As mentioned in a prior blog, a very small portion of total intermodal volume moves on the spot market. SONAR has contained intermodal spot rates since its inception, which are available for 100 lanes via the INTRM tickers. We don’t know how much intermodal volume moves in those lanes at those rates (and neither does our supplier) – oftentimes, I suspect it’s zero. But, there is information in the rates, which often move sharply higher or lower from one week to the next.
A sharp movement in rates suggests that something is happening in that lane. Sometimes, it’s the inclusion of a surcharge related to a disruptive event or peak season. Other times, carriers are simply raising the spot rate in order to discourage incremental volume (unless a shipper really wants to pay up) to protect capacity for high-volume contractual shippers, which include leading retailers and CPG companies.
Most intermodal shippers only use the contract market. Even so, it makes sense for that cohort to watch intermodal spot rates in their lanes. If carriers signal with higher spot rates that they are concerned with securing capacity for contractual shippers, those shippers should establish contingency plans in case service breaks down.
In addition to being useful in their own right for benchmarking, the addition of intermodal contract rates in SONAR (IMCRPM tickers) improves the usability of the intermodal spot rates by providing a basis for comparison. The two data sets are comparable because they both only pertain only to the domestic intermodal segment for the movement of 53’ containers and both include fuel surcharges.
Intermodal spot rates in the LA to Chicago lane, which were below contract rates in 2Q and 3Q 2024, rose above contract rates for most of 4Q 2024. SONAR Tickers: IMCRPM.LAXCHI, INTRM.LAXCHI
As an example, the chart above compares intermodal spot (red line) and contract rates (white line) for the LA-to-Chicago lane.
Spot rates were well below contract rates in last year’s (2024) second and third quarters indicating that domestic containers were plentiful. That started to change with spot rates that rose to well above contract rates at the start of November and remained above contract for most of December. The implication in early 4Q was that carriers were using spot rates as a way to prioritize their contractual shippers. However, spot rates in the LA-Chicago lane have since fallen to below contract rate, which is also true of most of the other dense intermodal corridors from the West Coast. So, at least during this generally slow time of the year (although, not as slow as usual amid elevated import volume), it appears that contractual shippers do not have to be too concerned with sourcing intermodal capacity in the densest intermodal lane.
In the LA-Atlanta lane, intermodal spot rates rose above contract rates in September before falling below contracts in mid-December. SONAR: INTRM.LAXATL, IMCRPM.LAXATL
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