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USA LOGISTICS MARKET ANALYSIS 12/10/21


Today’s lanes to watch: Friday, December 10, 2021


Takeaways for today's lanes:

  • Memphis to Kansas City capacity is likely to tighten as the Headhaul Index increases over 30% week-over-week (w/w).

  • From L.A. to Atlanta, domestic intermodal volume increases and intermodal spot rates fall, suggesting improved intermodal network fluidity.

  • Atlanta to Lakeland rejection rates remain well above the national average.

Memphis to Kansas City – Capacity is likely to tighten as the Headhaul Index increases 30% week-over-week (w/w).


SONAR Tickers: OTVI.MEM, ITVI.MEM, OTRI.MEM, OTRI.MEMMCI


Highlights:

  • Memphis outbound tender volumes are up 33% w/w, signaling that demand for outbound capacity is increasing.

  • The Headhaul Index in Memphis is up 30% w/w, signaling that the imbalance between inbound and outbound volumes is growing.

  • Memphis outbound tender rejections are relatively flat w/w, but are likely to increase in the days ahead as demand for capacity increases.

What does this mean for you?


Brokers: It is likely that outbound tender rejections will continue to rise as the Headhaul Index surges 30% w/w. With a 31% increase year-over-year (y/y) in weekly inbound international containers moving into Memphis via rail, this surge in outbound volumes is likely to continue, and could even last through the remainder of 2021. With outbound tender volumes up 33% w/w, outbound tender rejections are very likely to move higher in the coming days and weeks.


Carriers: Stay firm on your rates as outbound tender rejections are likely to increase in the coming days, and that should shift pricing power into your favor. With inbound international volumes seeing significant growth into Memphis, outbound volumes are likely to continue growing through the remainder of the year. Keep an eye on outbound tender rejections and use this index to confirm tightening conditions are indeed driving pressure on rates upward or downward.


Shippers: Your shipper cohorts in Memphis are still averaging 2.6 days in tender lead times. The Headhaul Index in Memphis is up 30% w/w, and outbound tender rejections are likely to continue increasing in the coming days. It would be wise to keep your tender lead times between 3 and 4 days through the next couple of weeks to ensure you are able to secure capacity in the market.


Los Angeles to Atlanta – Domestic intermodal volume rises and intermodal spot rates fall, suggesting improved intermodal network fluidity.


SONAR Tickers: INTRM.LAXCHI, ORAILDOML.LAXATL


Highlights:

  • The door-to-door intermodal spot rate declined 32% in the past week in the L.A. to Atlanta lane to $2.82/mile, including fuel surcharges.

  • Using the SONAR Market Dashboard tool, the average dry van spot rate is $3.75/mile, including fuel surcharges.

  • The average loaded domestic intermodal volume in the lane in the past week was 362 containers/day, the highest level since about one year ago.


What does this mean for you?


Brokers: Lower your bids to reflect the falling tender rejection rates in the lane and also for outbound L.A. and inbound Atlanta loads. For brokers able to source containers, the latest changes in intermodal spot rates suggest that you can reduce purchased transportation costs by using rail intermodal. If going that route, be sure to give shippers a heads-up that transit times will be extended relative to truckload.


Carriers: Because intermodal network fluidity has improved and intermodal spot rates have declined, shippers that are using the highway in the lane are more likely to be moving loads that are highly time-sensitive, so be sure to get compensated accordingly. Based on recent changes to the Atlanta Van Headhaul Index (rising from -25 to +32 in the past two weeks), it should be easier for carriers to get reloaded in Atlanta.


Shippers: The sharp decline in intermodal spot rates in the past week is meaningful for spot shippers seeking to move loads that are less time-sensitive because door-to-door intermodal spot rates are now meaningfully below dry van spot rates. For shippers moving more timesensitive loads on the highway, it should be easier to keep loads out of the spot market given the recent decline in the tender rejection rate in the lane from the mid-20s to 17%.


Atlanta to Lakeland – Rejection rates top 20% into Lakeland.


SONAR Tickers: OTRI.ATL, OTRI.ATLLAL, OTRI.LAL


Highlights:

  • Atlanta’s outbound tender rejection rates have moved horizontally since Thanksgiving, hovering around 17%.

  • Rejection rates into the Lakeland market were more sensitive to the tightening that occurred out of Atlanta after Thanksgiving and continue to move at a much higher level than the market average.

  • Lakeland’s outbound rejection rate had a hiccup around Thanksgiving, but has since recovered to sub-10% levels, among the lowest in the U.S.

What does this mean for you?


Brokers: Hold the line on rates in this lane. Spot rates have declined this week, but this lane is still going to be difficult to cover as Florida has largely returned to being the consummate backhaul market for carriers. If you get a carrier to cover a load for less than $4 per mile, take it.


Carriers: Plan your next loads carefully in this lane. Make sure your rate covers any deadhead or dwell time potential. The spot market will not be able to bail you out if you get stuck too far down the I-75 corridor.


Shippers: Consider a rate increase in this lane if you have had less than 80% compliance over the past two months. Atlanta has been easing, but this could be the result of higher rates, especially in lanes that are as unbalanced as this one. This lane will remain a challenge even if the market eases.

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