Using freight market signals to stay ahead of any freight market storms

Larry SingletonFreight Market Blog

freight market signals SONAR

Once weather like the snowstorm in Colorado or the one seared into Texans’ Valentine’s Day memory hits, it’s easy to predict what is going to happen next—the freight market in the area halted to a stand-still and strangled capacity, as also reported by The Dallas Morning News. Weather like this makes it easy to predict what will happen in the following days. 

How does the slightest change in capacity and freight demand shift your compliance metrics & costs? It’s hard to predict compliance issues and cost increases when everything seems “normal”. Prior to the winter blast, we saw some interesting things happen with supply and demand and if handled properly would have prepared you for the storm. The best solution would be to recognize the signals that capacity could be growing tight well before a monster of a storm hits.

Capacity signals for the freight market

freight market signals otri

In the image below, use the following as your guide to interpreting:

  • Blue = outbound tender rejections for the Dallas market, which measure service, capacity and price
  • Green = outbound volumes (demand)
  • Orange = inbound volumes (supply)

Supply and demand are among the biggest drivers of noncompliance, capacity shifts, and cost changes. When trucking supply and demand swings one way or the other, there are subsequent market responses. 

Look at the highlighted first signal in the image (prior to the weather) that would cause noncompliance. It shows outbound volumes increasing and inbound supply decreasing. That leads to fewer trucks in the market and an increase in loads being offered, driving up costs in the background (OTRI) which will cause service metrics to decline. 

SONAR delivers alerts around those parameters, so you know to increase lead-time and when to set up a backup plan with your reliable carriers. That’s the information needed to know when you’re about to experience some route guide and price volatility. Proactive signals can help reduce the susceptibility to risk. 

The second callout in the image above is showing the very beginning of the winter blast where shippers were hurrying to get freight off the dock to beat the storm. Also highlighted here is the drastic decline in trucks coming into Dallas for fear of getting stuck. 

Instead of waiting for the snow to fall, increasing lead times on February 8, aligning more reliable carriers, and assigning cost premiums would help ensure service. All this to say, you could have increased your capacity and service starting on the 8th, not after the storm. 

The rest here shows the market normalizing; Outbound freight volumes have soared, inbound volumes have increased, and load rejections are crazy high, leading to more spot market exposure, rate volatility on your end and route guide failure.

Overcome the barriers to logistics foresight with a data-driven procurement strategy

The best-laid plans are just that, thought out and well-laid. And without seeing the snowstorm on the horizon, there are opportunities to capture and apply data to manage capacity more proactively. Are you a FreightWaves SONAR user? If not, request a demo of the ultimate freight data platform for navigating the freight market by clicking the button below.