The Outbound Tender Volume Index (OTVI) climbed another 7.4% this week to a new all-time high of 15,329. OTVI has posted a string of consecutive all-time highs for many weeks now. It is important to note that our outbound tender volume index does include rejected contract load tenders, so the true organic growth of load volumes is slightly lower than the indexed reading. However, this does not mean the index is not directionally accurate or not indicative of the overall strength in the freight market. Freight volumes as measured by OTVI (including tender rejects) are now 45% above 2019 and 55% above 2018.
The breadth of the strength across geographies, lanes and spot rates ($2.60 according to Truckstop.com’s national average) are all confirming the robust backdrop of the current market. We are closely watching consumer spending among those previously receiving unemployment insurance of an additional $600 per week that expired July 31 and it continues to signal warning signs. Washington remains in a stalemate on the extension of these benefits. In fact, spending among the lowest income group no longer receiving extra benefits is falling rapidly — Target and Walmart confirmed this on their earnings calls this week as record-high, stimulus-fueled comparable store sales from June and July have moderated materially in August. However, thus far it clearly has not impacted the trucking market and it has not made much of a dent in overall consumer spending. Overall spending has yet to wane because, according to Bank of America’s overall credit and debit card spending, which was flat year-over-year this week, spending among the employed is accelerating.
A warning sign: Spending among those affected by delayed UI is falling.
Source: Bank of America
On a positive note, 14 of the 15 major freight markets FreightWaves tracks were positive on a week-over-week basis. This ratio has been consistently high in recent weeks. The markets with the largest gains this week in OTVI.USA were Los Angeles (37.79%), Ontario, California, (32.76%) and Savannah, Georgia (24.05%). The only market to decline this week was Laredo, Texas (-7.20%).
Tender rejections remain elevated
After a slight lull early last week, tender rejections began to climb and the trend has continued this week as well. The Outbound Tender Reject Index (OTRI) climbed again this week and currently sits at just under 24%, meaning nearly one in every four tendered loads is being rejected at contracted prices.
The index continued exhibiting stickiness at a high level for a seventh week in a row. OTRI is now well above its Fourth of July peak and sits comfortably above its March panic-buying-induced peak. The next milestone for the index would be crossing over the 2018 summer peak level of roughly 26%. We have heard for weeks now that large, asset-based carriers are rejecting more freight than they have in a very long time.
The supply-demand dynamic of May, June and July has been much different than March and April. During March we saw volumes and rejections rise in stepwise fashion to all-time highs in a matter of weeks. This time around the rise in freight volumes and tender rejections has been slower but consistently upward and gradual.
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