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USA LOGISTICS MARKET ANALYSIS 3/4/2022


Today’s lanes to watch: Friday, March 4, 2022


Takeaways for today's lanes:

  • Spot rates moderate in the Atlanta to Chicago lane with Chicago an attractive

destination for carriers.

  • Volatile spot rates continue to impact the Jacksonville to Charlotte lane, as both markets experience elevated tender rejection rates.

  • Increasing geopolitical risks in Europe are likely behind the surging ocean container volumes from major European origin ports to the U.S.

Atlanta to Chicago – Spot rates moderate with Chicago an attractive destination for carriers.

FreightWaves TRAC Market Dashboard – Atlanta to Chicago


Highlights:

  • The Chicago outbound tender rejection rate increased 192 bps in the past month to 19.7%.

  • The average dry van spot rate in the lane in the past month declined 4% to $2.91/mile, including fuel surcharges.

  • The door-to-door intermodal spot rate in the lane is $2.25/mile, including fuel.

What does this mean for you?


Brokers: The slightly moderating rates that brokers are paying for on-demand dry van

capacity in the lane likely reflects carriers’ greater willingness to head to Chicago.

When negotiating with carriers, cite Chicago’s above-average van tender rejection rate

of 19.7%.


Carriers: Chicago is currently a solid destination for carriers. The Chicago outbound van tender rejection rate of 19.7% is 130 bps above the national rate and Chicago is a headhaul market, as it typically is, with a Van Headhaul Index of 44.


Shippers: The 22% spread between the door-to-door intermodal spot rate and the current dry van spot rates suggests there is excess intermodal capacity in the lane and intermodal may be a viable option for shippers moving loads that are less timesensitive.


Jacksonville to Charlotte – Volatile spot rates continue to impact this lane as both markets experience elevated tender rejection rates.

FreightWaves TRAC Market Dashboard – Jacksonville to Charlotte


Highlights:

  • Spot rates continue to display volatility, with rates ranging from $2.88 to $3.49 in the past month, a 21% swing.

  • The Jacksonville market’s outbound tender rejections fell from early January highs of around 30% down to around 15% by late February, with a slight rebound to 17.56%.

  • The Lakeland market is located 200 miles to the southwest of Jacksonville in central Florida. Lakeland’s tender rejections are 9.45%, much lower than Jacksonville’s as it continues to experience limited capacity.

What does this mean for you?


Brokers: There is an opportunity for greater margins if carriers are deadheading 200 miles up from the Lakeland market, as spot rates from Jacksonville are $1.14 greater per mile and tender rejections continue to hover between 15%-20%. The recent surge in outbound tender volumes from 114 to 141 bps indicates greater demand and the possibility of customers paying premium spot rates due to lack of capacity in the market.


Carriers: Volumes and rejections appear to be rising in the Jacksonville market. This provides an opportunity to gain extra revenue if ad hoc spot quotes become available. The volatile spot rates still favor carrier pricing, but pay attention to customer and commodity characteristics, as some of these premium loads may be paying more due to customer backlogs from surging volumes and can increase the risk of detention.


Shippers: Rising volumes and rejections in the market indicates a need to increase tender lead times, which recently surged to 3.058 days and then declined to 2.83 days, signaling customers attempting to buy capacity further in advance to offset the rising rates. The rising volumes and rejections suggest the tender lead time should increase back toward late February highs, and with that, an increase in spot market rates.


Import lanes from Europe to U.S. Ports – Ocean container volumes are on the rise across most major countries of origin for U.S. imports.

SONAR Tickers: IOTI.USA, FBXD.ENAE


Highlights:

  • Container volumes are currently up 6% year-over-year (y/y) for U.S. imports, and are projected to move higher in the next 7 days.

  • Major countries of origin in Europe such as Germany, the Netherlands, Belgium and Italy have all had positive week-over-week (w/w), month-over-month (m/m), and y/y changes in volume.

  • Container rates per 40-foot container from Europe to North America (East Coast) are up 213% y/y.

What does this mean for you?


Brokers: Be sure to push your booking lead times further out to ensure you are securing space as far in advance as possible. It is highly likely that companies are looking to move higher volumes than normal from Europe as greater uncertainty arises from the Russian invasion of Ukraine. This could push container rates higher, but will almost certainly cause capacity to tighten if volumes continue to rise.


Carriers: Spot rates are currently averaging $6,886 per FEU (213% higher than last year), but you may be justified in moving them a bit higher due to the increased volumes coming from major ports of origin in Europe. Specifically, we are seeing significant increases from Germany, Italy, the Netherlands and Belgium, which comprise a majority of the major lanes from Europe to the U.S.


Shippers: Push your lead times out as far as you can (3 to 4 weeks if possible). We are seeing volumes pick up significantly from Europe to the U.S. and it is likely a result of the increased uncertainty from the invasion of Ukraine. That is unlikely to go away any time soon and has the risk of spilling over in some form or fashion into other countries, so moving volumes earlier this year makes sense. Expect rates to climb higher if this trend continues.

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