The bottom is behind us; volume should gain momentum
Freight brokers are still in their happy place – even with national volumes ticking up this week (OTVI.USA), capacity is still
quite loose. Tender rejections have stayed near historic lows (OTRI.USA), and the Midwest is perhaps the only region of the country
where markets have significantly tightened. The chart below displays national volumes in white against tender rejections in
green:
![Volume is turning back on, yet tender rejections are low, indicating capacity is still loose. ( Chart: FreightWaves SONAR )](https://static1.squarespace.com/static/5899e78b1b10e35238fba886/t/5c7730be4785d37267c9b471/1551315142041/Screen+Shot+2019-02-27+at+10.11.57+AM.png?format=1000w)
Volume is turning back on, yet tender rejections are low, indicating capacity is still loose. (Chart: FreightWaves
SONAR)
The liquidity created by a freight market with surging volumes and falling turndowns means that freight brokers can cover more
loads more easily – there are a lot of potential transactions in the market and it doesn't take too much work to make them
happen.
On Wednesday, four different brokerages told FreightWaves that spot rates have bottomed out and even started to recover, and
that they expect volumes to gain momentum going forward into the spring.
"I think volume has increased, but it could be regional moves; could be because intermodal is congested right now," a broker at
Echo Global Logistics (NASDAQ: ECHO) wrote to FreightWaves
in a text message this morning. "Margins are about the same."
Notably, capacity out of Chicago has recovered some pricing power. Dry van spot rates exclusive of fuel from Chicago to Atlanta
(DATVF.CHIATL) have risen 7.4 percent% this month to $2.02/mile.
Spot rates on the high-volume Los Angeles to Dallas lane (DATVF.LAXDAL) have been sideways in February, up just 4.8 percent
during the month. That lane is still priced low, at $1.36/mile, but the worst appears to be over. In every year since 2015, rates
from L.A. to Dallas bottomed in February before climbing through June.
Despite a small spike that broke above $1.15/mile two weeks ago, Philadelphia to Chicago van spot rates (DATVF.PHLCHI) have been
essentially flat, ending the month at $1.03/mile, less than a cent above where the month began. Meanwhile, in February the Atlanta
to Philadelphia lane is down 4.8 percent to $1.59/mile net of fuel.
"Capacity has been very loose since the New Year turned," wrote Greg Ackner, Vice President of Sales at White Plains, New
York-based Capital Logistics, in an email to FreightWaves. "Rates have generally stabilized but don't see them dropping to pre
2017-18 levels anytime soon."
![Learn more today](https://static1.squarespace.com/static/5899e78b1b10e35238fba886/t/5c773022f4e1fc2d8225a919/1544795752449/SONAR-Web-Banner.jpg?format=1000w)
Learn more today
Doug Starnes, Director of Operations at Indianapolis-based FitzMark, agreed.
"Markets are stable," Starnes wrote. "Contract awards are starting to come in, so certain lanes are picking up [volume]."
Markets showing signs of life include Charlotte, Chicago, Fort Worth, Lakeland (Florida) and Los Angeles.
"We don't expect it to loosen much more, if it all, as we enter spring construction season," said Duke Begy, Vice President at
Arrive Logistics, by telephone. "Capacity remains adequate, except two regions – south Texas and the Upper Midwest are tightening
up."
Begy also agreed that rates had likely bottomed, and said that he expected 2019 to be less volatile than last year and return to
historical freight patterns.
"We've hit the floor in terms of how far rates are going to fall," Begy said. "Our volumes are up week-over-week, and that could
be due to the end-of-month push, but we'll have a better feel for how Spring plays out once we get into the first half of
March."
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