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USA LOGISTICS MARKET ANALYSIS 2/15/2022


Today’s lanes to watch: Tuesday, February 15, 2022


Takeaways for today's lanes:

  • Spot rates fell off a peak as rejection rates dropped from Atlanta to Stockton.

  • In the LA to Atlanta lane, falling dry van spot rates and rising intermodal spot rates indicate that spot shippers should use the highway.

  • Outbound tender rejections surged in Roanoke, causing high spot market rates inbound to Birmingham.

Atlanta to Stockton – Atlanta’s outbound rejection rate fell over two percentage points last week.

SONAR Tickers: OTRI.ATL, OTRI.ATLSCK, OTRI.SCK


Highlights:

  • Atlanta’s outbound rejection rate dropped over two percentage points to 14.1% over the past week, which is one of the strongest volume moves in the country.

  • Rejection rates to Stockton recently fell below the market average with FreightWaves TRAC spot rates peaking around $2.10 per mile last week before falling back slightly.

  • Stockton’s outbound rejection rate has plummeted since the beginning of the year, falling from 17.5% to 9.5%.

What does this mean for you?


Brokers: Expect some easing in this lane this week as Atlanta capacity becomes more available. Thanks to elevated rates, carriers are targeting westbound loads, even if they are heading into traditionally oversupplied markets.


Carriers: Because of declining rejection rates, do not expect as much volume in this lane this week. The Atlanta market has stabilized over the past week, which will reduce contract waterfalls and spot market activity.


Shippers: Evaluate your carriers if you are still seeing compliance rates below 80% and your contract rate is above $1.50 per mile plus fuel over the past month. Rate increases should not be necessary, but deeper route guides or longer lead times may be needed.


Los Angeles to Atlanta – Falling dry van spot rates and rising intermodal spot rates indicate that spot shippers should use the highway.

SONAR Tickers: INTRM.LAXATL, VOTRI.LAXATL, VOTRI.LAX, VOTRI.USA


Highlights:

  • As shown in the SONAR Market Dashboard app, the dry van spot rate in the lane is $3.25/mile, including fuel, down 8% from one month ago.

  • The intermodal spot rate to move 53’ containers door-to-door, which is updated each week in SONAR, increased 38.4% in the past week to $3.45/mile, including fuel.

  • The dry van tender rejection rate in the lane is 11.7%, down 408 basis points (bps) in the past month.

What does this mean for you?


Brokers: The falling spot rates in the lane indicate that you should lower your bids in order to preserve margins. When bidding for capacity, keep in mind that the average dry van spot rate is $3.22/mile while $3.34/mile and $3.05/mile are the spot rates in the 67th and 33rd percentiles, respectively. All rates include fuel surcharges.


Carriers: The tender rejection rate on dry van loads departing LA has fallen to 6.9%, well below the national van tender rejection rate of 18.4%. Therefore, there will be fewer spot loads available than you have become accustomed to during the pandemic. The Atlanta market is not as tight as most domestic freight markets currently, but the Atlanta Van Headhaul Index of 23 indicates that there should be sufficient opportunities to get reloaded in Atlanta.


Shippers: It is likely that very few, if any, intermodal containers are moving on the spot market at the latest $3.45/mile spot rate. However, the sharp 38% increase in the intermodal spot rate in the lane, well above dry van spot rates, suggests that carriers have become concerned with securing capacity for intermodal shippers that have contracts in place. Therefore, intermodal shippers should add more time to their plans and spot shippers should utilize the highway.


Roanoke to Birmingham – Spot rates climb to 6-month highs amid rising outbound tender rejections.

FreightWaves TRAC Market Dashboard – Roanoke to Birmingham


Highlights:

  • Because of weather disruptions, Roanoke outbound tender rejections have

surged 94% from early February lows of 12.47% to 24.20%.

  • FreightWaves TRAC spot rates from Roanoke to Birmingham have plateaued at

6- month highs of $3.72 per mile, a 36-cent increase since January 1 rates.

  • Birmingham outbound tender rejections climb to 29.32%, indicating ongoing capacity-related volatility and higher outbound spot rates.

What does this mean for you?


Brokers: Rising tender rejections and spot rates are creating high lane volatility, which can lead to higher margins as shippers are paying premiums for ad hoc opportunities. Building an in-depth carrier routing guide will reward brokers via higher margins, as a 36- cent per mile swing within 30 days leaves the opportunity to quote high and buy a truck for lower costs.


Carriers: For extra capacity in the market, spot market volatility can be a boon for revenues. Ad hoc quotes directly with shippers can generate significantly higher rates than contract rates, while increasing the odds of the quote being awarded (since brokerages may charge extra due to their marginal buffer requirements). Knowing your cost per mile, the market rate, and cost of other capacity can create greater opportunities to stack revenue on the truck.


Shippers: High tender rejections and spot rates represent major headwinds for orders moving at the last minute or if a carrier falls off a load. Increase tender lead times to catch potential service issues earlier in advance; otherwise expect to pay higher costs on the spot market the closer you get to the ship date. Brokerage competition may increase due to volatility, as brokers that leverage greater buying power can produce some savings.



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