SONAR Captures Leverage in Contract Negotiation?

We start each day at AM Transport by tracking new index values pouring into the Freightwaves SONAR platform and seeing how marketplaces have moved overnight, where new possibilities are trying to present themselves, and also how we could provide best value both for our consumers and carrier partners using the wealth of near-real-time statistics compiled by that platform.

Because of the strong link with the DAT Freight Rate Indices, we constantly monitor tender rejection rates at both an individual and communal market level. This is predicted since spot market price changes are what prompt carriers to ignore decided contract prices and enter the spot market, and carrier migration into the spot market is expected to impact market pricing. The present softening rate environment, as seen below, is closely linked to a general drop in carrier rejection rates.

However, rejection rates have risen at a national level in the previous week, giving us hope that the present negative freight rate environment had reached a bottom and that relief was on the way. However, the temporary respite from the plummeting rejections was short-lived. However, when we dug further into the data, we discovered that rejection rates in some specific markets and for certain lengths of trip spiked, while rejection rates in the rest of the freight world remained stable. There was something strange about it.

When we look at the data more closely, we can see that local hauls (CTRI.USA), which Freightwaves defines as hauls under 100 miles, experienced a significant increase in rejections, while shorthauls (STRI.USA), which are hauls between 100 and 250 miles, saw a lesser increase. Pink and yellow, respectively, are used to identify them in the graph below.

As a result, we appear to have pinpointed the length of trip as a factor in at least part of the overall rejection rate increases. But from what part of the world are they coming?

When we look at rejections by geographic region, we observe a significant increase in rejections in the Midwest (OTRI.URMW), which follows the national tendency. We appear to have narrowed down the location and haul length that are at least somewhat to blame, but can we go deeper into the data?

In the Midwest, rejection rates are increasing in a few markets: Saginaw, Detroit, Grand Rapids, Toledo, and South Bend. When we concentrate just on local rejections (CTRI.Market), we see an even more pronounced trend develop, with rejection in the Saginaw market exceeding 85%.

What's going on here, then? We must be looking at a single aberrant occurrence that occurred on only one or two days, limited to a certain area of the nation and a specified length of haul, because these data are homogenized on a rolling seven-day basis.

We found something intriguing on Teamster.org after a little digging: “With the exception of one local, leaders of all union representatives that represent workers at YRC Freight, Holland, and New Penn met today [4/10/19] and voted overwhelmingly to endorse the tentative National Master Freight Agreement, which covers approximately 30,000 Teamsters, laying the foundation for a vote by the membership. Negotiations were challenging and complicated, but we are confident that we have reached an agreement that will safeguard our members' lives for the next five years,” said Ernie Soehl, Director of the Teamsters National Freight Division. ”

This might be the type of use for Freightwaves' upcoming "Event View" feature, which would "identify the data a certain subject or SONAR ticker was cited in an article" and will be published at Transparency 19 in SONAR 4.0.

But, for the time being, have we seen the first instance of a shipper or a group of shippers pressing dedicated capacity for reduced prices, and the carrier flexing back during talks with mass denials documented in near real time by the SONAR platform? If this is the case, it will very certainly not be the last.

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