As mid-October progresses, seasonal patterns indicating a dip in volume have become apparent, albeit slightly later than usual. This delay can be attributed to three disruptions earlier in the month that provided a temporary uptick in freight demand. Historically, mid-November marks the beginning of increased demand as we approach the holiday season, and this year should follow suit, especially with Thanksgiving and Black Friday occurring later in the month.
The Outbound Tender Volume Index (OTVI), which measures national freight demand through shippers’ requests for trucking capacity, has continued to trend downward after a significant drop last week. This week, it fell by 1.38% compared to the previous week. Despite consecutive weeks of declining freight demand, the OTVI remains 2.9% higher than this time last year.
A positive note amid the national decline in freight volumes is the resilience of long-haul loads, defined as those moving over 800 miles, which only dipped by 0.07% week over week. In contrast, local loads (under 100 miles) saw a sharper decline of 3.83%.
The Contract Load Accepted Volume (CLAV) index, which measures accepted load volumes under contracted agreements, also showed a larger decrease than the OTVI due to rising rejection rates, falling by 1.53% this week. Year-over-year growth in CLAV is modest, currently up just 0.95%.
Bank of America’s latest card spending report indicates a rebound in consumer spending following a lull caused by Hurricane Milton. Total card spending per household increased by 1.9% year over year. Excluding automobile spending, the growth stands at 0.9% for the week ending October 19. General merchandise sales led the charge, rising 5.7% year over year, closely followed by clothing, which increased by 5.5% year over year after earlier pressures.
Despite an overall decline in freight demand, 69 of the 135 freight markets tracked by FreightWaves SONAR reported higher volumes compared to the previous week, a rise from 51 markets the week before. Notably, while Terre Haute, Indiana, experienced a substantial volume increase of 40.27%, it only represents 0.25% of total outbound freight in the country. The largest freight market, Ontario, California, which accounts for 4.16% of total outbound volume, saw a 5.03% decrease in volumes, while Atlanta, the second-largest market (3.39% of total volume), reported a 1.84% decline.
By transportation mode, the dry van market is experiencing a more pronounced retreat, with the Van Outbound Tender Volume Index dropping by 0.9% over the past week. This decline has pushed dry van volumes into negative territory year over year, now down 0.11%. On the other hand, the reefer market showed a notable recovery, with the Reefer Outbound Tender Volume Index increasing by 3.47%, marking one of the strongest growth weeks of the year, although demand remains 1.46% lower compared to the previous year.
Rejection rates have stabilized above the 5% mark, defying expectations that they would quickly fall below this threshold following improvements in network fluidity post-Hurricane Milton. Currently, the Outbound Tender Reject Index (OTRI) stands at 5.35%, reflecting a 15 basis point increase from the previous week. This figure is 183 basis points higher than this time last year and 14 basis points above 2019 levels. If trends from 2019 hold, we may see rejection rates reach double digits for the first time since April 2022.
Among the 135 markets tracked, 71 reported increases in rejection rates over the past week, a significant rise from 40 markets the prior week. Noteworthy increases were seen in Memphis, Tennessee, with rejection rates jumping 336 basis points, and Kansas City, Missouri, where rates rose by 214 basis points. While the largest markets, such as Ontario and Atlanta, also experienced increases, they were relatively minor, at 29 and 5 basis points, respectively.
In the dry van segment, capacity remains available, as rejection rates are below 5%. However, they are 133 basis points higher than last year, reflecting some tightening in the market. The Reefer Outbound Tender Reject Index has risen to 13.92%, just shy of the year-to-date high set earlier this month and 762 basis points above last year’s figures. Meanwhile, flatbed rejection rates remain elevated but fell by 60 basis points to 12.28%, still 350 basis points higher than the previous year.
Spot rates are now reacting to the recent uptick in rejection rates, climbing for two consecutive weeks. This upward movement is promising for carriers in the spot market, as it sets a higher baseline ahead of the holiday season.
The National Truckload Index (NTI), which includes fuel surcharges and accessorials, rose by 4 cents per mile to $2.28, marking its first positive year-over-year change in over a month. The linehaul variant of the NTI increased similarly to $1.72, 19 cents per mile higher than the previous year. Despite recent fluctuations, initially reported dry van contract rates fell slightly, dropping 4 cents per mile to $2.29, which is 8 cents lower than last year. Knight-Swift’s third-quarter earnings report indicated that revenue per loaded mile in the truckload segment has stabilized year-over-year, suggesting a more favorable pricing outlook for 2025.
The spread between the NTIL and dry van contract rates is narrowing, reflecting the recent uptick in spot rates amid slight declines in contract rates. Disruptions can quickly tighten this spread, and a continued narrowing during the peak season is anticipated, though sustainability remains to be seen, especially considering the traditional slowdown in freight demand in the first quarter of 2025.
Lastly, the FreightWaves Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas decreased by 2 cents per mile to $2.55, remaining 10 cents above the contract rate. In contrast, the spot rate from Chicago to Atlanta increased by 13 cents per mile to $2.66, just 4 cents below the contract rate.
Source: seasnews.net