new record highs between now and the end of the month.

What does this mean for you?


Brokers: The import volumes pouring into the Port of NY/NJ are currently at record levels, and that trend is expected to continue. Any shippers who still have freight in those ocean containers that is needed for the holidays will be looking to expedite those shipments as soon as possible, which is likely to cause significant upward pressure on spot market rates. This is true at almost every major port in the U.S., so expect that the port-side truckload markets are likely to be some of your tightest conditions in the weeks leading up to the holidays.


Carriers: Stay firm on your rates as pricing power in the Elizabeth market is highly likely to shift further in your favor in the week ahead. Outbound volumes are positioned to surge in the weeks ahead and will likely extend beyond their recent record highs. This increase in demand is likely to cause a significant tightening in capacity in the Elizabeth market, but it is possible that the upward pressure on spot rates will be much higher due to the timesensitive nature of many of these containers.


Shippers: The record highs we have recently seen at nearly every major port in the U.S. is not over yet. Instead, it is highly likely that spot rates will rise at an even faster pace between now and the holidays, even if outbound tender rejections do not surge alongside volumes. If you are in the Elizabeth market with outbound volumes to move, you should push your tender lead times between 3 and 4 days as soon as possible. Conditions are likely to get worse from now through at least the end of November (but possibly through Christmas).


Memphis to Columbia – Memphis outbound rejection rates fall back to Earth

SONAR Tickers: OTRI.MEM, OTRI.MEMCAE, OTRI.CAE, OTVI.MEM, OTVI.CAE


Highlights:

  • Memphis’ outbound rejection rate fell from 32% on October 31 to 27.4% to start this week while demand appears to be easing.

  • Rejection rates to Columbia have also fallen dramatically over the past week, but are now well below the Memphis market average.

  • Columbia is in a strong easing pattern with rejection rates falling below 20% for the first time since July and volumes are also steadily moving downward.

What does this mean for you?


Brokers: Expect easing conditions in this lane in terms of contract compliance this week. Rates may still feel a bit of upward pressure due to the fact that one in four loads is still being rejected, but this is the loosest this lane has been since early August.


Carriers: Do not plan on as much reload potential out of Columbia this week for either spot or contracted freight. Rejection rates are still high, but dropping steadily. Tender volumes are also falling. At this point there is no sign of holiday surges at the origin or destination of this lane.


Shippers: Expect better contract compliance this week in this lane. If you are still experiencing compliance levels below 70%, consider offering short-term increases to get through the holidays.

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