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USA LOGISTICS MARKET ANALYSIS 12/16/2021


Today’s lanes to watch: Thursday, December 16, 2021


Takeaways for today's lanes:

  • Spot rates are bouncing around above $4 per mile in St. Louis to Cleveland lane.

  • Spot rates are off the recent highs, but significant increases in HAUL in both Seattle and

  • Los Angeles signal upward pressure on rates. Los Angeles to Dallas spot rates are likely to increase in the days ahead as the Headhaul Index surges 30% week-over-week (w/w).

St. Louis to Cleveland – St. Louis’ outbound rejection rate jumps over 21%.


SONAR Tickers: Market Dashboard for van rates from St. Louis to Cleveland


Highlights:

  • St. Louis’ outbound rejection rates continue to climb, increasing from 20.03% to 21.36% in a single day.

  • Average spot rates to Cleveland have been erratic over the past week as a wide dispersion of rates has come in (most of them averaging over $4 per mile).

  • Cleveland’s outbound tender volumes are on a seasonal decline, but rejection rates have increased nearly two percentage points over the past two days – pushing the value over 18%.

What does this mean for you?


Brokers: Prioritize loads moving into the Northeast and pad margins on just about everything moving out of St. Louis. Seasonal tightening has begun across the U.S., but St. Louis is displaying a stronger movement than many other markets.


Carriers: Expect increasing spot market activity in this lane, but recognize you are heading into a more stable area in Cleveland. Spot loads should still be available with most of those falling in the 250- to 450-mile range.


Shippers: Expect more difficulty in covering loads moving in this direction – especially if your contract rates fall well below the going spot rate. We are in the final stretch of the year when capacity only gets tighter until after the New Year.


Los Angeles to Seattle – Spot rates are off recent highs, but imbalances in both markets will cause capacity to tighten quickly.


SONAR Tickers: Market Dashboard for van rates from Los Angeles, CA to Seattle, WA


Highlights:

  • Capacity in Los Angeles is already starting to tighten as rejection rates are up 64 basis points (bps) w/w.

  • Severe imbalances in Los Angeles indicate further tightening on the horizon as the Headhaul Index (HAUL) increased 30.75% w/w.

  • FreightWaves TRAC spot rate is off recent highs, but will likely increase as capacity tightens in both markets.

What does this mean for you?


Brokers: Be diligent when pricing freight moving out of Southern California. As rejection rates rise, there will likely be increased disruptions to your carrier networks moving forward due to increased spot market activity.


Carriers: Seattle isn’t as unattractive as it traditionally is; the Headhaul Index has increased by 48.82% w/w. If you can get loads into the market, there will likely be increased spot market activity on outbound loads.


Shippers: Expect some disruption to carrier networks through the end of the year. The home stretch of 2021 will be as difficult as it has been throughout the year with capacity coming offline for the holidays. A willingness to pay higher rates could go a long way in getting loads covered over the next two and a half weeks.


Los Angeles to Dallas – Spot rates are likely to increase in the days ahead as the Headhaul Index surges 30% w/w.


SONAR Market Dashboard Trac Spot Rates from Los Angeles to Dallas


Highlights:

  • Los Angeles outbound tender volumes are up 3% w/w, signaling that demand for outbound capacity is rising as rail volumes hit the truckload market.

  • The Headhaul Index in Los Angeles is up 30% w/w, signaling that capacity is likely to tighten further as volumes become increasingly imbalanced.

  • Los Angeles outbound tender rejections are already up 64 bps w/w, but that is likely to increase as the imbalance between inbound and outbound volumes grows.

What does this mean for you?


Brokers: Beware of the 30% increase w/w in the Headhaul Index that is being primarily driven by a decline in inbound volumes. With over 70 vessels waiting off the coast of the ports of Los Angeles and Long Beach to deliver record amounts of cargo in the coming weeks, the decline in inbound volumes means that there is likely to be less available truckload capacity in the coming days, which will put significant upward pressure on spot rates.


Carriers: The pricing power in Los Angeles is likely to shift further into your favor in the days and weeks ahead. With over 70 vessels now at anchor off the coast, U.S. importers are getting even more desperate to get their containers as quickly as possible. Many of these loads are likely to become extremely hot, expedited shipments. Many of them will require team drivers and shippers will pay additional premiums for guaranteed delivery.


Shippers: At this point, if you are moving volumes out of the Los Angeles market, you will need to pay additional premiums for capacity. This will be especially true for expedited shipments. With container rates from China to the U.S. likely to increase another 10-15% before the end of the year, you need to be focusing more on guaranteeing capacity, and getting your lead times out to as far as possible.

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