The Shift in Outbound Tender Lead Times: A Deeper Look
A Record-Breaking Trend
The latest data from SONAR reveals a striking trend in outbound tender lead times. Last week, the average lead time reached an all-time high of 3.76 days, surpassing the previous record set in 2022. But what’s driving this increase?
Seasonal Fluctuations vs. Long-Term Trend
While Christmas and New Year’s Day typically cause a spike in lead times, the data suggests that there’s more to the story. Even after accounting for seasonal fluctuations, lead times have been steadily increasing since 2019. In fact, 2024 saw the highest average lead time on record, with an average of over three days.
The Value of Optimal Notice
So, why are shippers increasing lead times? One possibility is that they’ve learned the importance of providing optimal notice to carriers. Too short of a lead time can make it difficult for carriers to plan, while too long of a lead time can result in requests getting lost or buried. By giving carriers more notice, shippers can reduce rejection rates and improve overall efficiency.
The Relationship Between Lead Times and Capacity
There’s a complex relationship between lead times and available truckload capacity. While longer lead times can lead to lower rejection rates, it’s not always clear what’s causing what. Sometimes, shippers may not have the visibility to provide optimal lead times, as seen during the pandemic years. However, the trend of increasing lead times since 2019 suggests that shippers are gaining more visibility into near-term demand.
Inventory Management Shifts
Another factor contributing to the increase in lead times is a shift in inventory management practices. Shippers are now keeping upstream inventories well-stocked while allowing downstream inventories to be leaner. This hybrid model of just-in-time and just-in-case management helps mitigate the risks associated with international shipping disruptions and uncertain economic conditions.
What Does This Mean for the Industry?
The rising trend of lead times could be a sign of a more efficient and planned shipping environment. However, if this trend reverses, it may indicate that the shipping environment is under strain and could be a leading indicator of economic volatility. As the industry continues to evolve, it’s essential to stay informed about the latest trends and data insights.
SONAR: Your Window into the Freight Market
SONAR provides real-time data and insights into the freight market, helping participants visualize the industry in real-time. With hundreds of sources and datasets, SONAR is the ultimate tool for freight market experts. To request a demo, click here.
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