Each week, you’ll learn about another index found within SONAR, the freight forecasting platform from FreightWaves. This week, learn how freight market participants, especially those freight parties who are executing refrigerated shipping moves, rely on SONAR indices that show reefer freight data and activity. In this article, you learn what are the various reefer freight data indices available in SONAR, who in the freight market relies on these indices, what the indices tell freight market participants, and real-world scenario analysis of using SONAR refrigerated shipping indices to better understand the freight market. You’ll also learn what actions freight market participants may make from the insights gleaned in reefer-focused indices.
The Reefer Outbound Tender Reject Index (ROTRI) and the Reefer Inbound Tender Reject Index (RITRI) are sub-indices of the major SONAR Index named Tender Reject Index (TRI) measured by direction type as indicated by “outbound” and “inbound” in the name and ticker of these indices.
Adding the equipment type of “reefer” to either direction, outbound or inbound, of the Tender Reject Index derives the complete view of reefer tender rejections, which are measurements of carriers’ willingness to accept reefer loads that are tendered to them by shippers under contract terms. The index is expressed as a percentage of loads rejected to total loads tendered. The reasons for a carrier to reject the load tender are: 1) lack of trucking capacity; and 2) the rate is too low. Fast movements up or down in a market indicate potential spot market activity as well as freight volume surges and network imbalances.
The following indices are available for reefer tender rejections in both outbound and inbound freight movements:
Freight that requires temperature-controlled trailers for refrigerated shipping like produce, pharmaceuticals and certain types of alcohol will have an impact on the RTRI. For instance, when the produce harvests occur, RTRI percentages will increase. A change in reefer trailer capacity can also help explain why capacity, in general, has changed, as those reefer trailers are not available for other types of freight.
The Reefer Outbound Volume Index (ROTVI) and the Reefer Inbound Volume Index (RITVI) are sub-indices of the major SONAR Tender Volume Index (TVI), an index of tendered volumes on a given day, organized by inbound (ITVI) and outbound (OTVI) volumes for the U.S., regional and market granularity. The index was created with a base of 10,000 on a national level from March 1, 2018 volumes.
For example: If there were 10 national loads tendered on March 1st and on March 2nd there were 11 tendered loads, the March 1st OTVI.USA value would be 10,000 and the March 2nd value would be 11,000. This indicates a 10% increase in volume from March 1st.
To get the outbound or inbound volume for refrigerated shipping, just as we add the “R” in the tender rejection indices, we add an R, plus the direction of outbound or inbound, to view the ROTVI or RITVI.
Reefer tender volume provides a way to judge load volumes in various ways. As load volumes increase, capacity tightens. Volumes provide insight into where demand for refrigerated shipping trucks is increasing or decreasing, allowing carriers to position their fleets in the most opportune areas.
If a SONAR user wants to see the outbound reefer tender volume index for the Albuquerque market, he/she would type ROTVI.ABQ.
The Reefer Headhaul Index (RHAUL) calculates the difference between the Reefer Outbound Tender Volume Index (ROTVI) and the Reefer Inbound Tender Volume Index (RITVI). The Reefer Headhaul Index will calculate the difference between the two indices, and therefore, the difference between outbound and inbound volume in markets.
Example: ROTVI.ATL was 250 as of August 1. RITVI.ATL was 200 as of August 1. RHAUL.ATL would be equal to ROTVI.ATL (250) minus RITVI.ATL (200). RHAUL.ATL = 50.
The Reefer Headhaul Index is a good indicator of capacity changes for refrigerated shipping equipment. For example, if the spread between ROTVI and RITVI increases, it could indicate capacity may be decreasing. This is a good way to evaluate a change in available capacity over time.
In addition to indices around reefer tender volumes and rejections, SONAR users now also have access to the beta version of predictive freight rates for the reefer equipment type. The SONAR Predictive Rates app forecasts trucking rates for the route between any two locations. Using FreightWaves’ extensive data sources, SONAR aggregates estimated future rates for your selected route and equipment type (van or reefer) up to a year in advance and even calculates the low, high and median prices. As more data flows into SONAR, the reefer predictive rates grow more accurate.
The SONAR freight market experts put out an email newsletter every day for all SONAR subscribers called the “Daily Lane Planner.” As the United States heads into holidays, consumers are starting to purchase more goods that need refrigeration. This includes products like ham or the famous Thanksgiving turkey. With that said, let’s look at a snapshot for November 2020 and how the Freightwaves freight market experts use SONAR reefer freight data to get a sense of capacity and potential rates for refrigerated shipping.
Heavy reefer volumes continue to ship from the Lakeland (Florida) market, but a reefer headhaul score of -167.96 indicates that capacity is very loose in the market, keeping spot rates and rejection rates low. Reefer rejection rates are over 60% in these markets: Fayetteville, Arkansas; Joplin, Missouri; Tulsa, Oklahoma; Omaha, Nebraska; and Kansas City, Missouri, markets. Reefer rejection rates are over 70% in the Little Rock, Arkansas, and Twin Falls, Idaho, markets, forcing shippers to pay high carrier rates for on-demand capacity.
Let’s take a look at three uses cases for data applications by looking at three key lanes to understand how to better plan around capacity and rates for refrigerated shipping:
Kansas City’s reefer headhaul score drops to -3.81, but carriers keep spot rates elevated on the MCI–LIT lane.
SONAR Tickers: ROTRI.MCILIT, RHAUL.MCI / ROTRI.LIT, ROTRI.LITATL, ROTRI.LITIND, ROTRI.LITMDT
What does this mean for each freight market participant in relation to refrigerated shipping?
In this lane, rejections are likely to increase as the Headhaul Index jumps 32% w/w.
SONAR Tickers: OTVI.CMH, ITVI.CMH, OTRI.CMH, ITRI.CMH
What does this mean for freight market participants?
In this lane, the FreightWaves SONAR freight data around refrigerated shopping indicates that reefer capacity is tightening rapidly out of Phoenix.
SONAR Tickers: OTRI.PHXLAX, OTRI.PHX, OTRI.LAX
What does this mean for you?
In uncertain times, freight market participants need certainty to stay ahead of the freight market and understand the freight demand occurring in each participant’s most important lanes. The premier freight forecasting engine, FreightWaves SONAR, allows participants to benchmark, analyze, monitor and forecast freight demand and costs. SONAR ensures more proactive responses to the market, the ability to provide a solid customer experience by offering transparency, as well as to make faster, more informed decisions. Get a demo of SONAR to see what the platform can do for you.