As the freight market emerges from the Fourth of July weekend, notable shifts in spot market rates and tender rejection rates across various freight types have surfaced. This blog post dives into the latest trends and insights drawn from SONAR tickers to provide a comprehensive view of the current freight landscape.
Cooling Spot Market Following July 4th
The dry van spot rate rally that began in mid-June seems to have lost some momentum post-holiday. The FreightWaves National Truckload Index (NTI) 7-Day Average recorded a slight drop, moving from $2.38 per mile on July 1 to $2.37 per mile. Although minor, this decline suggests the return of capacity after the holiday surge. Despite this dip, the NTI remains elevated, marking its highest level since February 5.
Similarly, flatbed spot market rates experienced a post-holiday decline, dropping from $2.89 per mile to $2.88. A significant development in the flatbed segment comes from the contract space, where flatbed outbound tender rejection rates fell sharply by 282 basis points (bps) from 9.6% on July 1 to 6.78%. Month-over-month figures are even more staggering, with a 970 bps drop from 16.48% on June 9 to 6.78%.
Conversely, reefer spot market rates have shown resilience over the past week. The Reefer Truckload Index (RTI) rose by 10 cents per mile, climbing from $2.63 to $2.73. However, reefer outbound tender rejection rates saw a downward trend, decreasing by 218 bps from 10.88% to 8.7%.
The Long and Short of Haul Tender Volumes
Tender volumes have increased by approximately 18% compared to the same period in 2019, with rejection rates remaining nearly constant. Notably, demand for city freight (loads moving less than 100 miles) has surged by 50% since 2019. These city loads are accepted at a higher rate, with a rejection rate of 2.36%, compared to 4.84% for long-haul loads moving over 800 miles. The primary drivers behind this growth are manufacturing activities, particularly in the automotive sector, and consumer goods fulfillment. Supply chains have been working to reduce the distance between finished goods and end users, contributing to the weakest five-year growth in midhaul (MOTVI).
Long-haul freight remains crucial, matching the growth of city freight but from a higher base. This sector is essential to monitor due to the higher challenge of servicing long-haul loads compared to shorter-haul loads.
Van, Reefer, and Flatbed Demand Dynamics
Van rejection rates spiked around Independence Day as many truckers took time off, contributing to the Van Outbound Tender Reject Index (VOTRI) rally since hitting its year-to-date low in late April. While some of these holiday gains may be temporary, the demand for dry van freight remained stable throughout June, often aligning more with the better days of 2022 than the downturn seen in 2023.
The reefer segment presented a different trend. Although the Reefer Outbound Tender Reject Index (ROTRI) did not rally as clearly in June, it maintained respectable levels, driven by seasonal demand for temperature-controlled goods during the summer. On the other hand, the flatbed segment struggled. The Flatbed Outbound Tender Reject Index (FOTRI) plummeted throughout June and failed to recover over the holiday, reflecting challenges in the construction sector, which recently reported its highest layoff numbers since the 2008 subprime mortgage crisis.
Charleston’s Surge in Rejection Rates
Charleston, South Carolina, experienced a notable rise in rejection rates, increasing by 416 bps to 10.41% over the past week, significantly above the national average of 6.59%. Freight demand in Charleston also rose by 5.58% weekly, outperforming the Outbound Tender Volume Index’s negative growth of 2.28%. This surge comes as the Port of Charleston resolved a long-standing labor dispute, reopening its newest terminal and adding capacity for an additional 700,000 twenty-foot containers.
Mileage Band Rejection Rates Ahead of July 4th
Tender rejection rates across various mileage bands showed a rapid increase leading up to the Fourth of July. Midhaul loads (251-450 miles) and tweener loads (451-800 miles) saw the highest rejection rates at 8.38% and 8.53%, respectively, compared to the overall outbound tender rejection rate of 6.54%. Longhaul and shorthaul loads were closer to the national average, with rejection rates of 6.89% and 6.18%.
This variance in rejection rates is expected as drivers position themselves to be closer to home for the holiday. The repositioning of truckload capacity also impacted dry van spot market rates, which rose by 6 cents per mile, from $2.32 on June 24 to $2.38.
As the freight market adjusts post-holiday, these trends provide valuable insights into capacity, demand, and rejection rate dynamics across different freight segments. Monitoring these developments will be crucial for stakeholders to navigate the evolving freight landscape effectively.
