Latest news with #OutboundTenderRejectionIndex
Yahoo
26-06-2025
- Business
- Yahoo
State of Freight Takeaways: English language rule for truckers takes effect, early impacts emerging
Just when some aspects of the freight market were starting to calm down, there's a new factor that has the potential to inject renewed volatility into supply chains. That was one of the points made in the June State of Freight webinar featuring Firecrown and SONAR CEO Craig Fuller along with Zach Strickland, SONAR's director of market intelligence. FreightWaves' State of Freight webinars the past few months took place against a backdrop of tremendous volatility and uncertainty in freight markets. Fuller and Strickland saw some aspects of the supply chain growing somewhat calmer, but also discussed a change in a key benchmark from the SONAR data dashboard that could be signaling any calming might not last. Here are five takeaways from the June State of Freight webinar. The Outbound Tender Rejection Index in SONAR has moved up sharply in the past few days. Fuller said it could be the first signs of tightening capacity because of the English Language Proficiency requirement that began a renewed round of enforcement this week. The impact of enforcing the ELP–which is not a new regulation, but is getting a new enforcement push from the Trump administration–goes well past having a driver taken off the road because he or she failed the ELP during a safety stop. Out of Service orders that would accompany a driver being taken off the road end up on the records of a carrier, Fuller said. 'If you're a fleet and you have an out of service violation, this time is recorded on your record,' Fuller said. 'And what's interesting about that is that it shows up in your insurance rates. It also means some shippers will not book you if you have a lot of out of service violations.' That recent spike in tender rejection rates could be a sign of carriers taking drivers off the road rather than have them become the focus of an Out of Service order that results in that mark on a company's record, according to both Fuller and Strickland. Fuller was 50-50 on whether to call the trade war that was raging in April and into May 'an afterthought.' 'It has become sort of that, but you're still dealing with it,' he said. Fuller said he saw evidence in the news cycle that 'the administration seems to have largely moved on.' But Fuller also noted that the 90-day deadline on other countries cutting trade deals with the U.S. is coming up fast. (The 90-day pause on many tariffs was announced April 9). 'My guess is they just end up extending them out because tariffs were far less popular among the independents and obviously the bond market,' he said, referring to the sharp spike in Treasury rates when 'Liberation Day' tariffs were announced. Speaking of the U.S. bombing of Iranian nuclear facilities, Fuller said 'I think it seems to be that's where the administration is focused on. It has moved on from trade, and I think it's a positive for everybody.' Fuller and Strickland discussed the Trade War Center on SONAR and what it is saying about ocean shipments. Strickland noted that the dashboard shows that ocean going volumes are now running above last year, 'and if you recall, last year was a strong year for import activity,' he said. And a lot of that ocean going traffic is coming out of Vietnam and Thailand, which Fuller said is an effort to take Chinese-made goods, transship them through those countries and avoid the steep tariffs on Chinese imports. 'A lot of transshipping is going on,' Fuller said. 'It's nearly impossible to know how much it is.' He added that there are estimates as much as 70% of U.S. Imports from Vietnam could be goods that were transshipped from China, but he also has seen estimates as low as 30%. Strickland, who came out of the LTL business, said he 'thought LTL was going to come out in much better shape through all this, just because the industrial sector is dying to wake up and is ready to go.' But Strickland said he now believes LTL won't perform any better than a recovery in truckload, which remains in the doldrums. But Strickland had optimism for the truckload sector, which could drag LTL along with it. 'I think the truckload market will flip, and I think we're close to it,' he said. 'What's going to happen is the truckload market is going to have an inflection point and then that's going to trigger a downstream reaction into LTL.' He added that he believed September or October might be a period when that 'flip' would occur. But LTL is ultimately tied to industrial activity. 'And on the industrial side of things, we need economic certainty or clarity,' Strickland said. 'The biggest thing you can take from the Big Beautiful Bill is that the administration is very anti-EV now,' Fuller said. He noted the various incentives for electrification that were in the Inflation Reduction Act are being terminated in the legislation passed by the House and now before the Senate that carries that BBB name. As a result of that, Fuller said, 'the pressure to electrify is off somewhat, because fleets no longer feel that this is a necessary thing they have to contend with,' Fuller said. He also noted a statement made by a leading U.S. Volkswagen official in the U.S. who said that customers were going to be offered EVs aggressively because of the huge pool of money the IRA provided to incentivize EV purchases. But that pool of money is now drying up. 'If you look at the bill, we're changing directionally,' Fuller said. More articles by John Kingston 5 takeaways from State of Freight: Getting ready for auto tariffs State of Freight takeaways: Freight crash may turn into sudden revival A market on the precipice: 5 takeaways from the April State of Freight The post State of Freight Takeaways: English language rule for truckers takes effect, early impacts emerging appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
