The SONAR team is ready with another “SONAR Indices & Insights.” Each week, you’ll learn about another index found within SONAR, the freight forecasting platform from FreightWaves. This week we’ll focus on the “ALOHA” or Average Length of Haul index and how it allows SONAR subscribers to gauge carrier decisions on freight availability and pricing.
Average Length of Haul captures the number of reported monthly miles, divided by the number of reported loads during the same interval by carriers participating in the Truckload Carrier’s Association’s TCA Profitability Program, or TPP.
The ALOHA indices can be broken down by company fleets, or leased fleets and viewed by dry van, reefer and flatbed trailer types.
Here is the formula: Total Miles Driven / Number of Loads
Analysts: can utilize ALOHA data to gain visibility into the decisions regional carriers are making with the choices they have on available freight. When markets are strong, regional carriers will tighten their average lengths of haul, keeping their trucks closer to their terminals. When markets weaken, freight options are slim and average lengths of haul will expand as carriers accept loads out of their comfort zone.
Carriers: can use the ALOHA index as another checkpoint on how the freight economy is handling current market conditions. When ALOHA starts to increase, it could be a signal there might be a reduction in freight options on average across the nation, and when ALOHA begins to decline, it could be a signal that freight options are opening, and carriers are able to accept more of the loads they prefer to run.
Brokers: It is important for brokers to monitor benchmarking freight data based on decisions made by regional carriers to understand or predict the direction carrier freight rates are heading. ALOHA can give brokers insight on how strong the market conditions are for carriers. Carrier rates can increase when the market conditions have strengthened for carriers as capacity tightens, and carrier rates will decline during periods of looser capacity, signaled by an expansion in the ALOHA index.
Shippers: The ALOHA index can help shippers understand market conditions as they apply to supply versus demand. Shippers are on the demand side, while carriers supply the trucks. An oversupply of trucks, or loose capacity, will increase the ALOHA index as freight options for carriers decline, and in tighter conditions when the market strength is in the carriers’ favor, carriers tend to accept freight that will keep their trucks closer to their base market.
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On an aggregated basis, this index provides insight into decisions that regional carriers are making with respect to freight availability and pricing (supply and demand). In a robust freight market, regional carriers will tend to ‘tighten’ their freight network, thereby reducing the number of miles traveled per load. Conversely, when the supply of freight is constricted, regional carriers may seek freight opportunities outside their preferred networks and lanes based on the types of freight that are available (long-haul vs regional), thereby increasing the number of miles traveled per load.
Average Length of Haul can be separated into the following indices:
1) View the ALOHA Index in a chart to see the changes and trends in the average length of haul at a national level for a particular equipment type.
View the ALOHA Index in a HeatMap to see the actual average length of haul for all ALOHA indices.
Pro Tip: Use the ALOHA index as a benchmark index to help monitor the options carriers have in the freight market along with the OTVI and OTRI indices to see freight conditions at a market level.
Whether they realize it or not, many freight market participants are relying on stale and narrow data to make critical freight decisions. Freightwaves SONAR provides the freshest and most comprehensive view of the ($9.6T) freight market so freight market participants can mitigate risks and protect their margins while providing the highest levels of service.
