Chart of the Week: Accepted SONAR Tender Volume Index, National Truckload Index – USA SONAR: ASTVI.USA, NTI.USA
The truckload market is giving mixed signals. Spot rates are rising quickly, but the freight carriers are actually moving is not. The Accepted SONAR Truckload Volume Index (ASTVI) measures the volume of contracted loads that carriers accept. It has fallen nearly 3% over the past week to 9,574, below its 12-month average of 9,872. Meanwhile, the National Truckload Index (NTI), which measures dry van spot rates including fuel, climbed back to $3.53 per mile. That’s more than 10% above its late-August low and roughly 50% higher than at this time last year.
A rapid decline in accepted tenders paired with rising spot rates is rare outside of a major holiday. During holidays, accepted tenders fall and rejections rise because many drivers take time off, which pushes spot rates higher. This time, though, rejection rates have fallen along with accepted tenders, dropping from 14.6% on September 19 to 13.78% on October 1.
When accepted tenders and rejections fall together, demand is usually easing, and spot rates normally fall too. Timing can drive a disconnect between contracted tenders and spot rates, and that may be partly true here. Tenders are typically placed three to four days ahead of pickup, while spot loads average less than two days of lead time, so tenders tend to move ahead of spot rates. But timing gaps usually wash out within a few days, and this divergence between spot rates and rejection rates lasted most of September.
Another possibility is that rejections haven’t eased enough to pull spot rates down. At 13.8%, rejection rates are still too high for most shippers to be comfortable.
Neither explanation is fully convincing, since spot rates and rejection rates moved closely together over the summer. Sharply rising diesel costs are likely another reason the two have disconnected.
Fuel prices aren’t always closely tied to spot rates, because whether capacity is loose or tight outweighs nearly every change in operating costs. Rates rose in June while retail fuel prices fell, then fell in July while fuel costs rose. But fuel prices climbed sharply through September, and that strains carriers’ cash flow because expenses rise before revenue catches up. Many carriers aren’t paid until after delivery, and some wait days or weeks after that. In the meantime, rising costs eat into their available cash.
When this happens, spot rates react with a noticeable lag, because carriers can’t see future fuel prices any better than anyone else can.
Even as demand slips, the market is still tight enough for carriers to pass fuel cost inflation through to shippers. That doesn’t necessarily mean the market is getting tighter. It means operating costs are rising and the existing market conditions allow rates to rise.
About the Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.
The FreightWaves data science and product teams are releasing new datasets each week and enhancing the client experience.
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