SONAR Indices & Insights: Plan and Measure Refrigerated Shipping Capacity & Rates

Adam RobinsonFreight Market Blog

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.

What are the available refrigerated shipping indices in SONAR?

Reefer Outbound and Inbound Tender Reject 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:

  • RITRI – Reefer Inbound Tender Rejection Index
  • RITRIW – Reefer Inbound Tender Rejection Index – Weekly Change
  • RITRF – Reefer Inbound Tender Rejection Index – Two-Week Change
  • RITRM – Reefer Inbound Tender Rejection Index – Monthly Change
  • RITRY – Reefer Inbound Tender Rejection Index – Annual Change
  • ROTRI – Reefer Outbound Tender Rejection
  • ROTRIW – Reefer Outbound Tender Rejection – Weekly Change
  • ROTRIF – Reefer Outbound Tender Rejection – Two-Week Change
  • ROTRIM – Reefer Outbound Tender Rejection – Monthly Change
  • ROTRIY – Reefer Outbound Tender Rejection – Annual Change

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.

Reefer outbound and inbound volume indices

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.

refrigerated shipping outbound tender volume and reject indices
Reefer Outbound Tender Reject Index compared in relative terms to the Reefer Outbound Volume Index.

RHAUL: Reefer Headhaul Index

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.

RHAUL Changes

  • RHAULW – Weekly Change
  • RHAULF – Fortnightly Change
  • RHAULM – Monthly Change
  • RHAULY – Yearly Change

Exclusive RHAULs

  • RHAULEX100 is RHAUL for loads moving over 100 miles (ROTVIEX100 – RITVIEX100)
  • RHAULEX250 is RHAUL for loads moving over 250 miles (OTVIEX250 – ITVIEX250) 

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.

reefer headhual index for refrigerated shipping
The Reefer Headhaul Index for the Chicago market.

Predictive rates for refrigerated shipping

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.

How SONAR freight market experts use reefer freight data to plan and measure capacity and rates

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.

Reefer Outbound Tender Rejection Index vs Reefer Outbound Tender Volume Index

(see it in SONAR)

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.

refrigerated shipping ROTVI
3D Map comparing ROTRI to ROTVI in the USA with the bluer markets indicated higher rejections and elevated markets indicated by the height of that market.

Three use cases of refrigerated shipping data in three shipping lanes

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:

  • Reefer rejection rates jump to 79.26% on the Kansas City to Little Rock lane as capacity loosens in the market.
  • Columbus to Dallas rejections are likely to increase as the Headhaul Index jumps 32% week-over-week (w/w).
  • Van capacity remains consistent from Phoenix to Los Angeles, while reefer dries up.

Kansas City to Little Rock 

Kansas City’s reefer headhaul score drops to -3.81, but carriers keep spot rates elevated on the MCI–LIT lane.

refrigerated shipping reefer lane kansas city to little rock

SONAR Tickers: ROTRI.MCILIT, RHAUL.MCI / ROTRI.LIT, ROTRI.LITATL, ROTRI.LITIND, ROTRI.LITMDT

Highlights:

  • Reefer outbound tender rejection rates jump to 79.26% on the MCI–LIT lane as capacity loosens in the market.
  • Reefer outbound tender rejection rates remain high at 74.13% in the Little Rock market.
  • Reacting to the increase in spot rates over the past week, Kansas City shippers have extended reefer tender lead times to 4.35 days.

What does this mean for each freight market participant in relation to refrigerated shipping?

  • Brokers: With reefer rejection rates near 80% on the MCI–LIT lane, brokers should search the spot market for additional refrigerated freight from the Kansas City market to the Little Rock market. High volatility in the market will allow brokers to increase their margins, but bid accordingly; carrier rates are extremely high on the lane.
  • Carriers: Reefer carriers with inbound trucks into the Kansas City market should search for loads that deliver into the Little Rock market. Reefer rejection rates have climbed to 79.26% on the lane, forcing shippers to pay high carrier rates to move their loads.  Reefer rejection rates are also extremely high in the Little Rock market, currently 74.13%, making Little Rock a strong destination for a reefer carrier. From Little Rock, carriers will have options on loads delivering into the Midwest, Northeast and Southeast, with reefer lane rejection rates over 69%.
  • Shippers: Shippers in Kansas City have reacted to extremely high reefer rejection rates by extending tender lead times to 4.35 days. Inbound truck volumes are matching outbound freight volumes, but carriers are controlling the rates in the region. Elevated reefer rejection rates have overwhelmed shippers from the Little Rock market to the Kansas City market, creating one of the hottest reefer markets in the nation. Shippers need to keep tender lead times extended, and book their loads as early as possible. Monitor rejection rates in the region, and push carrier rates down when you see rejection rates trend down.

Columbus to Dallas

In this lane, rejections are likely to increase as the Headhaul Index jumps 32% w/w.

refrigerated shipping reefer lane columbus to dallas

SONAR Tickers: OTVI.CMH, ITVI.CMH, OTRI.CMH, ITRI.CMH

Highlights:

  • The Headhaul Index in Columbus is up 32% w/w, signaling that capacity is likely to tighten.
  • Columbus outbound tender volumes are up 2% w/w.
  • Columbus outbound tender rejections are down 60 basis points w/w.

What does this mean for freight market participants?

  • Brokers: It is important to notice the increasing imbalance between outbound volumes and inbound volumes via the Headhaul Index. Even though rejections may be down 60 basis points w/w, if there are significantly fewer trucks hauling freight into Columbus, and outbound volumes continue to rise, then you can expect that outbound tender rejections will rise. There are simply not enough trucks in the market to haul the available freight. 
  • Carriers: Columbus pricing power may have been moving back towards shippers and brokers for the last week or two, but stay firm on your rates as the increase of 32% in the Headhaul Index is likely to shift pricing power back to your favor. Keep an eye on rejections as they are likely to increase if the gap between outbound and inbound volumes continues to widen.
  • Shippers: Your shipper cohorts in Columbus are still averaging 2.5 days in tender lead times. With outbound volumes on the rise, it would be wise to keep your tender lead times between 3 and 4 days through the next couple of weeks to ensure you are able to secure capacity in the market.

Phoenix to Los Angeles

In this lane, the FreightWaves SONAR freight data around refrigerated shopping indicates that reefer capacity is tightening rapidly out of Phoenix.

refrigerated shipping reefer lane phoenix to lax

SONAR Tickers: OTRI.PHXLAX, OTRI.PHX, OTRI.LAX

Highlights:

  • Phoenix’s outbound rejection rate jumped three percentage points last week thanks to reefer capacity tightening, while the lane-specific rejection rate to Los Angeles remained relatively flat but higher than the market average. 
  • Los Angeles rejection rates fell back under 25% after increasing to start the month. 
  • Phoenix remains a strong backhaul market with a Headhaul Index value under -142, while Los Angeles is the consummate headhaul market with a Headhaul Index score above 230.

What does this mean for you?

  • Brokers: Keep this lane a low priority for daily coverage, but reefer capacity has tightened significantly for other lanes out of this market. Pad reefer rates for all destinations out of Phoenix.
  • Carriers: Van carriers should expect rates closer to contract levels in this lane, while reefer carriers should expect more options on the spot market with increasing rates.
  • Shippers: Increase lead times to over four days for any reefer loads. Service will remain consistent for van freight out of Phoenix this week, while reefer coverage will be more difficult to come by.

Keep ahead of the refrigerated shipping market and turn to SONAR to plan for reefer capacity and rates

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.