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USA LOGISTICS MARKET ANALYSIS 2/9/2022


Today’s lanes to watch: Wednesday, February 9, 2022


Takeaways for today's lanes:

  • Spot rates have fallen 60 cents per mile in Los Angeles to Denver.

  • Capacity is loosening out of Memphis, pushing spot rates down.

  • The wide spread between intermodal and dry van rates in the Elizabeth, NJ to Chicago lane highlights excess intermodal capacity.

Los Angeles to Denver – SoCal capacity continues to ease, but rates are still high.

FreightWaves TRAC Market Dashboard – Los Angeles to Denver


Highlights:

  • The FreightWaves TRAC spot rate has fallen nearly 60 cents per mile in this lane since January 20, which is still historically high at $5.48 per mile.

  • Los Angeles’ outbound rejection rate has fallen from 18% at the first of the year to 8% on Monday. Rejection rates to Denver have moved similarly but at a higher level.

  • Denver’s outbound tender volumes are on par with where they were in the fall of 2021, with rejection rates hovering around 20%.

What does this mean for you?


Brokers: Expect continued easing in this lane as carriers continue to target covering the market’s high margin long-haul freight. Target rates between $5 and $5.50 per mile. This lane is still extremely expensive but you can lower your buy side pricing expectations compared to last week.


Carriers: Expect less spot market opportunity in this lane and rely less on the transactional freight out of southern California. Make sure this lane has had enough increase to make it worth your effort on the contracted side as inflationary pressure is easing.


Shippers: If your compliance is not improving in this lane make sure your rates are not extremely different from the spot rate in this lane as it continues to be heavily imbalanced. Spot rates are falling, but contract rate increases are a defining factor.


Memphis to Joplin – Loosening capacity in Memphis puts downward pressure on spot rates.

FreightWaves TRAC Market Dashboard – Memphis to Joplin


Highlights:

  • Memphis hits its lowest outbound rejection rate in almost 6 months (19.80%), in contrast with Joplin's highest rejection rates in a month (44.0%).

  • Volumes are on the rise in both Memphis and Joplin. Both are climbing at aggressive rates.

  • FreightWaves TRAC spot rate comes in at $3.83, which is the lowest rate in 6 months on this lane. It continues to hover around $4.00 per mile.


What does this mean for you?


Brokers: Spot rates are down on this lane, so price freight lower to help move it out of Memphis. Nicely balanced freight markets such as Joplin should be no problem for carriers to find a load to haul (Joplin’s HAUL Index is at 0.67, meaning the market has an almost equal amount of inbound and outbound loads.)


Carriers: Memephis has an overwhelmingly higher amount of outbound shipments and a loosening market. Make sure those spot rates are reflected appropriately as they trend downward. There should be no issue to find a load In Joplin once you're there.


Shippers: Keep tender lead times at a minimum of 3 days. Capacity is loosening in Memphis, but the balance is tight. Joplin’s inbound and outbound loads are almost perfectly balanced. Get your shipments rolling now before rates spike upward.


Elizabeth, NJ to Chicago – The wide spread between intermodal and dry van rates highlights excess intermodal capacity.

SONAR Tickers: ORAILDOME, ORAILDOML, INTRM.LINCHI, TSTOPVRPM.EWRCHI


Highlights:

  • In the past week, an average of 267 loaded and 15 empty domestic intermodal containers moved each day in the lane, suggesting that there is some excess domestic intermodal capacity (otherwise there would be no empty containers).

  • The latest intermodal spot rate to move 53’ containers door-to-door in the lane is $1.70/mile, including fuel.

  • The dry van spot rate per Market Dashboard is $3.08/mile, including fuel, up from $2.56/mile one month ago. In the past week, Truckstop.com published a dry van spot rate of $2.78/mile, including fuel, in the lane.


What does this mean for you?


Brokers: Raise your rates in the lane to reflect the necessity for brokers to pay more for ondemand capacity in the lane. Keep in mind that the average spot rate that brokers are paying for on-demand capacity is $3.08/mile, including fuel, with $2.82/mile and $3.35/mile representing buy-rates in the 33rd and 67th percentile, respectively.


Carriers: With an outbound tender rejection rate of 19.65%, the Chicago dry van market is roughly as tight as the national freight market. Meanwhile, the Chicago Van Headhaul Index of 34 indicates that Chicago remains a headhaul market.


Shippers: For shippers moving less time-sensitive loads, domestic rail intermodal appears to be an attractive option, with both rates and empty container volume indicating that there is excess capacity in the lane. For shippers moving more time-sensitive loads, keep highway lead times extended past the 2.6-day average for dry van loads inbound to Chicago.

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