Freight Market Update: Capacity Returns After Holiday Disruption
The FreightWaves Supply Chain Pricing Power Index remains at 40, indicating that shippers still hold the negotiating power in the market. However, with the holiday season behind us, capacity is slowly returning to the roads, and tender volumes are on the rise.
Holiday Disruption and Volume Recovery
The holidays typically disrupt freight volumes, and this year was no exception. The Outbound Tender Volume Index (OTVI) dropped significantly during the holidays but has since recovered, rising 19.3% over the past week. Although volumes are still down 6.98% year over year, the potential for another strike by the International Longshoremen’s Association and the approaching Lunar New Year could provide a short-term boost to volumes.
Contract Load Accepted Volume and Tender Rejection Rates
Contract Load Accepted Volume (CLAV) has seen a greater increase than OTVI, rising 22.66% week over week, due to a decline in tender rejection rates. However, CLAV is still down 9.5% year over year. Tender rejection rates have retreated from their recent highs, falling by 256 basis points to 7.13%. While rejection rates are still 236 basis points higher than last year, the decrease is a positive sign for carriers entering 2025.
Market Trends and Insights
The majority of freight markets have seen growth in tender volumes over the past week, with 113 out of 135 markets tracked within SONAR reporting higher volumes. The Ontario, California, market, which has been a volume leader for much of 2024, saw a smaller increase than the national level, rising 5.11% week over week.
Mode-Specific Trends
The dry van market has seen a significant recovery, with the Van Outbound Tender Volume Index rising 19.8% over the past week, although volumes remain down 10.2% year over year. The reefer market continues to show relative strength, with volumes up 6.5% year over year. The flatbed market experienced the largest decline in tender rejections over the past week, but the market will likely remain under pressure until warmer weather brings more projects.
Spot Rates and Contract Rates
Spot rates have continued to rise over the past week, with the National Truckload Index increasing 3 cents per mile to $2.49. The linehaul variant of the NTI (NTIL) matched the increase, rising 23 cents per mile to $1.94. Initially reported dry van contract rates, excluding fuel, fell off their recent high, returning to the range they have been in for much of the year. The spread between the NTIL and dry van contract rates is trending back to pre-pandemic levels, widening by 12 cents to minus 49 cents.
Regional Trends
The map above shows the Outbound Tender Reject Index — Weekly Change for the 135 markets across the country. Markets shaded in blue are those where tender rejection rates have increased over the past week, whereas those in red and white have seen rejection rates decline. The bolder the color, the more significant the change. Of the 135 markets, 22 reported higher rejection rates over the past week, down from the 67 that saw tender rejection rates rise in last week’s report.
Conclusion
As the market recovers from the holiday season, capacity is slowly returning to the roads, and tender volumes are on the rise. While volumes are still down year over year, the potential for short-term boosts and the recovery in tender rejection rates are positive signs for carriers entering 2025.
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