5 SONAR charts that stand out

Dry van contract rates are lapping last year’s peak

Like most modes, dry van contract rates rose sharply two years in a row — from 2020 to 2021 and again from 2021 to 2022. Even with loosening freight markets, CPGs have highlighted freight rates as being a drag on profitability, reflecting elevated contract rates. Charts like the one below, which shows average dry van contract rates excluding fuel surcharges, shows how that may soon change as contract rates are no longer higher year-over-year and negotiating leverage shifts back into shippers’ favor. 

West coast imports have finally cracked

After being elevated since mid-2020, twenty-foot equivalent container imports to the Ports of LA and Long Beach plummeted in September, down 21.5% y/y and 7.4% y/y, respectively. For the Port of LA specifically, it was the lowest level for a September (typically, a strong month seasonally) since 2009. That data is relevant even for CPG companies that do not import products or ingredients because it directly translates to looser capacity for domestic surface transportation modes.  

Carriers are not expecting a domestic intermodal peak season

I was not expecting one, but the comment from J.B. Hunt’s management team served as confirmation. In addition to the decline in imports, the lack of a seasonal rise in the chart below, which shows average door-to-door spot rates to move 53’ containers, also suggests that domestic intermodal volume this fall will be muted. When the Class I railroads are expecting tight intermodal capacity, as they were the past two third and fourth quarters, they take spot rates higher in an effort to protect capacity for contracted shippers. That didn’t happen this year.   

The reefer tender rejection rate is only 6%

While you could say “what a difference a year makes” right now for all freight segments, it’s perhaps nowhere more on-point than in the reefer segment. One year ago, average reefer contract rates, excluding fuel surcharges, were $2.05-$2.15 and carriers were rejecting 35%-40% of tenders because there were plenty of higher-rated loads on the spot market. That’s no longer the case and the current reefer contract rates of ~$2.55 (excluding fuel surcharges) are generally high enough to be market-clearing and, as a result, reefer carriers are only rejecting 6% of load requests. 

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Last mile isn’t enough anymore — it’s time to look at the last 100 feet

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