Capacity Trend Indices (CTSV52, CTSR52, CTSV4, CTSR4, CTDV4, CTDR4)

FreightWaves Customer SuccessCapacity Trend

What is it?

Capacity Trend scores translate tender volume and rejection data into a relative measure of market capacity.  A unique algorithm is used to produce Capacity Trend scores by detecting structural market pattern shifts and volatility in load balance and tender rejection levels.

Capacity Trend scores are normalized for each market and reflect a measure of capacity using a numeric scale from 1 = (loosest capacity) to 100 = (tightest capacity).

Shippers and carriers generally have an inverse benefit relationship with respect to capacity:

Loose Capacity (low Capacity Trend scores) = shipper advantage

Reflecting an oversupply of trucks/equipment with deflationary price pressures

 

Tight Capacity (high Capacity Trend scores) = carrier advantage

Reflecting an undersupply of trucks/equipment with inflationary price pressures

Capacity Trend scores require minimal interpretation and can be easily incorporated into operational use cases by segmenting scores into customized tier groups. Day-over-day changes in the scores provide trending insights. As an example:

Scores between   1 ~ 33 = Loose Capacity conditions

Scores between  33 ~ 66 = Neutral Capacity conditions

Scores between 66 ~ 100 = Tight Capacity conditions

Capacity Trend insights are provided via two sets of indices:

  1. Capacity Trend Score (CTS*) – a measurement of overall market favorability on a scale of 1 (loosest capacity) to 100 (tightest capacity).

    • Van and refrigerated (reefer) indices available

    • 52-week and 4-week data pattern lookback versions are available for flexibility depending on application for RFP/bids or spot/transactional use cases

  2. Capacity Direction (CTD*) – measurement of a normalized change in the direction and strength of Capacity Trend scores, based on a scale of -3 (strongest tightening) to +3 (strongest easing).

    • Van and reefer indices available

    • 52-week and 4-week data pattern lookback versions available for flexibility depending on application for RFP/bids or spot/transactional use cases

The Capacity Trend Direction index is a derivative input of the Capacity Trend Score and provides visibility into the direction and strength of changes in capacity. Greater moves of Capacity Trend Direction values in either direction, reflect greater velocity of changes in capacity (i.e., ‘-3’ indicates rapid tightening, ‘0’ indicates little change and ‘+3’ indicates rapid easing).

Specifically, Capacity Trend Direction scores normalize the velocity of change that enables comparability across both large/stable markets and small/volatile markets. Capacity Trend Direction scores are well-suited for use in pricing models and algorithms that require dynamic price change capabilities. 

Who is interested?

Transportation Managers, Pricing Analysts, Freight Brokers, Carrier Representatives, Truckload Operators, Account Executives, Sales Representatives

What does it tell me?

Supply/Demand Economics 101: Capacity conditions are directly correlated with the direction of spot prices. When the demand for trucks/equipment exceeds the supply, asset scarcity drives spot prices higher. When the supply of trucks/equipment exceeds demand, asset saturation drives spot prices lower.

Capacity Trend Scores tell you the degree of leverage you have in a market. Scores closer to 1 will indicate a higher degree of leverage if you are a broker or shipper. Scores closer to 100 will indicate a higher degree of leverage if you are a carrier. Scores closer to 50 will indicate neutral leverage – minimal change from recent capacity and spot prices.

The highest and lowest Capacity Trend scores (exception management) will help you identify when situations are developing the fastest, which typically represent the greatest opportunity and risk-avoidance situations.

Capacity Trend Direction scores tell you how quickly capacity is changing. While low/high Capacity Trend scores help you identify your leverage, the Capacity Trend Direction scores will provide you with additional insights into a normalized measure of changing capacity across various markets.

SONAR Capacity Trend insights provide a valuable opportunity to layer valuable market context and color around many operational, procurement and sales workflows. Capacity Trend scores are easily and readily translatable to prescriptive actionable guidance for any truckload activity use case.

 

Capacity assessment can be leveraged in very specific ways across various business activities:

Operations:

Utilize Capacity Trend scores to manage daily loadboard prioritization and allocation of resources.

Procurement:

Utilize Capacity Trend scores and direction trending insights as negotiating leverage for procurement activities.

Sales & Business Development:

Utilize Capacity Trend scores and direction trending insights to build account-specific market management reporting tools and dashboards for monthly/quarterly business reviews. The same process can be applied for targeting new accounts and sales based on ‘needs-driven’ market conditions.  

Automated Pricing Tools:

Utilize Capacity Trend scores and direction trending insights as input signals for real-time spot algorithms.

Performance Benchmarking:

Utilize historical and archived Capacity Trend scores for market condition-based KPIs to manage operational and financial activities