The trucking freight train finally may be losing some steam. Tender volumes continue to be stagnant with slight declines, though still at very elevated levels for this time of the year. The Outbound Tender Volume Index (OTVI) fell 3.4% week over week, sitting at 13,686.
“Rejections are the major call out this week,” Justin Maze, Transfix’s senior manager of carrier account management, says. “Tender rejections continue to slowly decline from the beginning of the new year. The big question is: Is this just a low before volumes pick back up? Every expert has a different opinion on where the freight market will be throughout the next year, and we could see parts of Q2 with volumes and rejections at levels we just saw in Q4 of 2020.”
The Outbound Tender Reject Index (OTRI) is still descending from its all-time high near 28% in December to its current 21.93%. “The ongoing rebidding season is pushing contract rates higher toward spot rates, leaving carriers with less desire to reject contracted freight,” Seth Holm writes for FreightWaves.
Markets loosened in just about every part of the country last week. With less freight in the spot market, rates have been driving downward following their steady increase for the previous 4–6 months. According to FreightWaves, spot volumes fell in most lanes last week, and national average spot rates, inclusive of fuel, dropped by 20 cents to $2.85 per mile, a week-over-week drop of 11.5%.
“We could continue to see this softness for the next month or so, with volumes, rejections and rates all rising again in the second quarter,” Maze says. “Honestly, we should be prepared for anything to shift again within weeks, because industrial production continues to climb, ports are still very congested with plenty of freight to be moved, and we are looking at a potentially strong produce season driven by good weather. Economic factors, such as a large stimulus package or the prospect of life getting back to normal in a matter of months, could also shift freight patterns off the traditional path.”
The Institute for Supply Management’s (ISM) December 2020 Semiannual Economic Forecast, issued last week, calls for economic growth in both the manufacturing and services sectors. The report is based on feedback from U.S.–based purchasing and supply management executives.
For manufacturing, ISM is estimating a 6.9% annual increase in 2021 revenue, compared with a 1.3% annual decline in 2020. “Manufacturing’s purchasing and supply executives expect to see strong growth in 2021,” says Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee. “They are optimistic about overall business prospects for the first half of 2021, with business continuing to expand through the second half and at higher rates. Manufacturing experienced seven consecutive months of growth from June through December 2020, with December’s PMI (Purchasing Managers’ Index) at its highest level since August 2018, the peak of the last manufacturing expansion.” Capital expenditures in this sector are expected to increase by 2.4%, after a 2.4% decline in 2020.
Services experts expect a 1.6% net increase in overall revenues for 2021, compared with a 4.8% decrease in 2020. “Services supply managers report operating at 86.6% of their normal capacity,” says Anthony S. Nieves, chair of the ISM Services Business Survey Committee. “They are optimistic about continued growth in the first half of 2021 and more growth for the second half, with a projected increase in growth rate for capital reinvestment. They forecast their capacity to produce products and provide services will rise by 3.2% during 2021, and capital expenditures will increase by 12.7%.”
Transfix launched TrueView TMS, a flexible transportation management system for small and mid-size shippers. TrueView TMS enables shippers to easily secure reliable coverage, streamline tender management and automate carrier communications — all while getting access to data on carrier performance. The new system offers benefits including a flexible routing guide, automated tendering, instant capacity and performance analytics.
“TrueView TMS automates traditionally tedious tasks while bringing valuable data to the freight management process,” Transfix’s vice president of shipper solutions, Shane Duncan, told Logistics Management. “This not only streamlines operating, saving immense time, but it enables a focus on more strategic business operations, and [increases] the opportunity to drive growth. In fact, a customer of ours, Plastic Ingenuity, leveraged TrueView TMS to slash time to tender from three hours to under 15 minutes — a whopping 92% reduction.”
TrueView TMS is just the first part of Transfix’s novel transportation management system. The company is currently developing modular solutions that can be integrated with existing TMS, helping shippers of all sizes address their differing individualized needs.
“What Transfix does better than anyone else is bring ease-of-use and analytics to the freight management process, reducing friction caused by legacy systems and empowering decision-makers to make more strategic decisions,” Lily Shen, CEO of Transfix, says. “TrueView TMS brings transportation management into the 21st century, giving shippers the ability to manage their freight with a few clicks and tap into the most powerful capabilities Transfix offers: instant capacity, real-time visibility and actionable insights across their entire operations.”
With the uncertainty and volatility surrounding the U.S. economic recovery, shippers need a partner that can help them adapt and excel — no matter the circumstance. Shippers turn to Transfix for our leading technology and reliable carrier network. As volumes drive higher, we are here to help: Learn more about our Core Carrier program and Dynamic Lane Rates. As part of our ongoing market coverage, we’ll continue to provide breaking news, resources and insight into emerging trends and the pandemic’s impact on the transportation industry.