Contracted truckload has a fight on two fronts!
As the urgency of truckload shipments continues to wane, intermodal becomes more attractive because it is a cheaper yet reliable mode of transport.
The SONAR chart below shows intermodal volumes (orange) compared with truckload volumes (blue). The disparity in the volumes over the past couple of months is evident.
The right side is comparing long-haul intermodal and mid-haul intermodal savings over truckload. Although both spreads are trending downward at the moment, the savings is still quite high.
While this is certainly taking volume from the truckload carriers, it is not the only negative impact contract carriers are seeing.
The national average for spot rates including fuel has now crossed contract rates excluding fuel. This gives shippers a discount mechanism to employ against higher contract rates.
When this occurs the market sees the descent of rejection rates stall or even reverse. This is due to intentional routing guide failure as shippers tender loads directly to the spot market.
As shippers move loads from contracted carriers to the intermodal and spot markets we see contracted loads fall and the drop in rejection rates stall or reverse.
Read more articles from Michael “The Dude” Vincent
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