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Accepted tender volume rebounds over year-ago levels against soft comps

This week’s FreightWaves Supply Chain Pricing Power Index: 55 (Carriers)                                

Last week’s FreightWaves Supply Chain Pricing Power Index: 60 (Carriers)

Three-month FreightWaves Supply Chain Pricing Power Index Outlook: 50 (Carriers)

The FreightWaves Supply Chain Pricing Power Index uses the analytics and data in FreightWaves SONAR to analyze the market and estimate the negotiating power for rates between shippers and carriers.

The Pricing Power Index is based on the following indicators:

Tender volumes continue to decline as a softening trend is firmly entrenched

In the first week of 2022’s second quarter, tender volume levels continued their slide from the previous quarter — an early signal that freight demand in the spring could very well be sluggish. The Outbound Tender Volume Index (OTVI) still remains well below year-ago levels, albeit against puzzling comps.

Tender volumes contract early in Q2:
SONAR: OTVI.USA: 2021-22 (blue), 2020-21 (green) and 2019-20 (orange)
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OTVI declined by 4.54% over the past week and is down 12.48% on a year-over-year (y/y) basis. As heavily discussed in this column throughout March, OTVI does not necessarily measure true freight flow in the market, as it can be inflated by an uptick in tender rejection rates. Last year’s OTVI was indeed greatly inflated by rising tender rejections, a trend that began in mid-February and was sustained until deep in the summer of 2021. In contrast, current rates of tender rejections are in virtual free fall and rapidly approaching single-digit percentages — a phenomenon not seen in nearly two years.

Turning to accepted tender volumes, which is OTVI adjusted by the Outbound Tender Reject Index (OTRI), we see growth of 3.2% y/y but also a decline in equal measure week-over-week (w/w). The difference between y/y comparisons of OTVI and accepted volume cannot be explained by a falling OTRI alone: OTRI had a local peak in 2021 on March 28, when accepted volume in 2022 was up by a meager 0.75% y/y.

Rather, a few factors seem to be at play here. First is the perplexing “dead cat bounce,” when a bearish market falsely appears to be entering a sustained recovery. Since truckload freight is heavily influenced by ocean imports, which react to changing market conditions more slowly than trucking due to differences in transportation time, a backlog of said imports continues to trickle through the ports. This backlog worsened as shippers rushed to get their imports out of Shanghai, which was placed under targeted COVID lockdowns a few weeks prior.

Second, the freight market took an inexplicable breather one year ago, despite a round of stimulus payments driving consumer demand for goods. The market quickly rebounded the following week, so expect to see a return to unfavorable y/y comparisons next week if this trend is merely a false spring. Third, produce season provides relative insulation from market downturns, since perishable goods have to ship and people have to eat.

Volumes are rising across many smaller markets:
SONAR: Outbound Tender Volume Index – Weekly Change (OTVIW).
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The third-largest market by outbound volume, Harrisburg, Pennsylvania, saw a large increase in volume by 13.65% w/w. Moreover, since rejection rates fell by 2% w/w in the region, the increase in OTVI is tracking real freight flowing in the market. Meanwhile, the largest market by outbound volume, Atlanta, saw a moderate 1.4% decline w/w.

Of the 135 total markets, however, only 36 reported weekly increases, with most of the growth coming from smaller markets. Charleston, South Carolina, which is becoming an attractive East Coast alternative to West Coast seaports, saw outbound volume rise 12.2% w/w. Major seaports on the West Coast, however, were not as fortunate, since outbound volume fell 8.8% w/w in Ontario, California.

By mode: Following the trend of the overall OTVI, both reefer and dry van volumes are down on a w/w basis. The Reefer Outbound Tender Volume Index (ROTVI) is down 4.55% this week and down 27.8% y/y against an inflated ROTVI from last year. Accepted reefer volumes, however, are currently up 6.4% y/y, showing that produce season is indeed underway. The story is similar to the Van Outbound Tender Volume Index (VOTVI), which is down 4.84% w/w and 12.1% y/y. Accepted van volumes, on the other hand, are up 3.5% y/y.

Rejection rates fall stepwise closer to single-digit levels

It should alarm carriers that, only two weeks prior, OTRI was at an already shocking 15%. This week’s OTRI posted an even further decline and is now hovering just above 12%.

Rejection rates barely above 12%
SONAR: OTRI.USA: 2021-22 (blue), 2020-21 (green) and 2019-20 (orange)
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Over the past week, OTRI, which measures relative capacity in the market, fell to 12.14%, a change of 124 basis points (bps) from the week prior. OTRI is now 1,361 bps below year-ago levels — a comforting thought for shippers who feared that 2021 heralded a new norm for rejection rates.

