March 17 SONAR sightings: Denver to Salt Lake City, shipper update, more

Highlights from Thursday’s SONAR reports are below. For more information on SONAR – the industry’s fastest freight forecasting platform – or to request a demo, Click here. Also be sure to check the latest update of SONAR, TRAC — the most recent spot rate data in the industry.

Way to watch: Denver to Salt Lake City

Overview: Spot rates stabilized after a brief surge in early January, while bid rejection rates rose.

Strong points:

  • Spot rates have stabilized between $2.40 and $2.45 per mile over the past two months after surging in January to around $3 per mile.
  • Denver’s outbound tender rejections remained volatile at around 17% to 20% over the same period, with the spike in spot rates in early January matching a tender rejection level of 32 % on January 5.
  • Outbound tender rejections from Denver to Salt Lake City largely mirrored Denver’s overall outbound tender movement, but remain high at 21.85% compared to the overall market rejection rate of 19, 89%.

What does this mean for you?

Brokers: Denver to Salt Lake City route continues to experience higher outbound tender rejection levels compared to the overall Denver outbound market. While spot rates have stabilized at $2.41/mile, the Salt Lake City destination market is seeing a bigger decline in bid rejections than Denver, currently sitting at 14.9%. This indicates spot rates could rise slightly as capacity increases relative to volume, forcing carriers to raise prices to cover Utah’s lower outbound rates.

Carriers: Spring weather should bring some relief from poor road conditions in parts of Utah and Colorado, but expect more snow in Colorado through April, when average low temperatures will exceed finally the freezing point. Colorado’s snow chain laws are in effect from September 1 through May 31, which may prevent owner-operators and other capabilities from entering the Denver-Utah corridor until early April. If so, this can potentially put downward pressure on rates, as more capacity to volume will reduce spot rates.

Senders: Falling levels of tender rejections are a welcome sign, as is the stabilization of spot rates, allowing for greater ability to predict potential transportation spending. Continue to focus on tender compliance. Outbound tender times remain high at 3,346 days as both markets suffer from lower capacity levels than major metropolitan areas. If outbound tender volumes and tender turnaround times decrease, we could see the possibility of lower rates, as lower volumes relative to capacity can provide transportation savings.

Watch: Shipper Update

Lane to watch: Dallas to Lakeland, Florida

Overview: Rejections fall to a yearly low in Dallas.

Strong points:

  • Dallas’ outbound rejection rate hit a new low for 2022, dropping from 15% to 12.6% last week.
  • Discharge rates to Lakeland have also declined, but at a much slower rate (still lower than the national average). Spot rates have trended lower since the start of the month, dropping 3 cents to $2.97 per mile.
  • Lakeland’s rejection rate rose four percentage points to 12.37% at the start of the month, due to tighter capacity for vans and refrigerators.

What does this mean for you?

Brokers: Target spot rates below $3 per mile in this lane, which should always remain one of the highest priorities for finding coverage out of the Dallas market.

Carriers: Expect improved conditions at Lakeland this week as rejection rates continue to climb. It could be a problem of contract fares that are too low, but carriers should see an increasing option compared to February. Don’t be greedy with the rates out of Dallas as they drop rapidly.

Senders: Expect slightly better compliance on this lane this week, but make sure it’s one of the first lanes you book on Dallas’ outbound charges.

Watch: Carrier Update

Way to watch: Toledo, Ohio, to Charlotte

Overview: Discharges are up as the Headhaul index increases by more than 6% w/w.

Strong points:

  • Toledo’s outbound tender volumes increased 8% w/w, signaling that demand for capacity is increasing.
  • The Headhaul index in Toledo is up 6% w/w, signaling that capacity is likely to tighten.
  • Toledo’s outbound tender rejections are up 264 basis points w/w, signaling that capacity is likely already tightening.

What does this mean for you?

Brokers: Toledo outbound bid rejections rose 264 basis points w/w. This increase in releases is a signal that capacity is tightening significantly. For this reason, you will likely find it more difficult to find capacity for outbound freight to Charlotte. If the Headhaul Index continues to rise, it will put even more pressure on capacity and spot rates. Let your team know that they will need to prioritize the Toledo market for coverage while ensuring they accurately price all loads looking to ship out of Toledo over the next few weeks.

Carriers: Rejections are up 264 basis points in the Toledo market, which has likely started to put significant upward pressure on rates. If outbound volumes continue to increase relative to inbound volumes, stay firm on your rates in the coming days to ensure your rates reflect the capacity crunch that is likely to continue as demand increases.

Senders: Your shipper cohorts in Toledo currently have 2.8 day bidding times, but with the 264 bps increase in bidding rejections in Toledo w/w, it would be wise to get a head start on your competitors for truckload capacity by bringing your bidding deadlines closer to four days. This will help you maintain adequate capacity if/when the market tightens again.

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