Outbound tender volumes posted the highest June 5th total in the three-year series history, while this doesn’t match the surge seen in March due to pre-stocking, for this time of year, it is telling how aggressive the volumes are.
Volumes have made a huge climb over the past few weeks and there isn’t much to point towards a slow-down. Capacity is reacting very slowly to the volume surge, but the Outbound Tender Rejection Index (OTRI) has finally broken the 5% threshold. Spot markets have come alive in the past couple weeks, but rates remain significantly below where carriers would expect them to be in normal times.
The outbound tender volume index has roared out from the Memorial Day disruption and now sits at 10,996. This is the highest June 5 value in the three-year series history. Due to the holiday, weekly comparisons are skewed, but OTVI is up 7% year-over-year.
The agricultural hubs along the West Coast and in the Southwest and Southeast continue to be strong sources of volumes. In May, the Rust Belt also became a source of outbound freight as much of the country’s manufacturing and industrial economy came back online.
On the positive side, all 15 of the major freight markets FreightWaves tracks were positive on a week-over-week basis. This ratio soared this week relative to last week’s tepid ratio but the strong levels have been mostly consistent in recent weeks. The markets with the largest gains this week in OTVI.USA were Laredo, Texas (37.34%), Houston (30.88%) and Savannah, Georgia (30.14%).
Tender rejections continue to improve with volumes
Outbound tender rejections have increased week-over-week for the fifth week in a row after tumbling for the six weeks since the OTRI peak of 19.25% on March 28. Capacity has tightened as volumes began to fill markets throughout May. Overall reefer rejections are up nearly 10% week-over-week. It is not much, but considering we are just four weeks removed from the lowest point in OTRI’s history, any movement toward the upside should be welcomed by carriers.
The produce season helped push reefer rejection rates up, especially in and around California and Florida. After stalling two weeks ago, reefer rejections have begun rising quicker than total rejections in the past two weeks.
Although there are pockets of tightening capacity in the Southeast, on the West Coast and Northern Plains, capacity remains relatively loose across the country. If volume throughput remains near this level, rejections will adjust upward in the coming weeks.
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