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This week’s FreightWaves Provide Chain Pricing Energy Index: 40 (Shippers)
Final week’s FreightWaves Provide Chain Pricing Energy Index: 40 (Shippers)
Three-month FreightWaves Provide Chain Pricing Energy Index Outlook: 40 (Shippers)
The FreightWaves Provide Chain Pricing Energy Index makes use of the analytics and information in FreightWavesSONAR to investigate the market and estimate the negotiating energy for charges between shippers and carriers.
This week’s Pricing Energy Index relies on the next indicators:
Figuring out any important adjustments in route round holidays is a problem and this yr isn’t any totally different. In actual fact, it might be more difficult to determine this yr in contrast with any latest yr as each the Christmas and New Yr’s holidays fall on a Wednesday, which creates elevated operational challenges for shippers.
SONAR: Outbound Tender Quantity Index — Seasonality View: 2024 (white) and 2023 (pink) To study extra about SONAR, click on right here.
The Outbound Tender Quantity Index (OTVI), a measure of nationwide freight demand that tracks shippers’ requests for trucking capability, is down over 31% previously week, however the index is a seven-day transferring common and holidays successfully create zero days within the transferring common. The decline this yr was extra important than it has been lately, however that’s doubtless extra a results of timing of the vacations than a basic shift in volumes.
After the primary week of January, the route by which volumes are headed shall be clearer. The problem for the market is that the primary two months of the yr are historically the softest intervals for freight, and there’s nothing to recommend that there shall be stronger volumes throughout this time.
SONAR: Contract Load Accepted Quantity – Seasonality View: 2024 (white) and 2023 (pink) To study extra about SONAR, click on right here.
Contract Load Accepted Quantity (CLAV) is an index that measures accepted load volumes transferring beneath contracted agreements. In brief, it’s just like OTVI however with out the rejected tenders. Taking a look at accepted tender volumes, the decline is just like OTVI, falling by over 31% previously week.
SONAR: Outbound Tender Quantity Index – Weekly Change To study extra about SONAR, click on right here.
As anticipated when there’s a important decline in tender volumes on the nationwide degree, almost all the freight market skilled declines. Of the 135 freight markets, simply 4 of the markets skilled quantity progress, although the will increase are solely in additional rural freight markets.
In a constructive signal for the freight market, volumes out of Los Angeles outperformed the nationwide common, falling by 29%. It’s the identical story in Atlanta, the place volumes fell by 29% over the previous week.
The one 4 markets that skilled will increase had been: Grand Junction, Colorado; Fargo, North Dakota; Fast Metropolis, South Dakota; and Bristol, New Hampshire. The will increase assorted from 1% greater to 330% greater w/w.
SONAR: Van Outbound Tender Quantity Index (white, proper axis) and Reefer Outbound Tender Quantity Index (inexperienced, left axis) To study extra about SONAR, click on right here.
By mode: The dry van market skilled a extra important decline than the general market. The Van Outbound Tender Quantity Index fell by 34% over the previous week. Van outbound volumes are down 10.65% over the previous yr.
The reefer market stays the outperformer between the 2 gear varieties. The Reefer Outbound Tender Quantity Index fell by 21.2% over the previous week. In comparison with this time final yr, reefer tender volumes are up 3.4%.
It lastly occurred! Tender rejection charges broke above 10% for the primary time in additional than two years, but it surely was only a transient stint above the double-digit threshold. Tender rejection charges have retreated from above 10%, although they’re nonetheless greater than they had been this time final week. Rejection charges will retreat after the vacations as capability returns to the street, however the query that is still is how low they may fall in January and February.
SONAR: Outbound Tender Reject Index – Seasonality View: 2024 (white), 2023 (pink) and 2019 (orange) To study extra about SONAR, click on right here.
