The national freight market is “settling” into a seasonal summer slump. As seen in the SONAR chart below, capacity continues to loosen as volumes decrease.
The map to the left shows weekly changes in truckload tender rejection rates in color and volume changes in elevation. Blue coloring indicates a tightening market while red means loosening. The elevation indicates a volume increase.
From the map, you can see where the tighter markets are as well as the volume of loads being tendered. A blue market with decent elevation is your best bet to get loaded and paid as a carrier.
Contrary to that logic, shippers are looking at the red markets and lower elevations as the ideal environment to pay less for capacity.
There sure are a lot of red and white colors on this map!
The chart to the right shows a timeline trend of the same data sets on a daily basis for the nation in aggregate. Obviously, markets down and to right are not good from a carrier’s perspective.
Looking at rates and fuel in the SONAR charts above, there isn’t any relief or change in fortunes for carriers in the spot market.
The left side is comparing van contract rates in blue and spot market rates in green. I know, it does not look very good, but at least the slide in spot rates has leveled off.
The right side has retail diesel per gallon in blue and rack prices in green. The spread is still favoring the enterprise carriers; the playing field is still not level by any means.
However, at least retail fuel prices are slowly moving downward.
The best I can say about this is that things are not getting worse from a rate and fuel cost perspective.
The market watch tower above is a customizable market table in SONAR. If we focus on two columns in this table we can learn a good bit about market dynamics and why timely data is useful in a down market.
Across the top we are going to look at ITRI – the Inbound Tender Rejection Index – and OTRI – the Outbound Tender Rejection Index.
We will throw in the other columns as needed for context.
ITRI measures the flow of capacity into a market. A green square with positive movement means more rejections and less capacity entering the market.
OTRI measures the same flow of capacity from an outbound perspective. A green square with positive numbers means capacity is tight and shippers are having a hard time getting loads covered.
Let’s look at the top two markets in the country measured by outbound market share.
Atlanta, Georgia (ATL): ITRI is up 0.3% (flat) and OTRI is down 35%.
Introducing the volume of moves inbound (ITVI) and outbound (OTVI) will help explain that even though inbound rejections are flat the volumes have shifted and Atlanta has moved toward a backhaul market.
No, Atlanta is not a backhaul market. Atlanta moved 13% toward a backhaul market and that is why we have a loosening capacity market.
Ontario, California (ONT): In spite of this market moving 31.6% toward a backhaul, ITRI, or inbound rejections, rose 16.6% and outbound rejections rose 9.4%.
This is a severely tightening market!
But why, Mr. The Dude?
Glad you asked. The move towards backhaul was 31.6%. However, it is due to outbound tenders dropping 6.5% – not growth in inbound volume. Inbound volumes decreased AND rejections of that lesser volume increased by 16.6%
Plus, unlike Atlanta, there is a rather large market next door to Ontario that must be considered – Los Angeles.
Los Angeles’ inbound volumes dropped by 1.3% and rejections of those inbound loads also rose by 16% – at the same time, there were declining outbound volumes.
This means that even as outbound volumes are decreasing in both markets, and the inbound loads are flat to decreasing, the real multiplier is that fewer carriers are accepting those loads; therefore, the reduction in available capacity is exponential.
Peace and love