SONAR highlight reel: China’s energy crisis is a significant freight demand risk

This “SONAR highlight reel,” which we publish every other week, is intended to concisely hit data highlights and trends in truckload, intermodal and maritime. 

Spot rates continue to rise as freight flows to the spot market – particularly on the West Coast. Capacity constraints remain in place, although conditions have improved over the past year. Contract rates are up over 25% year-over-year (y/y), which has helped drive better carrier compliance as rejections are down 500 basis points y/y.  Ultimately, pressure on the truckload market will continue for the rest of the year.

The latest week of domestic intermodal volume suggests that domestic intermodal congestion is getting “less worse.” Loded domestic intermodal volume in the first week of October is up 7.5% from August-September levels. Meanwhile intermodal tender rejections have fallen in most locations and domestic intermodal spot rates are flattening at a high level. Unfortunately, international intermodal volume is falling due to the many capacity constraints. These declines are concentrated in the outbound L.A. lanes.       

Maritime spot rates slid once again in the most recent week, as production in China was curbed due to the annual Golden Week holiday. The energy crisis in the same region threatens to slow exports, putting pressure on an already crimped global supply chain. All other indications point toward continued tightness, as import shipment volumes remain 2% higher y/y.