24-06-2025
- Business
- Yahoo
Prepare for a hot, tight July 4th freight market
Trucking carriers operating in the spot market should see a nice payday if they choose loads carefully in the lead-up to the July 4th holiday, based on SONAR freight market data, while freight brokers need to stay in touch with their customers to protect their margins against potentially surging spot rates. The U.S. truckload market is currently navigating a complex landscape marked by economic uncertainty and fluctuating demand, as indicated by recent trends in tender rejections and spot rates. These indexes, crucial in assessing the health of the freight sector, reveal a nuanced picture of both opportunity and potential peril for various stakeholders within the industry. Over the past two years, the truckload market has seen a gradual but significant exit of capacity. This contraction can be largely attributed to adverse business conditions that have persisted since the post-pandemic peak. According to FMCSA data, from June 2020 to October 2022, the number of active truckload operating authorities surged by approximately 48%, but they have since declined by about 12%. This downsizing reflects a correction mode in response to overinflated capacity during the pandemic boom, which is still being unwound. The Outbound Tender Rejection INdex, a measure of the percentage of loads rejected by carriers, has become increasingly volatile, indicating sensitivity to changes in market balance and economic signals. Recent data shows that tender rejection rates have risen above 6% since mid-May, a period coinciding with broader underwhelming demand conditions. This increase suggests tightening capacity and stressed networks, as carriers find themselves more empowered to decline freight in the face of proliferating and lucrative options. Los Angeles tender rejections currently stand at 2.85%, a small bump following a relative drought of containerized imports amid stiff competition from intermodal rail. At this point, any significant tightening in LA will have implications for the national freight market. Meanwhile, Dallas has seen its OTRI rise more significantly, now standing at 6.8%, up from lower figures earlier in the month. The increase in Dallas is particularly illustrative of regional pressures, which are likely tied to specific industry sectors experiencing localized freight demand rises. These changes highlight the broader trend of rising rejection rates in major freight hubs, suggesting a growing equilibrium between supply and demand that could lead to varying conditions for carriers and brokers alike. (The national average Outbound Tender Rejection Index [in white] has risen to 6%, and the National Truckload Index, a fuel-inclusive spot rate, has risen to $2.27 per mile). At the same time, the National Truckload Index (NTI), a national average spot rate, has spiked and receded over the past month and is now at $2.27 per mile. These swings are driven by not only seasonal factors but also wider economic challenges, including inflation and rising costs. This fluctuation in spot rates presents a two-sided challenge: while carriers profit from increased rates, brokers must deftly manage these changes to ensure profitability and maintain a competitive edge. As the industry approaches the July 4th holiday, historically a peak period for the trucking sector, the increase in tender rejections and spot rates signals a potential boon for trucking carriers. The ability to capture higher rates could bolster their balance sheets after months of challenging conditions. However, this uptick also signals a potential risk for freight brokers, who must work swiftly with their customers to renegotiate contract rates to preserve their margins. The market's current state indicates that while there is promise for carriers, the same conditions pose challenges for brokers. The increased rates, if not faced with corresponding contract rate adjustments, will compress broker margins, highlighting the importance of proactive communication and strategic contract management with shippers. The post Prepare for a hot, tight July 4th freight market appeared first on FreightWaves. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
05-06-2025
- Business
- Yahoo
Truckload's path to equilibrium
