As we roll into the dog days of summer, the trucking industry is experiencing some noteworthy shifts. Let’s break down the latest data and what it means for those behind the wheel.
Truckload Demand Sees Summer Surge
Despite a sluggish start in late June, truckload demand has picked up significantly. The Contract Load Accepted Volume (CLAV), which provides a clear picture of actual freight movement by excluding rejected tenders, has shown impressive growth. Weekly CLAV is up by 3.5%, and year-to-date, it’s nearly 10% higher. This uptick, unusual for this time of year, is partly due to the early arrival of ocean freight’s peak season, spurred by concerns over potential labor strikes at East and Gulf Coast ports.
Reefer Tender Rejections on the Rise
The Outbound Tender Reject Index (OTRI) offers another glimpse into market conditions. For the first time this year, reefer outbound tender rejections have surged, driven by the produce season. The ROTRI now stands at 7.91%, although flatbed rejections have dropped to 4.9%, and van rejections remain steady at 4.75%. These moderate changes suggest a stable market as we approach the back-to-school season.
Spot Rates vs. Contract Rates
The relationship between spot rates and contract rates is shifting. While long-term contract rates for dry van truckloads have dipped by 3%-5% since July 2023, spot rates have risen by 5%-6% year-over-year. This indicates a tightening market, with carriers gaining some negotiating leverage. Spot rates, often more reactive, are suggesting an approaching shift in market conditions.
Impact of Port Diversions on Intermodal Volumes
International intermodal volumes from Southern California are benefiting from a diversion of vessel movements from Canadian ports. Union Pacific and Norfolk Southern have noted increased transloading activities. This trend, driven by the availability of oceangoing containers, is expected to sustain strong intermodal volumes in the near term. Monitoring import booking volumes at ports like Long Beach can provide early indicators of potential drops in international intermodal volumes.
Stabilizing Spot Rates
Dry van spot market rates have stabilized but remain elevated compared to last year. Recent data from the FreightWaves National Truckload Index shows a slight decrease week-over-week but a significant year-over-year increase. Contract freight rates have seen similar stability, with minor fluctuations in rejection rates. The challenging environment for Request for Proposals (RFPs) continues, affecting dedicated segments more acutely.
What This Means for Truck Drivers
For truck drivers, these data points highlight a complex yet promising landscape. The rise in import volumes suggests more freight opportunities in the near future. However, the overall market balance will depend on domestic demand and capacity adjustments. Staying informed about these trends can help drivers anticipate changes and make strategic decisions about their routes and freight choices.
As always, the resilience of the U.S. consumer and the potential for unexpected market rallies remain factors to watch. Keep an eye on these indicators to navigate the summer freight market effectively and make the most of the opportunities that arise. Safe travels!
