Tender volumes slipped by 2.7% overall this week on a national basis but from a very elevated base. If one looks at the weekly Outbound Tender Volume Index (OTVI) map below, one might think freight markets have reversed course and are retreating significantly. Here’s the OTVI weekly change for select major markets:
| Market | OTVI weekly change |
|---|---|
| Ontario, California | -6% |
| Atlanta | -4.5% |
| Indianapolis | -7.5% |
| Harrisburg, Pennsylvania | -5% |
| Houston | -3.5% |
| Stockton, California | -8% |
(Chart: SONAR; 3-D Map; Weekly outbound tender volume change in %)
But this simply isn’t true. Tender volumes are coming down, but off an unnaturally high base. The winter storms caused an already strained freight market to turn upside down. Routing guides were upended as many major interstates — I-10, I-20, I-40, I-75, I-95, I-24, I-57, I-70 and I-80 — were all shut down for some time.
On the retail front, difficulty in sourcing capacity at the beginning of March may have led retailers to accelerate their Q1 order schedule. If that is the case, shippers may have temporarily pulled forward delivery schedules and caused a non-sustainable large surge in tender volumes. It is this high base from which the market is declining.
Tender volumes in nearly every major market in the country — from LA/Ontario on the West Coast, to Houston, Dallas and Atlanta in the South, to Joliet, Illinois, and Harrisburg in the Midwest and Northeast — remain above pre-storm levels.
The storm-induced tender volume surge was larger and longer lasting than many expected, but the market is reverting to the mean. If we look at the tender volume trend prior to the storm, volumes were at an extremely high level but were sliding and in a modest downtrend. At the same time, tender rejections were declining as well.
The truckload industry may likely see a resurgence in tender volumes in the coming weeks as $1.9 trillion in stimulus checks are disbursed and find their way into the real economy, necessitating replenishment of already lean inventories.
On a negative note, only two of the 15 major freight markets that we monitor as a broad, representative benchmark were positive on a week-over-week basis. This ratio deteriorated meaningfully compared to both last week and the stronger levels it has become accustomed to in recent months as the freight market rallies. The markets with the largest gains this week in OTVI.USA were Miami (1.02%) and Los Angeles (0.58%). The markets with the largest declines this week in OTVI.USA were Laredo, Texas (-16.78%), Dallas (-9.50%) and Newark, New Jersey (-8.16%).
Tender rejections hover near peak
Carriers continue to reject freight at a high level this week, with the Outbound Tender Reject Index sitting at 26.2%, down marginally from last week’s 26.5%. There was some volatility in major markets this week in both directions. Southern markets like Houston and Atlanta have seen a surge in tender rejections over the past 10 days, while Northeastern freight hubs like Harrisburg have seen significant declines.
In aggregate, the shifting freight networks balance out to very little change overall in the national average, but there are huge differences in capacity availability by region. In the Midwest and Plains regions, capacity is far scarcer than in the South and Southwest.
Since the beginning of the month, tender rejections have plummeted on the West Coast. However, much of this decline can be attributed to lower tender volumes, rather than additional capacity.
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