The U.S. truckload market has undergone significant transformation since the COVID-19 pandemic, with the industry experiencing dramatic swings in capacity, demand and pricing. In the aftermath of the pandemic, the truckload market found itself awash in excess capacity. This oversupply stemmed from a combination of factors, including the entry of new carriers during the pandemic-era freight boom and subsequent softening of demand as consumer spending patterns normalized. The oversupply situation was further complicated by volatile trade policies, with tariff rhetoric accelerating in early 2025 and creating uncertainty in import patterns. As market conditions deteriorated, thousands of small- and midsize trucking carriers faced unsustainable economics, leading to widespread business failures and market exits. This natural, if painful, adjustment mechanism began to rebalance the supply-demand equation that had tilted heavily in shippers' favor during the post-COVID era. The exodus of carriers was driven by significant cost pressures. Publicly traded freight brokerage RXO noted in its quarterly market report that 'the average cost to operate a truck is 34% higher over the past decade but absolute spot rates are largely the same as they were in 2014.' This economic reality made it increasingly difficult for carriers to maintain profitability, particularly smaller operators without the scale or financial resources to weather prolonged market weakness. According to RXO, the truckload market 'has remained relatively calm' with spot rates continuing to step higher despite disruption from rapidly changing tariff policies. The market has followed a trend – largely in place since 2023 – of soft freight demand, reductions in carrier capacity and gradually stabilizing situation created what RXO described as 'a difficult landscape for carriers,' with many 'running with unsustainable unit economics.' This harsh operating environment accelerated the pace of carrier exits, despite 'a couple of atypical months of operating authority growth in March and April.' By mid-2025, the prolonged exodus of carriers finally brought the market closer to equilibrium. As RXO observed in its quarterly forecast, 'We're as close to equilibrium, in terms of carrier supply and shipper demand, as we've been in over two years.' The broker noted that 'relatively speaking, the capacity situation is much more fragile than at this time last year.' This newfound balance began manifesting in key market indicators. The national average Outbound Tender Rejection Index, which measures the percentage of tendered loads rejected by carriers, climbed to 6.67% by June 2025 – reaching the threshold where rejections start putting inflationary pressure on spot rates. Most enterprise shippers prefer to maintain tender acceptance percentages in the upper 90s, meaning many were already experiencing problematic service levels. The data showed significant improvement in rate trends as well. TL spot rates (excluding fuel) were up 9.1% year over year in the first quarter of 2025, following an 11.6% growth rate during the fourth quarter of 2024. Contractual rates also increased 1.4% year over year in the first quarter – the first annual increase since the end of 2022.A notable development in the recovering market has been the emergence of significant regional disparities. By June 2025, tender rejection rates for truckload shipments originating in the Southeast surpassed 10% – marking the first time in nearly three years they reached that level. In contrast, rejection rates for freight departing the West Coast remained well below the national average and were the lowest among the seven major U.S. regions. This contrast was particularly striking given the focus on imports and Southern California ports that handle the bulk of U.S. container traffic. While tender volumes out of the Southeast were down 6% year over year, West Coast volumes declined 14% annually, suggesting that demand alone wasn't driving the regional disparity. Part of the explanation lies in intermodal transportation patterns. Much of the long-haul freight demand from the West shifted to rail, with intermodal capturing a large share from the truckload sector. Loaded container volumes moving by rail out of Los Angeles remained up year over year, even as they dipped alongside declining import levels. Meanwhile, long-haul tender volumes out of Los Angeles dropped 26% annually. The Outbound Tender Rejection Index measures the percentage of truckload tenders rejected by carriers and serves as an indicator of the relative balance of supply and demand in the truckload market. (Chart: SONAR. To learn more about SONAR, click here.) By June 2025, the 'interior' markets of Atlanta, Chicago and Dallas showed the tightest capacity conditions among major freight centers. Atlanta's outbound tender rejection rate reached 8.89%, continuing an upward trend that began in late February. Chicago's rejection rate stood at 7.07%, while Dallas reported 6.86% – all above the national average. The market trajectory for truckload rates remains 'inflationary,' according to RXO, though trade policy presents a significant wild card. The 3PL classified the early part of 2025 as 'still primarily a shippers' market' but noted that 'with a continued difficult landscape for carriers, and (in many cases) decreasing 2025 contract rates setting in, it could set the stage for volatility later in 2025.' The broader trend for 2025 calls for more carrier exits and high operating