FreightWaves SONAR releases Capacity Trend Indices

Scott MallFreight Market Blog

FreightWaves SONAR is releasing new indices Capacity Trend Market Scores and Capacity Trend Market Direction to help shippers, carriers and brokers prioritize specific routes daily. SONAR subscribers will be able to see those markets across the nation that have the most significant tightening or easing conditions. By using the indices in the daily work flow, subscribers can generate lower costs and improved profitability.

Measuring capacity is a key to maximizing margins/transactions for a broker, utilization for a carrier, and minimizing service and budgetary failures for shippers.The capacity trend indices show you which markets are tightening or loosening by the largest amounts by combining tender rejection rates and market balance of inbound and outbound loads.

The market score allows users to easily compare capacity conditions across multiple markets, while market direction indicates how quickly capacity is loosening or tightening. Instead of looking at multiple values and comparing markets, subscribers now can look at just one. 

Capacity Trend Market Scores

Capacity Trend Market Scores are divided into two perspectives – shipper/broker and carrier. The scores are positioned on a scale from 1-100 and have values measuring van and refrigerated (reefer) capacity. The higher values represent more favorable trends.

For instance, Atlanta has a current shipper trend score of 32 after being at 57 one month ago. This is an indication that the Atlanta market’s capacity is trending much tighter than it was a month ago. Tightening markets are unfavorable from a shipping perspective because it means a higher risk of service failures, low compliance and higher rates.

However, tightening is favorable to carriers. This is because carriers’ services will be in higher demand, leading to better chances for utilization. In addition, shippers may bid up rates, leading to higher margins for carriers. For this reason, the Carrier Trend Market Scores move inversely to the shipper perspective. Targeting markets with tightening capacity increases the odds of continued utilization; carriers will find increased spot load activity or markets where new customers may be looking for additional carrier options.

From a brokerage perspective, identifying markets that are tightening in relation to others is extremely important – brokers can use these SONAR tools to know which loads they need to focus on and secure capacity for them first. Sorting the market scores from low to high will tell a broker which loads will be the most difficult to cover. In the example above, El Paso has the lowest score, meaning that specific market is showing the most unfavorable or deteriorating capacity conditions in the country. Lakeland, however, has a score of 100, indicating favorable or improving capacity conditions.

Capacity Trend Market Direction

The Capacity Trend Market Direction Index is divided into van and reefer granularities at a market level and ranges on a scale from 3 to -3. Positive values indicate easing capacity conditions while negative scores indicate tightening capacity. The level of positive and negative score indicates the velocity or strength of that change.

In the example above, the El Paso market has increasing outbound tender volumes, decreasing inbound tender volumes, and sharply increasing outbound rejection rates. These factors point to a sharp decline in available capacity, leading to a market direction value of -3.

Combine this data with the Capacity Trend Market Score and a subscriber will know there is an extreme lack of capacity in El Paso and that action is required to mitigate the potential of deteriorating service and rising costs. Carriers will know to accept more loads into the market.

Both score and direction give insight into long- and near-term trend changes, alerting a SONAR subscriber to capacity trend changes in each of the 135 markets for RFP/bid or transactional spot market analysis. Subscribers have the choice of either using a 4- or 52-week data sample size, which is used to baseline the market. Use the 4-week data for daily transactional decisions and 52-week data to see variance from longer trends.

List of tickers:

Ticker

Description

CTSSV4

Capacity Trend Score Shipper Van 4-week

CTSSV52

Capacity Trend Score Shipper Van 52-week

CTSSR4

Capacity Trend Score Shipper Reefer 4-week

CTSSR52

Capacity Trend Score Shipper Reefer 52-week

CTSCV4

Capacity Trend Score Carrier Van 4-week

CTSCV52

Capacity Trend Score Carrier Van 52-week

CTSCR4

Capacity Trend Score Carrier Reefer 4-week

CTSCR52

Capacity Trend Score Carrier Reefer 52-week

CTDV4

Capacity Trend Direction Van 4-week

CTDV52

Capacity Trend Direction Van 52-week

CTDR4

Capacity Trend Direction Reefer 4-week

CTDR52

Capacity Trend Direction Reefer 52-week

These new SONAR indices will help shippers, carriers and brokers prioritize the markets that need attention on a daily basis. Using Capacity Trend Market Scores and Capacity Trend Market Direction, SONAR subscribers can see the markets that have the most significant tightening or easing conditions. Employed as guides, these new indices can be used to make more informed decisions.