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USA LOGISTICS MARKET ANALYSIS 12/2/2021


Today’s lanes to watch: Thursday, December 2, 2021


Takeaways for today's lanes:

  • Spot rates from L.A. to Phoenix continue to rise, hitting new high.

  • Capacity to loosen on loads exiting Allentown as volumes drop off.

  • Spot rates increase 7 cents per mile in a day from Columbus to Boston Los Angeles to Phoenix – Spot rates continue to rise, hitting new high.


SONAR Tickers: Market Dashboard Los Angeles to Phoenix


Highlights

  • SONAR Market Dashboard shows that the spot rates that 3PLs have been paying for dry van capacity in the lane have increased throughout the past month to a current spot rate of $5.41/mile, including fuel surcharges.

  • The dry van tender rejection rate in the lane declined 51 basis points in the past week to 16.55%, which is 242 basis points higher than the tender rejection rate for all van loads inbound to Phoenix.

  • The current Phoenix Van Headhaul Index is -90, which shows that Phoenix is even more of a backhaul market than it was during the first three quarters of the year when the Phoenix Van Headhaul Index ranged from -50 to -90.

What does this mean for you?


Brokers: Raise your rates in light of SONAR Market Dashboard data that shows average spot rates that brokers are paying for capacity in the lane hitting a new high at the start of December. Keep your bids for capacity in the low $5/mile range, including fuel, and look to pay a dry van spot rate near $5.17/mile, including fuel, which would represent a buy rate in the 33rd percentile.


Carriers: Dry van spot rates have shown steady appreciation in the past month. For carriers, accepting a highly-rated load is key as compensation for heading to a deeply backhaul market. If you’re willing to head to the desert, seek out spot rates that are at least in line with the range of spot rates shown in Market Dashboard ($5.17/mile and $5.64/mile for rates in the 33rd and 67th percentile, respectively).


Shippers: Other shippers moving van loads to Phoenix have average tender lead times of 2.7 days, which indicates that shippers are concerned with securing inbound Phoenix capacity. With carriers rejecting 16.6% of tendered van loads in the lane, have your routing guide in order as you look to keep loads out of the spot market to avoid all-in spot rates that exceed $5/mile


Allentown to Chicago – Capacity should loosen after outbound volumes drop 2.7% w/w.


SONAR Tickers: WICSTM.USNYC, OTVI.ABE, OTRI.ABECHI, OTRI.ABE


Highlights

  • Allentown outbound tender volumes are down 14% w/w, signaling that demand for outbound capacity has dropped significantly since the Thanksgiving holiday.

  • The Headhaul Index in Allentown is up 37% w/w, signaling that capacity is likely to tighten due to a growing imbalance between inbound and outbound volumes.

  • Allentown outbound tender rejections are relatively flat w/w, but due to the growing imbalance in volumes, rejections are expected to rise in the days ahead.

What does this mean for you?


Brokers: Allentown outbound capacity has considerable room to tighten further, and we are likely to see rejections increase through the remainder of 2021. Be sure to keep an eye on outbound tender rejections because that will be one of the best proxies for a significant tightening in the market. Rejections are relatively flat w/w, but be sure to take note of the growing imbalance in volumes and its potential impact on capacity.


Carriers: Allentown pricing power is shifting even further in your favor as the large surge of over 37% in the Headhaul Index is likely to cause a significant tightening of capacity in the days ahead. This will be especially true in the lead up to the Christmas holiday season, and arguably the most important month for truckload transportation.


Shippers: Your shipper cohorts in Allentown are averaging 3.4 days in tender lead times (hit a record high in the last week), but it is highly recommended to push those out to between 4.5 and 5 days. You are likely to experience a significant tightening in capacity this month as Christmas approaches


Columbus to Boston – Boston’s outbound rejection rates hit the highest point in over a month.


SONAR Tickers: Market Dashboard Columbus to Boston


Highlights

  • Spot rates in this lane jumped back above $4.45 with a 7 cent per mile increase from Monday to Tuesday, according to FreightWaves’ TRAC.

  • Columbus to Boston’s rejection rate has increased over two percentage points over the past 10 days.

  • Boston’s outbound rejection rate has spiked to 17.32%, its highest point since October 21.

What does this mean for you?


Brokers: Expect upward pressure back on rates in this lane as capacity tightens around the origin market. Pad margins and double check all contracted loads scheduled for pickup over the next two days. It isn’t a code red event, but this lane is one of the first to go as capacity becomes less available.


Carriers: Cover this lane on the spot market unless contract rates are above $4.50 per mile. There should be some increasing opportunity for reload out of Boston, even though it may not be all the way back out of the New England corridor. Midhaul (250-450 mile) and long haul (800+ mile) loads are driving Boston’s latest increase in outbound rejection rate.


Shippers: Expect some disruption to capacity in this lane. If your compliance rates are below 80% and your rates are at or above $4.40 per mile it may be time to evaluate a new carrier if this is a high volume lane.

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