costs to keep upward pressure on rates. RXO pointed to the possibility of a more material uptick in rates if trade tensions calm ahead of peak season and carrier exits become more pronounced. In that scenario, 'contract rates and routing guides set in the softer market of 2024 may not survive a tighter market late in 2025, when the spot market will likely become more lucrative than the contract market.' Transportation prices were forecast to be significantly higher a year from now, with industry respondents returning a reading of 75 for the pricing outlook in the Logistics Managers' Index. There is a growing consensus that 'the worst-case scenarios associated with potential tariffs will not come to pass,' and 2026 could reflect a more robust transportation recovery, barring a macroeconomic U.S. truckload market has traveled a difficult road since the pandemic, moving from extreme oversupply to a more balanced state through the painful but necessary process of carrier exits. This gradual market healing has finally restored equilibrium between supply and demand, enabling carriers to regain pricing power as evidenced by rising tender rejection rates and strengthening spot market conditions. The market remains sensitive to external shocks, particularly trade policy developments and potential economic headwinds. However, the significant reduction in truckload capacity over the past year has made the market more responsive to even modest demand changes. As one analyst noted, 'a significant reduction in truckload capacity over the past year has made the market more vulnerable. Even with a somewhat bearish outlook for demand, the truckload sector appears increasingly reactive — and poised for volatility.' The post Truckload's path to equilibrium appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
28-05-2025
- Business
- Yahoo
How Tender Rejections Predict Your Next Rate
Every week, thousands of loads move across the country before a single rate hits the load board. That's because most freight—especially high-volume freight—starts with a contract. Shippers send out tenders to their core carriers, usually the same ones every week. But when those carriers say no? That's when things start to shift—and it's also when the money starts moving. The problem is, most small carriers and owner-operators aren't watching what's happening upstream. They're watching load boards. They're looking at what they got paid last week. And by the time they realize something's changed, the smart brokers have already made their move. This article breaks down what a tender rejection is, how it's tracked, and how it can predict your next rates—if you know where to look. Let's break it down simple. A tender is a shipment offer from a shipper to a contract carrier. Think of it like this: a shipper says, 'We've got a load leaving Atlanta going to Columbus. Can you move it for $1,950 like we agreed last month?' If the carrier says yes, that's accepted. If they say no—maybe they don't have a truck, or the spot market's paying better—that's a tender rejection. When enough of those get rejected in a given market, that freight has to go somewhere else. And where does it go? The spot market. This is where it gets critical for small carriers. You might not have access to the initial tender, but once it gets rejected, you're in play. If you're watching rejection data, you can position your truck before the freight hits the board—and you can negotiate stronger because you know the market's getting tighter. The freight market doesn't run on guesswork. Large shippers and brokers use data tools like SONAR from FreightWaves to track trends. One of the most important metrics in SONAR is the Outbound Tender Rejection Index (OTRI). This number shows what percentage of loads are being rejected by contract carriers in a specific market. If the OTRI in Chicago jumps from 5% to 10%, that means twice as many loads are being turned down. That's a signal that capacity is tightening (available trucks are declining)—and spot rates are likely to rise in that market in the next few days. Carriers who are watching this in real time can reposition their truck or push harder on rate in markets where tender rejections are rising. Here's how to read the signal: OTRI under 5% – Contract freight is being covered easily. No major pressure on spot rates. Expect soft rates on load boards. OTRI between 5–10% – Capacity is getting tighter. Spot market may start to absorb overflow freight. Rates likely to rise slightly. OTRI over 10% – Shippers are struggling to cover freight. Brokers are calling more carriers. Spot market is heating up fast. If you're running a lane and you see OTRI climbing for that origin city, that's a real-time green light to hold your ground on rate—or even raise it. Let's say you're parked in Dallas. You're thinking about bouncing to Houston to find freight. You check SONAR and see: Dallas OTRI = 4.3% Houston OTRI = 11.2% What does that mean? It means Houston contract carriers are rejecting more freight—likely due to higher-paying spot market options or truck shortages. That's your signal. So instead of sitting on Dallas at $2.15/mile, you make the short reposition to Houston, where brokers are under pressure and spot rates are