Freight Market Insights: Shippers Struggle to Gain Traction
The latest FreightWaves Supply Chain Pricing Power Index reveals a stagnant market, with shippers struggling to gain negotiating power. This week’s index remains at 40, indicating a carrier-friendly environment.
Seasonal Slump Continues
Freight volumes are still lower than they were a month ago, but there’s a silver lining. Tender volumes have turned positive year over year, a trend that hasn’t been seen since mid-November. The Outbound Tender Volume Index (OTVI) has erased holiday noise, allowing for more accurate comparisons. While tender volumes declined by 0.2% week over week, they’ve been inching higher in recent days.
Holiday Impact on Tender Volumes
The Martin Luther King Jr. Day holiday will likely impact tender volumes, but it’s unclear how significant the effect will be. Compared to last year, tender volumes are up 4.6%, but this is largely due to the holiday’s earlier timing in 2024.
Contract Load Accepted Volume Takes a Hit
Contract Load Accepted Volume (CLAV) fell by 0.58% week over week, a greater decline than the overall OTVI. This suggests that carriers are becoming more selective about the loads they accept.
Bank of America’s Card Spending Report
The latest report from Bank of America shows a 0.8% year-over-year decline in spending. While online electronics, department stores, and transit spending saw increases, entertainment and furniture spending plummeted over 6%. Severe winter weather across the Midwest and South contributed to the decline.
Regional Freight Markets
Despite a national decline in tender volumes, many regional markets experienced growth. Of the 135 markets tracked, 83 reported higher volumes over the past week. The Midwest saw significant growth, with St. Louis and Jefferson City, Missouri, experiencing 17.2% increases week over week. Atlanta, one of the largest markets, saw tender volumes increase by 8.53% over the past week.
Mode-Specific Trends
The dry van market rebounded this week, showing growth after the holiday. The Van Outbound Tender Volume Index increased by 0.88% week over week and is now 5% higher than last year. The reefer market experienced a decline in tender volumes, but remains 6.6% higher than last year. The flatbed market has been stable, but rejection rates remain depressed.
Tender Rejection Rates
Tender rejection rates have remained elevated, increasing by 35 basis points week over week to 7.92%. While rates are off their Christmas highs, the stickiness above 7% indicates that capacity has exited the market. Compared to last year, the Outbound Tender Reject Index is 280 basis points higher, a sign that the market is tighter.
Spot Rates and Contract Rates
Spot rates are showing stickiness at elevated levels, with the National Truckload Index increasing by 1 cent per mile over the past week to $2.50. The linehaul variant of the NTI remains unchanged at $1.95. Initially reported dry van contract rates continued to rise, up 5 cents per mile over the past week to $2.46. The spread between the NTIL and dry van contract rates is trending back to pre-pandemic levels, widening by 2 cents to minus 52 cents.
Lane-Specific Trends
The SONAR Trusted Rate Assessment Consortium spot rate from Los Angeles to Dallas suffered a large slide, dipping below the contract rate once again. In contrast, spot rates from Chicago to Atlanta have been volatile, finally moving above contract rates and to the highest level in six months.
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