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USA LOGISTICS MARKET ANALYSIS 12/9/2021


Today’s lanes to watch: Thursday, December 9, 2021


Takeaways for today's lanes:

  • A sharp drop in door-to-door intermodal spot rates in the L.A. to Chicago lane makes domestic intermodal a viable option for spot shippers.

  • Nashville to Elizabeth capacity is likely to get much tighter in the days ahead as outbound volumes surge over 92% week-over-week (w/w).

  • Dallas rejection and spot rates to Columbus are falling as capacity eases.

Los Angeles to Chicago – A sharp drop in door-to-door intermodal spot rates makes domestic intermodal a viable option for spot shippers.


SONAR: INTRM.LAXCHI, ORAILDOML.LAXCHI


Highlights:

  • The domestic intermodal spot rate to move 53’ containers declined 33.5% in the past week (from $3.94/mile to $2.62/mile). Those rates include fuel surcharges.

  • The dry van spot rate is $3.57/mile, including fuel surcharges, according to Market Dashboard, which aggregates rates that brokers are paying for highway capacity.

  • Intermodal tender rejection rates for outbound L.A. loads and inbound Chicago loads are 8.7% and 5.0%, respectively.


What does this mean for you?


Brokers: In light of the decline in intermodal spot rates, logistics companies that are able to source containers and broker intermodal loads should again consider that to be a viable option for sourcing capacity in the lane. For those brokering more timesensitive loads, you may want to lower your bids in the lane given that the L.A. longhaul outbound tender rejection rate of 16.24% has fallen 367 basis points (bps) below the long-haul national tender rejection rate.


Carriers: With intermodal tightness easing, dry van carriers face more competition from domestic rail intermodal. Therefore, tendered loads in the lane are more likely to be time-sensitive or service-sensitive. Carriers should make sure to get compensated accordingly for that level of service.


Shippers: The sharp decline in the domestic intermodal spot rate in the past week suggests that domestic intermodal capacity is more available to move containers outbound from L.A. With domestic intermodal spot rates now 26.6% below dry van truckload rates, intermodal is again a viable option for shippers with less time-sensitive loads.


Nashville to Elizabeth – Rejections are likely to increase further as outbound volumes surge over 92% w/w.


SONAR Tickers: OTVI.BNA, OTRI.USA, OTRI.BNA, ITVI.BNA, ITRI.BNA


Highlights:

  • Nashville outbound tender volumes are up 92% w/w, signaling that demand for outbound capacity is picking up.

  • The Headhaul Index in Nashville is up 62% w/w, and likely to increase further. This is changing Nashville into a headhaul market, where it is likely to remain through all of peak season.

  • Nashville outbound tender rejections are up 12% w/w, signaling that the increase in outbound volumes has likely already caused a major tightening in capacity.


What does this mean for you?


Brokers: Nashville tender rejections are up 12% w/w, and are currently over 13% higher than the national average. With outbound volumes increasing 92% w/w (pushing the Headhaul Index up 62% w/w), it is likely that there is significant upward pressure on rates. Therefore, capacity is also likely to get even tighter in the coming days. Nashville is likely to maintain consistent demand for outbound volumes, so be sure to account for the upward pressure on spot rates when pricing new opportunities and prioritize coverage on your existing loads.


Carriers: Stay firm on your rates because there is significant upward pressure coming from both a decrease in supply and an increase in demand w/w. Outbound tender rejections have already increased over 12% w/w, and with the Headhaul Index increasing 62% w/w, pricing power is likely to shift even further in your favor for outbound Nashville lanes. Keep an eye on outbound tender rejections. If they continue to rise, you can likely push your rates higher as well.


Shippers: Your shipper cohorts have increased lead times significantly w/w, and are currently averaging 3.3 days. Outbound tender rejections, outbound volumes and the Headhaul Index are all rising. You should push tender lead times closer to 4 days to protect your company from at least some of the upward pressure being put on rates and causing a tightening of capacity.


Dallas to Columbus – Tender rejection rates continue to decrease w/w.

SONAR Tickers: OTVI.DAL, ITVI.DAL, OTRI.DALCHI, OTRI.DAL, ITRI.DAL


Highlights:

  • Dallas’ outbound rejection rate has been falling slowly since Labor Day, dropping from 25% to 15.4% over the past three months.

  • That trend has accelerated over the past week. Rejection rates to Columbus are above the national average as it remains one of the most rejected high-volume lanes out of Dallas, but they have been trending lower over the past month.

  • Columbus’ rejection rates appear to be in lockstep with the national average, moving around 20% over the past month.


What does this mean for you?


Brokers: Expect falling rates in this lane. FreightWaves TRAC spot rates have fallen over $0.06 per mile since December 3, and are currently around $2.46. Dallas is much better supplied than it was over the summer, which should also make it much less volatile.


Carriers: Rely less on spot loads out of Dallas, but note this lane is still seeing rejection rates above 22%. If contract rates are well below $2.50 per mile, it may be worth your time to divert capacity to cover it. Also, it may be a good lane to target for an increase since it is moving into the well supplied northeastern corridor.


Shippers: Do not lower your guard on this lane just yet. Dallas is becoming slightly more manageable, but there is still strong resistance to moving into the Northeast. Keep lead times above 3 days when possible.

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