Demand for flatbeds drop off. Is this a sign of an industrial economy slowdown?

FREIGHTWAVES' SONAR CHART OF THE WEEK (Oct 21 -Oct 27, 2018) 

 Photo Truckstockimages.com

Photo Truckstockimages.com

Chart of the Week: Flatbed Tender Rejection Index - USA (SONAR:FTRI.USA)

 SONAR Chart Flatbed Tender Rejection Index USA (FTRI.USA)

SONAR Chart Flatbed Tender Rejection Index USA (FTRI.USA)

Flatbed capacity appears to have increased rapidly over the past month according to the flatbed tender rejection index for the U.S. Since September 17th the FTRI.USA has dropped 48% or 848 bps from 17.74% to 9.26%, indicating flatbed trucks are not as in demand as they have been for the first 3 quarters of the year.

The flatbed tender rejection index measures the apparent supply and demand in the flatbed freight market. As capacity increases, the FTRI decreases. The converse is also true, capacity decreases as the FTRI increases.

It is no secret that the flatbed market is much more volatile than the other equipment types such as reefer and dryvan, but we can gain other insight from the apparent increase in flatbed capacity. The rapid drop in rejections could have significance due to the type of freight normally associated with this trailer type.

Flatbeds generally haul large machinery or over-dimensioned freight that is delivered to jobsites or places without a dock—construction sites or undeveloped areas such as oil fields. So, when flatbed volume drops, it is an indication that the construction cycle and other industry is slowing.

One more thing to keep in mind: the flatbed sector is far more exposed to seasonal fluctuations than the other modes. Builders are reluctant to start construction heading into winter, so demand will drop off in anticipation. Is this a warning sign for the broader market or a normal seasonal pattern? Construction certainly does appear to be slowing and oil is challenged with pipeline capacity, both creating drags on demand for flatbeds.

 Come see Michael Lewis at MarketWaves18, the industry’s most powerful event focused on the freight markets in 2019 and beyond. Check out:  MarketWaves18.com  for tickets and information.

Come see Michael Lewis at MarketWaves18, the industry’s most powerful event focused on the freight markets in 2019 and beyond. Check out: MarketWaves18.com for tickets and information.

About Indices presented in this article

(SONAR: FTRI.USA) Flatbed Tender Rejection Index USA. The flatbed tender rejection index provides daily insights on flatbed capacity in the entire country. As the FTRI increases capacity decreases. As the FTRI decreases capacity increases. An FTRI value of 26% indicates there is less capacity available in the flatbed market than when the FTRI is 10% for example.

About 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 the Sultan of SONAR 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.

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