Operating expenses are mounting across the board for carriers, as detailed by Craig Fuller, FreightWaves’ founder and CEO, in his recent article, “If demand returns to pre-pandemic levels, the trucking industry will be in trouble.” Aside from the obvious spike in diesel fuel costs, insurance and maintenance costs have increased by 8 cents per mile over 2019 levels. Maintenance costs in particular are troublesome because many carriers cannot afford to upgrade their fleets with newer trucks, given the ongoing semiconductor crisis and corresponding hike in prices of used equipment.

Capacity tightens in Baltimore, loosens elsewhere:
SONAR: WRI (color)
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The map above shows the Weighted Rejection Index (WRI), the product of the Outbound Tender Reject Index — Weekly Change and Outbound Tender Market Share, as a way to prioritize rejection rate changes. As capacity is generally finding freight, there are only a handful of blue markets, which are the ones to focus on.

Of the 135 markets, only 41 reported higher rejection rates over the past week as carriers compete for loads among quieter freight demand.

Early in the week, Baltimore hosted a wave of outbound freight as, on Monday, OTVI was up 11.6% w/w. Although the surge has subsided somewhat, rejection rates in the market are currently up 5.2% w/w. While not one of the largest markets by outbound volume, Baltimore is still a significant importer of farm and construction equipment, as well as automobiles, through its seaport.

SONAR: VOTRI.USA (blue); ROTRI.USA (orange); FOTRI.USA (green)
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By mode: Rejection rates fell across all modes this week, though flatbed rejections are still higher compared to year-ago levels. The Flatbed Outbound Tender Reject Index (FOTRI) currently sits at 31.28%, 483 bps higher on a y/y basis. Despite rising interest rates, the housing market remains hot due to low inventory levels and high buyer demand. Construction on new homes in the spring will likely sustain elevated rejection rates in the flatbed mode.

Van rejection rates continue to drive the decline in the overall OTRI, as the Van Outbound Tender Reject Index (VOTRI) is now at 11.76%, a full 120 bps lower w/w. Capacity conditions in the reefer market are also easing, as the Reefer Outbound Tender Reject Index (ROTRI) fell 195 bps w/w to 20.24%.

Contract rates have yet to budge, though spot rates are tumbling

The spot rate data available in SONAR from is updated every Tuesday with the previous week’s data.

Spot rates have fallen dramatically since February’s peak:
SONAR:’s national spot rate (blue, right axis) and dry van contract rate (green, left axis).
To learn more about FreightWaves SONAR, click here.

The national spot rate, based on the top 100 lanes on’s load board, continued to drop as capacity loosened across the markets. The national spot rate, after reaching an all-time high of $3.83 per mile in early January, now sits at just $3.29 a mile, which includes fuel surcharges and other accessorials.

Of the 102 lanes from’s load board, 30 reported spot rate increases last week, up from 25 lanes the week prior. This decline in the average spot rate, coupled with the unstoppable rise in contract rates, is likely to help shift pricing power into shippers’ favor.

In early March, contract rates set a record high at $2.97 per mile, though they have since fallen by a negligible amount. Contract rates, which are the base linehaul rate excluding fuel surcharges and other accessorials that are included in spot rates, remain unchanged from last week’s levels, sitting at $2.94 a mile.

Until last week, FreightWaves’ Trusted Rate Assessment Consortium (TRAC) spot rate from Los Angeles to Dallas had yet to experience any correction, as the downward spiral in rates continued uninterrupted since the beginning of 2022. This week, the rate rose 5 cents per mile to $2.90. Carriers and shippers alike have been wondering where this lane’s floor for rates was, and since rates are finally leveling out, it might be here. A dramatic increase in this lane, especially when compared to 2021’s $4-plus-per-mile rates, is not expected anytime soon.

SONAR: FreightWaves TRAC rate from Los Angeles to Dallas.
To learn more about FreightWaves TRAC, click here.

The FreightWaves TRAC spot rate from Atlanta to Philadelphia, on the other hand, did fall this week, responding to loosened capacity in the Atlanta region. The rate from Atlanta to Philadelphia now sits at $3.52 per mile, down 14 cents a mile from the previous week. Volume levels in Atlanta, currently the largest market by outbound volume, declined by 1.4% over the past week.

SONAR: FreightWaves TRAC rate from Atlanta to Philadelphia.
To learn more about FreightWaves TRAC, click here.

With the above discussion on the small size (and thus heightened vulnerability) of most On lanes where spot rates are already close to carriers’ operating costs, such as the route from Dallas to Los Angeles, rising diesel prices will continue to place upward pressure on spot rates. In general, however, spot rates are going to fall as freight demand peters out. Since contract rates are reported on a two-week lag, it is possible that shippers will push for lower rates in their Q2 negotiations, given that pricing power is increasingly swaying in their favor. Should contract rates drop, it is unlikely that rejection rates will rise dramatically in response, given the dire outlook facing many smaller and newer carriers.

For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at [email protected] or Tony Mulvey at [email protected].

Michael Rudolph

Michael Rudolph is a research analyst at FreightWaves and is a former freight broker. Prior to entering the logistics industry, Michael worked in academia. He holds an MA from the University of Chicago.