INFOGRAPHIC: How Lane Signals gauges freight market volatility & provides actionable insights do they provide?

Adam RobinsonFreight Market Blog, Infographics

SONAR Lane Signals provide a snapshot of general rate control by lanes at both the origin and destination. However, the real implications of Lane Signal to show a snapshot into the freight market are more significant than meets the eye. These values are easily recognized by their gauge design when viewing any lane. Shippers, carriers, freight brokers and forwarders, and third-party logistics providers (3PLs) need to understand why Lane Signals is among the most valuable SONAR resources.

What is Lane Signals?

Lane Signals reflects a measure of shipper versus carrier strength within a given origin or destination. The scores range from 0 to 100. Shippers are more likely to control rate negotiations when the score is 0-40, while carriers are more likely to control rate negotiations when the score is 60-100. Scores between 41-59 are often a toss-up in terms of strength. The need to assess a lane score with 100 units of measure is essential to consider the full picture of the freight market that millions of data points reveal when analyzed by SONAR, the premier freight analytics platform.

How SONAR derives Lane Signals

Lane Signals scores are derived from the various interactions of shipper and carrier strengths and market shares at the origin and destination

For example, the rates consider these core indices from each point:

  • Headhaul Index
  • Inbound Tender Rejection Index
  • Inbound Tender Volume Index

The gauges not only show the Lane Signal for the current week, but they also show the Lane Signal of that freight market for the prior week as a dotted line across the blue gauge. 

INFOGRAPHIC: What are Lane Signals & What Actionable Insights do they provide?

freight-market-volatility-lane-signals-infographic

The example above shows improvements for carriers as the white-dotted line for the prior week’s Lane Signal moved from 45 to 53.

What Lane Signals mean for SONAR users to understand the freight market

Lane Signal provides much more insight than merely seeing whether carriers or shippers have negotiating power in a freight market. The following chart breaks down some of the top insights from Lane Signal. 

Example Value Assigned. Meaning Capacity Impact Lead Time Example for Origin Shipments
(Inverse Indicates Time to Opportunities for Backhauls From Destination) in Days
Market Rate Insight Shipper V. Carrier Favor Type of Bidding Process
100 A signal of 100 indicates the location is experiencing a carrier is most favored Extremely Limited and Highest Rejections ~7+ ~1 Market rates at the total peak rate Carriers dominate negotiations, provided they have any capacity to spare for contracts Dedicated fleets (if lower-cost than spot rates)
Mini-bids (if carriers have the capacity to spare)
75 As the signal moves further ahead of the prior week’s deviation, rethinking carrier balance will become critical Limited Capacity That Results in Higher Rejections ~5-4 ~2-3 Market rates approaching YOY records Carriers with more shipper-initiated bidding processes. Mini-bids to secure rates or capacity at rates slightly below the real market rate
50 An even score is beneficial to neither party. The market could swing in either direction Tight Capacity With Little Room for Sudden Market Shifts; Some Rejections ~3.5 ~3.5 True market rate for that origin or destination Relatively stable contracts and few contract renegotiations Annual contracts almost exclusively
25 Declining values greatly benefit shippers and offer key advantages to those needing to move freight faster. Generally Available Capacity and Few Rejections ~2-1 ~4-6 Market rates approaching YOY lows Shippers with more freight in the spot market and possible carrier-initiated freight negotiations Annual contracts with mini-bids to attract shippers from the spot market.
1 A Lane Signal of 1 is the ultimate low and reflects maximum control shippers may possess but comes with added risk for carriers that force a rebound Available Capacity With Still Fewer Rejections <24hrs 7+ Market rates at total record lows Shippers dominate negotiations at the risk of a snapback from carriers trying to avoid bankruptcy Market rates near record lows, and carriers begin to retake power through canceled transport

Using data and insights
as your guide to freight
bidding negotiations

Benefits of Lane Signal by segment

Lane Signal data provides core benefits to each freight management segment.

Carriers

  • Improved ability to plan for tenders submitted.
  • Better resource allocation to lower deadhead. 
  • Augmented rate management by adjusting rates based on the freight market.
  • Ability to gauge when to consider renewed freight bidding with other freight management parties to attract shippers, brokers, forwarders and 3PLs.
  • Increased performance measurement capabilities by ensuring lanes with the highest Lane Signals are addressed first.

3PLs, Brokers and Forwarders

  • Better strategic mapping to reduce confusion and offer more available bookings to shippers.
  • Enhanced management of carrier relationships. 
  • Fewer tender rejections or understanding how to avoid rejections from competitive rate offers for carriers. 
  • Securing more shippers by prioritizing origins and destinations for service.
  • Increased performance measurement capabilities by ensuring lanes with the most extreme Lane Signals are addressed first (to improve carrier relations among the highest Signals or to improve shipper relations among those with the lowest Signals).

Shippers

  • Expanded understanding of bargaining power in play. 
  • Ability to prioritize shipments based on origin and destination data.
  • Snapshot view into week-over-week rate comparison.
  • Improved ability to re-enter negotiations to get a better rate.
  • Better ability to gauge whether predicted costs will reflect actual landed rates for shipments.
  • Increased performance measurement capabilities by ensuring lanes with the most extreme Lane Signals are addressed first.

Depending on your target freight management party served (shippers versus carriers), more substantial movements to the extremes out of your favor may indicate a need to rebalance rates through new bidding processes.

Get SONAR with Lane Signals to Better Gauge the Freight Market

Want to get a first hand look at Lane Signals to stay proactive with capacity and procurement cost planning by getting more actionable insights into the freight market? Click below to get a demo of SONAR or learn more about Lane Signals.