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USA LOGISTICS MARKET ANALYSIS 12/27/2021


Today’s lanes to watch: Monday, December 27, 2021


Takeaways for today's lanes:

  • Rejection rates jumped nearly 4 percentage points from Atlanta to Chicago.

  • The Headhaul Index in Dallas increased 4% week-over-week (w/w), signaling that capacity is likely to tighten further

Atlanta to Chicago – Rejection rates spike in one of the nation’s highest volume longhaul lanes.

SONAR Tickers: OTRI.ATL, OTRI.ATLCHI, OTRI.CHI


Highlights:

  • Atlanta’s outbound rejection rate increased to 17.8% over Christmas, its highest level since October.

  • Rejection rates to Chicago have increased nearly 6 percentage points since December 13 to 24%. Average spot rates have increased 16 cents per mile to $2.91 per mile over the same period.

  • Chicago’s outbound rejection rate has not increased with any significance in response to the Christmas holiday, hovering around 20% since December 15.

What does this mean for you?


Brokers: Pad margins and expect upward pressure on spot rates in this lane. Look over your loads scheduled in this lane this morning and double check for coverage.


Carriers: Expect more spot market activity in this lane this week. Double check shipper hours of operation before accepting anything to ensure you do not get stuck with a load over the holiday.


Shippers: Double check with your carriers on loads scheduled to move in this lane this week. Expect spot rates to still be at a premium on anything moving outside of contract.


Ontario, CA to Dallas – Capacity is tightening in two of the largest markets in the country, placing upward pressure on rates


SONAR Market Dashboard: FreightWaves TRAC spot rates from Ontario, CA to Dallas


Highlights:

  • Rejection rates along one of the denest lanes in the country increased by 510 basis points (bps) w/w, outpacing the national average, which increased 130 bps.

  • The Dallas Headhaul Index increased over 4% during the past week, indicating capacity is likely to tighten in the coming days.

  • FreightWaves TRAC spot rates are ~20 cents off the recent highs, but as capacity tightens in both markets, upward pressure on rates will increase.

What does this mean for you?


Brokers: As capacity tightens, margins will get squeezed, so focus on padding margins during the beginning of the week, before rates have a chance to catch up. Expect carrier network disruptions as the week between Christmas and New Year’s is a period when capacity remains off the road.


Carriers: Take advantage of freight moving out of Southern California. Carriers are going to be able to claw back some pricing power, especially in the larger markets due to how tight capacity is around the country. Expect increased spot market activity in both Ontario and Dallas.


Shippers: Expect carrier network disruptions due to the holidays, which will lead to increased spot market activity. Upward pressure on rates in the coming days is likely due to capacity remaining off the road, so be willing to pay slightly higher rates to secure capacity. Additionally, extend lead times to give carriers ample time to accept and pick up loads.


Kansas City to Fort Worth – A 305 bps increase w/w in rejections is signaling that capacity is likely to remain tight in the week ahead.


SONAR Market Dashboard Trac Spot Rates from Kansas City to Ft Worth


Highlights:

  • Kansas City outbound tender volumes are down 23% w/w, signaling an increase in demand for truckload capacity.

  • The Headhaul Index in Kansas City is relatively flat w/w, signaling that the large imbalance between inbound and outbound truckload volumes is easing.

  • Kansas City outbound tender rejections are up 305 bps w/w, signaling that capacity is likely to remain tight through the New Year.

What does this mean for you?


Brokers: Capacity may not be as tight on the Kansas City to Fort Worth lane as it is for the entire Kansas City market. However, with rejections up over 300 bps w/w, the Kansas City market is likely to remain tight through the New Year. The major 23% drop in outbound volumes should help relieve pressure from the demand side in the weeks ahead.


Carriers: Stay firm on your rates for your outbound Kansas City loads, as there is significant upward pressure coming from the 305 bps increase in outbound rejections w/w. With outbound tender rejections much higher than the national average, you still have pricing power in your favor for outbound Kansas City lanes.


Shippers: Your shipper cohorts currently have tender lead times at 3.5 days, but these will likely need to be pushed to 4 days to ensure proper coverage in the Kansas City market that has seen a 305 bps increase in rejections w/w.

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