In this edition of “SONAR Indices & Insights,” the SONAR team describes how freight market participants can view a leading indicator of incoming ocean shipments before they leave the port of origin. This is possible using the new Ocean TEUs indices found in SONAR, the freight forecasting platform from FreightWaves.
When freight market participants are able to get a leading indicator instead of historical data, they are able to proactively plan for assets needed, capacity, and the potential price of freight for drayage and surface transportation moves that head to inland markets after ocean shipments go from the port to roads.
In this article, freight market participants will learn what are the Ocean TEUs indices in SONAR that track ocean shipments volumes, how freight market participants can use these indices to get a leading indicator and plan accordingly, and the high-level benefits of using these indices (in addition to other SONAR indices) to get a more complete understanding of the freight market, providing a more proactive approach to overall freight management.
What are the SONAR indices that provide leading indicators of ocean shipments volume?
SONAR’s Ocean Shipments Report and Ocean TEUs indices show subscribers how much cargo is shipping to and from the United States. SONAR subscribers can search for specific ports and specific carriers to see when and who is moving this cargo.
When SONAR subscribers view these containerized ocean shipments volume indices, they see a chart representing the daily volume of twenty-foot equivalent unit (TEU) volumes being booked with ocean container lines for a specific country of origin or a specific port within a country of origin. The index is calculated on a 10-day moving average and is indexed to January 1st, 2019, using a baseline of 100 for each specific lane combination. A user can view the volume of TEUs being booked on both an inbound (IOTI) and outbound basis (OOTI).
These are additional organizations of the OOTI:
- OOTIW – the percent change in OOTI from 7 days ago
- OOTIM – the percent change in OOTI from 28 days ago
- OOTIY – the percent change in OOTI from 1 year ago
For inbound volumes replace the “O” with an “I.”
What do the Ocean Shipments Report and OceanTEUs indices tell freight market participants?
The Ocean Shipments Report and Ocean TEUs indices tell SONAR subscribers how much demand is currently being generated in the form of new bookings taking place with ocean container lines at a specific port of origin for ocean containers. Rather than relying on historical data being reported by ports or U.S. Customs for volumes that have already moved through a specific port, this gives the user insight into volumes before they ever depart the country or port of origin.
Example: A subscriber wants to see the outbound ocean shipments TEU volume being booked with ocean container lines in China that are moving outbound to the United States.
Each granularity is indexed against itself; they do not aggregate (so U.S. to China for instance would not be a sum of all U.S. ports to China).
The Ocean TEUs Index and Ocean Shipments Report provide a leading indicator to SONAR subscribers regarding how much containerized ocean volume can be expected to move from various countries and ports of origin around the world. Before these indices were released within SONAR, anyone interested in ocean shipment container volumes would have to rely upon historical data from either U.S. Customs and Border Protection or from the ports themselves for insights into the volumes of containerized ocean freight moving through a port or on a given lane. But now, with these completely proprietary indices, SONAR subscribers are able to see demand and volumes before the containers are expected to depart their origins on a given lane.
How can freight market participants further understand ocean shipment volumes with these indices?
The concept of the Ocean Shipments Report and Ocean TEUs indices is very similar to the SONAR indices for outbound tender volume in the truckload market, which is known as OTVI. Much like the SONAR OTVI provides subscribers with insight into truckload demand within various origin markets around the country, the ocean shipments and TEUs indices provide users insight regarding demand and volumes being booked with ocean carriers as far as 7 days from the estimated time of departure for those volumes in TEUs contained within those bookings. For example, if a subscriber is looking at ocean TEU volumes from China to the U.S. (OOTI.CHNUSA chart image below), the index provides the user with a 7-day forecast (and two years of historical values) for ocean TEU volumes that have been booked with ocean carriers and are expected to move within those next 7 days. So the user knows how much TEU volume is leaving China destined for U.S. ports instead of waiting anywhere from 20-40 days until those volumes actually land in the U.S. and are reported by U.S. Customs.
Just like OTVI can be a great leading indicator for increased or decreased truckload demand (and the potential capacity constraints that increased or decreased demand will cause), the Ocean TEUs and Ocean Shipments indices will provide users with the same ability to monitor demand at origin to better understand how that demand could positively or negatively affect capacity and put either upward or downward pressure on rates.
Get proactive with ocean shipments and correlating impact with Ocean Shipments Report and TEUs indices by purchasing and using SONAR
In turbulent times, freight market participants need certainty to stay ahead of the freight market and understand the impacts that an increase or decrease in ocean shipments volume may have on port, drayage or inland transportation activity. The premier freight forecasting engine, FreightWaves SONAR, allows carriers to benchmark, analyze, monitor and forecast freight rates in freight markets.
SONAR ensures more proactive responses to the market, provides correlations between several indices to guide decisions and imbues confidence in freight market participants looking to optimize annual contracts and spot freight bids or rate increases. Click the button below to get a demo of SONAR to see what the platform can do for you.