Intermodal Rate Volatility & Freight Lead Times: An Update
We're revisiting our data that compares rate per mile volatility and the lead time of intermodal freight orders.
In late 2020, we pulled our own internal data to analyze the relationship between the price of intermodal freight and the lead time of loads to see how both relate to intermodal trucking capacity. In that analysis, we saw that intermodal loads with a lower rate and short lead time were more likely to go uncovered.
To understand how intermodal loads get covered, we will go over how our technology works. On the DrayNow platform, carriers see all available loads posted by customers on an app marketplace that displays both the price and the appointment for each load. All carriers have the choice and ability to choose what freight would work best for their current operation. Their marketplace behavior is directly affecting the data, as whatever freight they do not pick up ends up going uncovered.
We have decided to revisit this topic and include more recent data to get the best insight into the relationship between rate volatility and lead time.
The updated chart displays data points illustrating the relationship between the lead time of an intermodal load, and the rate per mile in which that trip was priced at. This data was collected between March 1-June 1 and all green points show represent a completed trip while the red points show cancelled loads.
In the most current iteration of this data, it appears that a low price and shorter lead time is still the leading cause of load cancellation. However, in 2022 there is a higher incidence of load cancellations for lower priced freight with greater lead times compared to the 2020 data. Thus, although lower priced freight will often be covered given as longer lead time, the price of intermodal freight has more of an impact on getting capacity in 2022 compared to 2020.
It’s clear that the best chance at getting capacity for intermodal freight is if a trip is posted to the marketplace with a longer lead time and high rate per mile. But the data also insists that even with a shorter lead time, a load with a competitive price will most likely get capacity. And with longer lead time, even less competitively priced freight has a high chance of being covered.
All in all, the data speaks for itself, and if freight isn’t getting capacity with a long lead time, it’s most likely a pricing issue. Rates have been volatile for a good amount of time, and the best decision to make is increase that rate per mile to obtain capacity.
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