SONAR’s Outbound / Inbound Average Length of Haul (OALOHA / IALOHA) shows users the number of reported miles divided by FreightWaves tender volumes delivering into or out of selected markets.
Here is the formula: Total Miles Driven / Number of Loads
Analysts: can utilize OALOHA / IALOHA data to gain visibility into the decisions regional carriers are making with the choices they have on available freight. When markets are strong, regional carriers will tighten their average lengths of haul, keeping their trucks closer to their terminals. Long-haul freight is more closely tied to inventory replenishment, while shorter-haul loads are tied to upstream warehouse repositioning that occurs earlier in the order cycle.
Carriers: can use the OALOHA / IALOHA index as another checkpoint on how the freight economy is handling current market conditions. When OALOHA / IALOHA starts to increase, it could be a signal there might be a reduction in freight options on average across the nation, and when OALOHA / IALOHA begins to decline, it could be a signal that freight options are opening, and carriers are able to accept more of the loads they prefer to run.
Brokers: It is important for brokers to monitor benchmarking freight data based on decisions made by regional carriers to understand or predict the direction carrier freight rates are heading. OALOHA / IALOHA can give brokers insight into how strong the market conditions are for carriers. Carrier rates can increase when the market conditions have strengthened for carriers as capacity tightens, and carrier rates will decline during periods of looser capacity, signaled by an expansion in the OALOHA / IALOHA index.
Shippers: The OALOHA / IALOHA index can help shippers understand market conditions as they apply to supply versus demand. Shippers are on the demand side, while carriers supply the trucks. An oversupply of trucks, or loose capacity, will increase the OALOHA / IALOHA index as freight options for carriers decline, and in tighter conditions when the market strength is in the carriers’ favor, carriers tend to accept freight that will keep their trucks closer to their base market. OALOHA / IALOHA can also be used as an indicator to network efficiencies. Short lengths of haul mean shippers are receiving/positioning inventory close to the consumer market, compared to replenishment moves in longer lengths of haul.
This index provides insight into the type of freight being offered. A longer length of haul freight favors distribution center replenishment moves. This is typical of shipments between manufacturers or primary distribution centers. These movements are more economical over long distances when you can move products in bulk. It’s also indicative of a centralized distribution model where products are transported to central hubs from where they are further distributed. Shorter haul freight favors far upstream and far downstream moves. Shorter lengths suggest a more decentralized or fragmented distribution model, where goods are frequently moved in smaller batches. This can be due to various reasons like catering to rapid changes in demand
