Midwest Markets Hold Steady Amid Fluctuations Elsewhere
As we move deeper into the summer, the Midwest continues to demonstrate stability in an otherwise fluctuating market landscape. Key Midwestern hubs like Indianapolis, Chicago, Columbus, and Joliet have maintained relative calm, experiencing a modest 3%-8% increase in market share month over month. This steady performance contrasts sharply with markets like Dallas, which saw an 18.8% decrease in outbound tender volume, dropping below 3% of the U.S. market share. The resilience in the Midwest suggests a consistent demand for trucks, preventing significant capacity imbalances and mitigating spot market volatility in the region.
Market Movers: Salt Lake City and the Reefer Market
Salt Lake City, on the other hand, is experiencing a surplus of capacity as both outbound tender rejections and volumes have taken a hit. The Outbound Tender Reject Index (OTRI) in Salt Lake City fell by 204 basis points week over week, bringing the rejection rate down to a mere 1.39%. With outbound tender volumes also down 2.64%, carriers may need to shift focus to more dynamic markets to optimize their operations. Shippers and brokers in Salt Lake City can enjoy lower-than-average spot rates due to the excess capacity.
Meanwhile, the reefer market is showing signs of a comeback, with reefer rejection rates climbing significantly in regions like Southern California and the Pacific Northwest. Ontario, CA, saw a sharp 540 basis point increase in reefer rejections, while rates in Pendleton, OR, and Seattle, WA, spiked by 621 and 684 basis points, respectively. This resurgence in reefer demand is a positive signal for carriers specializing in temperature-controlled freight, as it could lead to higher spot rates in the coming weeks.
Dry Van and Contracted Freight Insights
While the dry van spot market rates remained flat at $2.31 per mile week over week, they continue to outperform last year’s rates, showing an 8-cent-per-mile increase year over year. Looking ahead, spot market rates are projected to rise by 9 cents per mile over the next 28 days, likely peaking around Labor Day as capacity tightens.
On the contracted freight side, nationwide outbound tender rejection rates have seen minimal movement, with the OTRI dropping slightly by 9 basis points to 4.49%. While this suggests a relatively loose capacity environment, the market is gradually tightening. The Logistics Managers’ Index also offers a positive outlook, indicating that transportation pricing has been improving, potentially signaling the end of the freight recession. However, the market remains vulnerable to external shocks, such as a slowdown in imports or unexpected events.
Import Demand Fuels Strong Peak Season Expectations
Import volumes arriving at U.S. ports have been on a steady incline since mid-July, signaling a robust peak season ahead. Container volumes are averaging double-digit percentage growth, with no signs of slowing down. This surge in imports suggests that the domestic transportation market could face significant capacity constraints in the Western U.S. in the coming months, as demand outpaces supply. Laredo, TX, in particular, is seeing tightened capacity with outbound tender rejection rates reaching their second-highest level this year at 6.5%.
Looking Ahead: What to Expect
As we move towards the end of summer, market conditions appear favorable for shippers. The Outbound Tender Reject Index (OTRI) remains at a modest 4.44%, and the Outbound Tender Lead Time Index (OTLT) holds steady at 2.94 days, reflecting strong carrier contract compliance. While there are no major disruptions expected in the near term, the market may tighten gradually, leading to higher rejection rates by Labor Day. This would signal a shift towards a more challenging environment as we approach the holiday shipping season.
Conclusion
The freight market is showing signs of gradual tightening, with some regions experiencing increased reefer demand and others facing excess capacity. The Midwest remains a beacon of stability, while import demand points to a strong peak season ahead. Carriers and shippers alike should keep a close eye on market trends as we move into the late summer and early fall, preparing for potential shifts in capacity and rate dynamics.
Stay tuned for our next update as we continue to monitor these developments and provide insights to help you navigate the ever-changing freight landscape.
