Chart of the week: Outbound tender rejection index, National Truck Load Index (line only) – USA SONAR: : OTHERS.USA, NTIL.USA
The national outbound bid rejection index (THE SECOND), which is the rate at which freight carriers reject requests from customers to move their cargo, pushed more than 10% for the first time since April 2022 during the Christmas holidays. Spot rates (excluding the estimated cost of fuel) have also climbed almost 10% higher than in 2023.
While this is further evidence that enough capacity has exited the market to make it significantly more inconvenient for shippers, it could be much worse from a transportation management perspective.
The truckload market can usually be measured by its peaks and troughs when looking at bid rejection rates. Seasonal fluctuations define the market, but seasonality has been challenged to find since the pandemic due to an extreme lack of capacity and excess.
As the trucking market emerges from one of the longest periods of extreme oversupply, seasonal peaks have become more apparent, Christmas being the highest among them.
Last Christmas, the OTRI reached 5.6%, a figure that characterizes a relatively easy transportation supply environment. This means that shippers had trouble finding a truck for one in every 18 loads.
During the pandemic years, the OTRI was above 20% for almost 18 months. This means that transport managers have to navigate supply problems about one in every five loads. This is a bit of extra work.
While the current market is still far from where it was two years ago, it continues to transition from an easier supply environment and becoming more erratic. Rising volatility may be the most challenging component, as shippers can plan for seasonal changes but still have trouble estimating the magnitude.
Shippers have employed strategies that mitigate their exposure to increased freight market volatility.
Increase processing timesThe amount of time between the initial request and the requested collection date, has been a continuous trend even though the market has been relatively loose. Shippers are giving about half a day’s notice to carriers on average than in 2019.
Intermodal has regained favor with the maritime community, with domestic-sized containers (ORAILDOML) an average of more than 10% higher y/y last December. International containers (ORAILINTL) are staying on trains and moving inland with more frequency, which has also taken pressure off West Coast trucking capacity since this summer.
https://media.zenfs.com/en/freightwaves_373/8958943bdc477f3e129b4c44ac90df9e
2025-01-05 01:30:00
