Chart of the Week

Trucking volumes spike despite— because of—coronavirus concerns (with video)

Chart of the Week:  Outbound Tender Volume Index – USA  SONAR: OTVI.USA 

People have been clearing store shelves in parts of the country as if they were preparing for a zombie apocalypse this past week. This mass purchasing—or threat thereof—has spiked trucking volumes in the U.S. as the national Outbound Tender Volume Index (OTVI) increased 9.3% last week to hit a level normally only seen around a holiday period in the summer or winter with a value above 10,800.

The coronavirus has expanded in the U.S. after the first case was reported in Washington state in January. Currently there are 312 confirmed cases in 28 states, which is sure to have grown by the time you read this. Whether or not one believes the virus is significant threat to national health or not, the reaction is real. This is not the exact scenario many in the trucking industry were expecting as Chinese production slowed to a minimum in reaction to the outbreak. What does this mean for the rest of 2020?

The OTVI is an index with a base value of 10,000 based on trucking volumes on March 1, 2018. The current OTVI value of 10,852 indicates there are approximately 8.52% more shipments in the U.S. than there were on the create date.

To provide context on just how significant this is, before Thursday, the OTVI has only been above 10,700 on 33 of the 735 days of its existence with most of those occurring in a single month. 30 of those days occurred between June 5 and July 3 of 2018, when the freight market was at its busiest level and capacity at its tightest in over a decade.

Tender rejection rates spiked in a similar way only seen prior to a holiday this week. (Chart: National Outbound Tender Rejection Index – OTRI.USA)

Capacity has tightened as a result of the surging volumes. The Outbound Tender Rejection Index (OTRI) that measures the rate at which electronically tendered loads are rejected, has climbed from 5.3% on March 1 to 6.52% by March 6. Increasing OTRI values are an indication that carriers are less able to fulfill the needs of their customers by having trucks available to pick up their freight. The number itself is not so shocking, but the magnitude, direction, and timing are.

Seasonal volume surges are normal this time of year, but this is a statistical anomaly that is not driven by a single commodity or region in the U.S. Volumes have increased in 96 of the 135 markets in the U.S. over the past week with rejection rates increasing in 100 markets.

Many were expecting volumes to slide in connection to the lost import volume originating from China, which represents roughly 22% of the total U.S. import volume. The opposite has occurred, but this could be the beginning of a bumpy ride over the next several months.

Increased consumption has shippers moving inventory from regional warehouses and distribution centers to storefronts. Loads that move less than 450 miles have increased over 13% this week with loads moving 450+ miles only increasing 4.7% by comparison.

U.S. inventory levels were higher in 2019, resulting from a slower economy and trade war adjustment by shippers. (Chart: SONAR – Total Business Inventory to Sales Ratio TBIS.USA)

As strange as it may seem, the timing of the coronavirus outbreak may have been somewhat ideal for shippers. Most of the inventory levels have been increasing over the past year, resulting from the recent trade war concerns. According to the Census Bureau the inventory to sales ratio, which measures how many months of inventory businesses are keeping in relation to sales rates, inventories grew from 1.34 to 1.4 months in 2019 where it hovered through most of the year. Looking back over the past 20 years, this is a historically high number.  

Compound this with the fact most shippers import a significant amount of freight into the country in preparation for the Chinese New Year (CNY) dead period when production levels fall dramatically, meaning U.S. inventories may have been at their annual and cyclical peak as the virus hit.

It takes 2-4 weeks for freight to hit the U.S. ports from Asia, and another several weeks before that freight is offloaded from the ship and de-containerized in a distribution center. As inventory levels fall at a faster than expected rates the well may run dry leading to rapidly declining volumes before China can fully recover, but this is assuming the U.S. remains operational throughout the outbreak.

If companies slow domestic production and activity attempting to contain the spread of the virus, trucking volumes should decline, but trucking companies may do the same thing resulting in reduced supply of trucks. To say the least, there is no clear road through this. There are still many unknown factors revolving around this event, and most of the answers lie in how people will react as the virus inevitably spreads throughout the U.S.  

About the 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 a Market Expert will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

The FreightWaves data science and product teams are releasing new data sets each week and enhancing the client experience.

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  1. So a spike now will result in a collapse once all homes are stuffed with TP, water, and canned food?

    Layoffs and decreased production/consumption (AKA freight) are in the cards.
    A good chunk of retirement money has vanished that would buy discretionary goods.

    Make America Great Again?

  2. Thank God they do not treat the common flu like they treat this corona virus… The common flu has taken tens of thousands of lives alone this year in the US. Corona virus has taken what, a dozen? And I know, this is all Trump’s fault. Media hysteria driving markets, along with unhinged democrats and their buddies in China.

    1. It is the homeless shelter in New York City. As of today one person in the Toronto homeless shelter likely has it. People in Toronto Canada are getting after meeting other people who came back from other countries. The insurance companies and the cuts to public health care in the last 2 years may allow a lot of homeless people and truck drivers to get this as I have as well as many drivers used the homeless shelters for a spot to sleep in hot or cold weather when parking at certain produce terminals that do not allow the running of truck engines or when we get sick or hurt. This a real problem in New York City and some other cities including Toronto Canada.

      1. You have used a homeless shelter to sleep because it was convenient? Makes me trust your judgement and expert analysis.

  3. So all of your charts and analogy are based on history and no clear predictions for us in the shipping world to use as a helpful tool.

    1. Gaines ABF Swift are being asked to reveal more stats.
      Towery Maurice Burris-Hunt. Successor heir at J.B.Hunt transportation has began speaking out about internal concerns. SEC FTC being made aware of incidents taking place in Lowell. Ark, Concord Charlotte & Shelby NC.

    1. Just like the stock market.
      Report negative news and watch the panic selling!
      Report positive news and watch the overpricing buying!

      Getting information first is the key to prosperity (insider trading).

Zach Strickland, FW Market Expert & Market Analyst

Zach Strickland, the “Sultan of SONAR,” curates the weekly market update. Zach is also one of FreightWaves’ Market Experts. With a degree in Finance, Strickland spent the early part of his career in banking before transitioning to transportation in various roles and segments, such as truckload and LTL. He has over 13 years of transportation experience, specializing in data, pricing, and analytics.