climbing. A move like that could add $400–$600 to your week with no change in total miles—just a smarter play based on rejection data if you play it right. Brokers aren't guessing what to pay you. They're watching tender rejections too. If OTRI is low, they know they've got leverage. They'll tell you: 'That lane's been soft all week—we've got plenty of options.' But when OTRI jumps? That's when you hear: 'I've got a shipper that needs coverage right now—can you do it for $2,400?' Most of the time, they knew that lane tightened days ago—they just waited to call when the pressure hit. Carriers who know OTRI numbers ahead of the phone call get to flip the script. They stop chasing what's posted and start controlling what they're worth. If you're not a SONAR user (or part of the Playbook Masterclass where we break this down weekly), you can still spot rejection patterns through: Load board volume shifts – sudden spikes in load count often follow tender rejections Rate swings by region – if the same lane suddenly pays $300 more than last week, contract freight likely spilled Broker behavior – when brokers start calling instead of posting, something's changing Time to cover loads – when it takes longer to get a truck booked, it usually follows rejection pressure The goal is to make these signals part of your planning routine—not something you notice after you're already loaded. Here's how to make this part of your daily workflow—whether you're running one truck or managing a small team. Figure out the top 3–5 origin markets you run out of most often (example: Memphis, Harrisburg, Dallas, Joliet). Track whether rejections in those markets are rising, falling, or flat. Even a 1–2% increase is a signal. If OTRI is rising in that market, don't undercut yourself. Quote strong, walk if the math doesn't work. If OTRI is low, build in buffer lanes or add short hauls to compensate for weaker pricing. Move your truck before the crowd. If rejection rates are climbing in a nearby market, reposition early—don't wait until everyone else is chasing the same freight. Let's be clear—OTRI is not a silver bullet. It won't tell you: Whether the freight is high quality (some rejections are for junk freight) Whether brokers are paying what they should (some will lowball even in tight markets) Whether accessorials, wait times, or backhauls make it a profitable run But OTRI does tell you where the leverage is shifting. And in trucking, leverage = money. Tender rejections are the earliest signal you'll ever get that a rate is about to change. If you wait until the load board reflects it, you're already behind. If you wait until a broker tells you 'things are heating up,' it's too late. But if you're watching OTRI—and making decisions off that data—you stop reacting and start running your truck like a business. Because this market doesn't reward who's working the hardest. It rewards who's reading the game the best. The post How Tender Rejections Predict Your Next Rate appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
27-05-2025
- Business
- Yahoo
Tender Rejections: The Freight Market's Crystal Ball
What's a tender rejection rate? Few indicators are as telling in the dance of freight logistics as the tender rejection rate. This metric, often underappreciated outside logistics circles, offers a window into the balance of supply and demand, signaling shifts in market dynamics before they fully materialize. Tender rejections occur when carriers decline loads offered under contract by shippers. A rising rejection rate typically indicates tightening capacity, as carriers opt for more lucrative spot market opportunities. Conversely, a declining rate suggests ample capacity and potentially softer spot rates. Current Trends As of May 2025, the national Outbound Tender Rejection Index (OTRI) stands at 6.69%, reflecting a slight increase from previous weeks. This uptick suggests a modest tightening in capacity, though rates remain relatively there are disparities. The Southeast has seen rejection rates surpass 10% for the first time since 2022, indicating a significant tightening in that area. In contrast, the West Coast, particularly Southern California, continues to experience low rejection rates, reflecting abundant capacity. Implications for Fleets Understanding tender rejection trends is strategic planning. In regions with rising rejection rates, carriers may find opportunities to negotiate higher rates or prioritize spot market loads. Conversely, maintaining strong relationships with shippers and focusing on efficiency becomes paramount in areas with declining rates. While current trends suggest a gradual tightening in certain regions, the overall market remains balanced. Carriers and owner-operators should monitor rejection rates as they offer early signals of market shifts. This helps make proactive adjustments to operations and rejection rates are an indicator of the freight market's health. By staying attuned to these metrics, carriers and owner-operators can make better decisions, understanding the industry's complexities and how they will affect the near- and long-term future of trucking. The post Tender Rejections: The Freight Market's Crystal Ball appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
