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USA LOGISTICS MARKET ANALYSIS 2/11/2022


Today’s lanes to watch: Friday, February 11, 2022


Takeaways for today's lanes:

  • Rate spreads from Atlanta to Chicago highlight domestic rail intermodal as a viable option for spot shippers in the lane.

  • Spot rates are steadily increasing from Kansas City to Denver.

  • Richmond to Dallas spot rates are likely to move higher as outbound rejections rise 3.6% and the Headhaul Index increases 19% w/w.

Atlanta to Chicago – Rate spreads highlight rail intermodal as a viable option for spot shippers.

SONAR Tickers: ORAILDOML.ATLCHI, ORAILDOME.ATLCHI, INTRM.ATLCHI


Highlights:

  • The average daily volume of loaded and empty domestic intermodal containers moving in the lane in the past week were 301 units and 21 units, respectively, the highest number of units since early December.

  • The door-to-door intermodal spot rate to move 53’ containers in the lane is $2.21/mile, including fuel surcharges. That is 27% below the dry van truckload spot rate shown in SONAR’s Market Dashboard app.

  • The Atlanta freight market has shown more loosening than most. The Atlanta tender rejection rate for outbound dry van loads is 12.6%, down from 17.5% in late January.

What does this mean for you?


Brokers: SONAR Market Dashboard shows that brokers are currently paying an average of $3.03/mile, including fuel, for capacity in the lane. That is near the lowest average rate of the past month, which has ranged from $3.02-$3.08. Brokers may want to trim a few cents from their recent bids in the lane.


Carriers: Chicago is currently a solid destination for carriers. The Chicago van outbound tender rejection rate increased 106 bps (to 18.84%) in the past week. The Chicago van outbound tender rejection rate is only slightly below the national van tender rejection rate of 19.25%. Many of the nation’s largest freight markets are currently far below national tender rejection rates.


Shippers: Based on current spot rate and volume data, domestic intermodal is a viable option for shippers moving loads that are less time-sensitive. When moving more time-sensitive shipments on the highway, keep your loads out of the spot market, which should be feasible given the declining tender rejection rates associated with outbound Atlanta loads.


Kansas City to Denver – Tightening capacity is putting upward pressure on spot rates.

FreightWaves TRAC Market Dashboard – Kansas City to Denver


Highlights:

  • Outbound volumes have increased 12 bps w/w out of Kansas City; the demand for outbound capacity is tightening.

  • FreightWaves TRAC rate is $5.88 a slight dip since the end of January

  • Denver's outbound rejection numbers have steadily declined from the beginning of the year. They are now 18.58, signaling capacity is loosening.

What does this mean for you?


Brokers: The Kansas City market is tightening significantly as we head into the weekend. The Headhaul Index is increasing, which signals capacity is tightening. Be prepared for an increase in spot rates.


Carriers: Rates have taken a small dip, but given the tightening in the Kansas City market be prepared for those rates to jump again. Hold firm on your rates now and don't hesitate to raise them as capacity becomes scarcer.


Shippers: Tender lead times in both markets are just over 3 days. While Denver has dropped from 3.5 to 3.1 days, it still makes sense to ship early and get those loads out while you can (before rates skyrocket).


Richmond to Dallas – Spot rates are likely to move higher as outbound rejections rise 3.6% and the Headhaul Index increases 19% w/w

FreightWaves TRAC Market Dashboard – Richmond to Dallas


Highlights:

  • Outbound tender volumes are up 12% w/w, indicating that demand for outbound capacity is increasing.

  • The Headhaul Index in Richmond is up 19% w/w, signaling that there is a growing imbalance between inbound and outbound capacity.

  • Outbound tender rejections are already up 3.6%, but are likely to increase further as a result of the increase in demand for outbound capacity.

What does this mean for you?


Brokers: The Richmond truckload market is likely to tighten significantly in the days ahead. There already has been a 12% w/w increase in outbound tender volumes, and with the Headhaul Index increasing 19% w/w, capacity is likely to tighten significantly in the days ahead. Be sure to prioritize this lane and let your team know that there is significant upward pressure on spot rates.


Carriers: Stay firm on your rates; you are likely to see pricing power shift further into your favor in the days ahead. Spot rates are already at a one-month high, and with the growing imbalance in volumes and increasing tender rejections, Richmond’s market conditions are very favorable for carriers.


Shippers: Your shipper cohorts currently have tender lead times at 2.3 days, but that is not likely to be sufficient for the increase in demand that is expected in the weeks ahead. In the tightest markets historically, shippers in Richmond have increased lead times to between 3 and 3.5 days to help offset tightening conditions in the outbound truckload market.

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