Tender Volumes and Rejections Soar Leading to Fourth of July
If you were longing for something bursting in air this Independence Day, look to tender volumes across the country. “Carriers are rejecting loads at rates only seen during the March panic-buying spree buildup,” Seth Holm writes for FreightWaves. “Volumes are so high currently that even a significant decline [after the typical peak of July 4] could still keep OTVI above 2018/2019 comparables.” The Outbound Tender Volume Index (OTVI) is approaching 13,000 for only the second time in its three-year history.
Other than the March spike, there has not been freight demand like this in recent history. 2018 was considered a banner year for freight volume, and OTVI is at more than 14% above the 2018 high point.
There is typically a surge in volumes leading up to Independence Day, as shippers try to clear inventory. “After a lost April and depressed May, we believe shippers are particularly focused on pushing freight to paint the second quarter as rosy as possible,” Holm writes. July 4 typically is the start of a summer slowdown before things pick up in the fall. With all the uncertainty this year, it’s hard to know if this historical pattern will hold.
“This week will be a true tell on which way the market will go. We could see either a normal seasonal slowdown in freight volumes or the continuing of an unpredictable market,” says Justin Maze, Transfix’s senior carrier account manager. “Last week, we continued to see a lot of movement out of the West Coast, as imports are still very strong. While this freight continues to be moved to other parts of the country and repositioned regionally, we could see strong volumes continue for the coming weeks.”
Sitting at 16%, tender rejections are surging along with volumes. “The Outbound Tender Rejection Index (OTRI) jumped an additional 500 bps over the past week after running up more than 400 bps last week,” Holm writes. “The last two weeks have been among the more volatile weeks for OTRI in its three-year history.”
Like volumes, tender rejections tend to trend higher leading up to a national holiday, but the current spike is unlike any leading up to a summer holiday in the past few years. This level of tender rejections will likely put upward pressure on rates.
Trucking Jobs, Spot Rates Also Up in June
According to the Bureau of Labor Statistics (BLS), employment in the U.S. trucking industry surged by 23,300 jobs in June before seasonal adjustments, and 8,100 jobs after seasonal adjustments, William Cassidy reports on JOC.com. Trucking companies tracked by BLS regained 44% of jobs lost between February and April.
“The continued upward trajectory of trucking employment is a good sign for shippers that the truck capacity they need this summer will be in place,” Cassidy wrote. One thing to note is the BLS numbers reflect the employment situation in mid-June, before the latest surge in COVID-19 cases.
Spurred on by improving retail and manufacturing sectors in June, as Transfix predicted, spot market rates also surged this past month, with per-mile rates increasing in all three major truckload segments, James Jaillet reported on Commercial Carrier Journal. Dry van rates saw the biggest gains, followed by reefer, then flatbed rates. All three segments were down from June 2019 averages.
“Carriers’ spot rates jumped last week going into the holiday weekend, as shippers pushed to get as much as they could off their docks to close out the quarter,” Maze says.
With the uncertainty and volatility surrounding the US economic recovery, shippers need a partner that can help them adapt and excel in uncertain times. Transfix’s leading technology and reliable carrier network were specifically developed to help shippers adapt to changing transportation needs. As a part of our ongoing market and COVID-19 coverage, we’ll continue to provide breaking news, resources and insight into emerging trends and the pandemic’s impact on the transportation industry.