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Yahoo
2 days ago
- Business
- Yahoo
Economic uncertainty delays truckload market breakout
Chart of the Week: Outbound Tender Reject Index, National Truckload Index (linehaul only) – USA SONAR: The truckload market remains poised for a breakout, but the timeline appears to be extending. Analyzing the trend line of tender rejections (OTRI) and spot rates excluding fuel (NTIL) over the past two years reveals a clear upward trajectory with increasing volatility. However, this trend flattened in the first five months of the year, as economic uncertainty continues to dampen demand. The trucking sector is enduring one of its longest and most challenging economic stretches since deregulation. Truckload demand is currently down approximately 30% from its COVID-era peaks. While those peak levels were never sustainable, they lasted long enough to inflate capacity far beyond what the market required. From June 2020 to October 2022, the number of active truckload operating authorities grew by roughly 48%. Since then, they have declined by only about 12%. Federal Motor Carrier Safety Administration data is slow to reflect these changes, as it can take up to two years to clear inactive authorities unless operators self-report their exit. Carrier Details helps refine this timeline to around a year, but it still lags. Importantly, one authority can represent a single truck or a fleet of a thousand, so this metric isn't evenly distributed. Tender rejections serve as a reliable proxy for market balance. Carriers are unlikely to reject freight in soft markets unless they have alternatives, so rising rejection rates indicate tightening capacity and strained networks. Capacity has been in correction mode for years and seemed close to reaching equilibrium late last year. Over the holidays, the OTRI exceeded 10% for the first time since 2021. This occurred even as shippers increasingly turned to intermodal for longer hauls, taking advantage of early inventory pull-forwards that gave them more flexibility in shipping. The ongoing trade war has further fueled the inventory pull-forward phenomenon. After briefly cooling in late April and early May, tariff activity resumed, sending mixed signals and triggering repeated shifts in shipping behavior. Import bookings data shows a surge in container volumes bound for the U.S. last summer, followed by erratic swings. Container imports can be a useful demand proxy, but they often give false signals during periods of uncertainty — something that has plagued shippers since COVID. Import demand remains relatively high, but much of the freight is precautionary. With trade policy and consumer spending still in question, a significant portion of freight is sitting idle in warehouses rather than moving on trucks. The economy seems to be stalling, if not slowing outright, as business investment weakens. This protracted trade policy uncertainty is unprecedented, leaving businesses without a playbook. Hiring has slowed, and layoffs are rising. Initial jobless claims have increased since January after declining through the latter half of 2024. While aggregate figures remain historically healthy, the trend is concerning. If the labor market continues to deteriorate, consumer spending could contract further. Combined with persistent inflation and reduced investment, these factors suggest a stagnating economy. The fact that rejection rates have stayed above 6% since International Roadcheck in mid-May — despite underwhelming demand — should be seen as a positive signal for carriers and 3PLs. Demand conditions are actually weaker than in mid-2023, when excess inventory caused order slowdowns and pushed OTRI below 3%. This suggests a meaningful amount of capacity has exited the market, with more likely to follow as demand remains soft. While the outlook isn't bright for all stakeholders, it does indicate that the imbalance between truck supply and freight demand has narrowed. Shippers should take note: The market is primed for a sharp reaction if macroeconomic conditions improve. Even if they don't, transportation is likely to become more challenging going forward, even if not dramatically so. The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on for future reference. SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time. The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience. To request a SONAR demo, click here. The post Economic uncertainty delays truckload market breakout 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
25-05-2025
- Business
- Yahoo
Carriers have a West Coast bias
Chart of the Week: Outbound Tender Reject Index–Southeast, West Coast SONAR: Tender rejection rates (OTRI) for truckload shipments originating in the Southeast (URSE) surpassed 10% last week — marking the first time in nearly three years they've reached that level. In contrast, rejection rates for freight departing the West Coast (URWT) remain well below the national average and are the lowest among the seven major U.S. regions. This contrast is striking, especially given the current focus on imports and the Southern California ports that handle the bulk of U.S. container traffic. So, what can we learn from these diverging trends? Let's start with demand, the most logical first factor to examine. Tender volumes out of the Southeast are down 6% year over year, while West Coast volumes have declined 14% annually. While demand has held up better in the East, it hasn't increased meaningfully. This lack of significant growth suggests that demand alone is unlikely to be the root cause of the rejection rate disparity — at least not directly. As we've discussed previously, much of the long-haul freight demand from the West has shifted to rail, with intermodal capturing a large share from the truckload sector. Shippers have been bringing goods into the U.S. well ahead of fulfillment needs, allowing more flexibility in how freight is moved across the country. Loaded container volumes moving by rail (ORAILL) out of Los Angeles remain up year over year, even though they've dipped in recent weeks alongside declining import levels. Meanwhile, long-haul tender volumes (LOTVI) out of Los Angeles are down a staggering 26% annually. Intermodal is a slower but more cost-effective alternative to trucking — both attractive options in an environment of shrinking warehouse capacity and cost. In many cases, intermodal serves as a form of mobile storage. This shift helps explain part of the East-West truckload rejection rate disparity. Without sufficient transcontinental freight, carriers operating out West may find themselves stuck without balanced return loads. Despite the demand drop, some carriers may be gravitating toward the West Coast due to operational advantages. The average length of haul out of Los Angeles still exceeds 800 miles — down from 900 miles last year — which can result in better truck utilization and higher revenue per load. Rates are also compelling. According to SONAR's TRAC and invoice data, spot rates in many major Southern California lanes are at or above $3 per mile. Current averages include $3.29 to Denver, $2.97 to Salt Lake City and $2.92 to Phoenix. In contrast, rates from Atlanta to Chicago averaged about $1.78 last week (a 24% increase from the week prior). Atlanta to Harrisburg — typically an expensive, high-volume lane — was $2.42, while loads to Dallas were averaging $1.94. While rates per mile aren't directly comparable due to differing lane lengths and demand imbalances, it's clear that carriers are earning higher margins per load out West — even with lower demand. Utilization is a key driver of carrier profitability, though it's not directly visible in macro-level data. Without enough transcontinental freight to rebalance trucks, carriers may end up taking any available load — or staying in the West, drawn by stronger rates. Tender data also shows where markets are tightening the most. The latest key market trends map highlights tightening in the Savannah, Georgia, and Jacksonville, Florida, areas, along with Houston (outside the Southeast but still port-influenced). All are heavily impacted by maritime freight. The final wave of import pull-forward activity in April reached the East Coast in early May. This could be straining capacity, especially if much of that freight is moving through the spot or transactional markets, which may not be fully captured in tender data from a demand perspective as it is heavily biased toward contractual agreements. While much of this analysis is inferred, one point is clear: 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 FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on for future reference. SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time. The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience. To request a SONAR demo, click here. The post Carriers have a West Coast bias appeared first on FreightWaves.