Over the previous week, the Outbound Tender Reject Index (OTRI), a measure of relative capability, rose by 35 foundation factors to 9.69%. The OTRI is 418 foundation factors greater than it was this time final yr, an indication that the market is tighter now than it was then. The spike, whereas not as excessive as 2019, does characterize a extra responsive market than the earlier two vacation seasons.
SONAR: Outbound Tender Reject Index – Weekly change To study extra about SONAR, click on right here.
The map above reveals the Outbound Tender Reject Index — Weekly Change for the 135 markets throughout the nation. Markets shaded in blue and white are these the place tender rejection charges have elevated over the previous week, whereas these in pink have seen rejection charges decline. The bolder the colour, the extra important the change.
Of the 135 markets, 67 reported greater rejection charges over the previous week, down from the 121 that noticed tender rejection charges rise in final week’s report.
Surprisingly sufficient, even with tender rejection charges growing on the nationwide degree over the previous week, the cut up between the variety of markets that skilled greater rejection charges and the quantity that had decrease rejection charges was lifeless even. Tender rejection charges within the largest market within the nation, Ontario, California, continued to rise over the previous week, up by 165 foundation factors to 9.34%, almost thrice greater than it was this time final yr. The Chicago market noticed tender rejection charges retreat this week after breaking above 10% final week, falling 123 bps to 9.44%. The most important will increase within the nation had been primarily remoted to smaller freight markets, although the Memphis, Tennessee, market skilled a large enhance: Tender rejection charges elevated by 630 bps w/w to 17.95%.
SONAR: Van Outbound Tender Reject Index (white), Reefer Outbound Tender Reject Index (inexperienced) and Flatbed Outbound Tender Reject Index (orange) To study extra about SONAR, click on right here.
By mode: The dry van market continues to see tender rejection charges rise, approaching 10%. Over the previous week, the Van Outbound Tender Reject Index elevated by 41 foundation factors to eight.71%. Van tender rejection charges are 357 foundation factors greater than they had been this time final yr.
The reefer market stays the tightest gear kind by far, although rejection charges have retreated from their latest highs. The Reefer Outbound Tender Reject Index fell by 265 foundation factors over the previous week to 18.59%. Reefer rejection charges are greater than double the place they had been this time final yr, up 950 bps.
Flatbed tender rejection charges skilled the biggest enhance of the gear varieties over the previous week. The Flatbed Outbound Tender Reject Index rose 360 foundation factors to 17.36%. In comparison with this time final yr, flatbed tender rejection charges are down 67 bps.
Spot charges haven’t touched the highs set a few weeks in the past, however they haven’t declined considerably. The expansion in spot charges over the previous two months reveals that carriers have been in a position to seize some pricing energy again. The luxurious for carriers is that if spot charges proceed to rise into 2025, it creates the next ground for charges heading into the brand new yr.
SONAR: SONAR Nationwide Truckload Index – Linehaul Solely (white, proper axis) and Initially Reported Van Contract Fee (inexperienced, left axis) To study extra about SONAR, click on right here.
The Nationwide Truckload Index – which incorporates gasoline surcharge and varied accessorials – rebounded, rising by 3 cents per mile to $2.46. The NTI is 10 cents per mile greater than it was this time final yr, however given the transfer rejection charges remodeled the previous week, it’s doubtless the hole will widen in the course of the subsequent week. The linehaul variant of the NTI (NTIL) – which excludes gasoline surcharges and different accessorials – skilled a barely smaller enhance than the general NTI, rising 2 cents per mile to $1.91. The NTIL is eighteen cents per mile greater than it was this time final yr, exhibiting how the underlying price has moved over the previous yr.
Initially reported dry van contract charges, which exclude gasoline, fell off their latest Thanksgiving excessive, returning to the vary they’ve been in for a lot of the yr. The initially reported dry van contract price, excluding gasoline, was unchanged over the previous week at $2.34. Contract charges are 5 cents per mile greater than they had been this time final yr. With the responsiveness in rejection charges and spot charges, contract charges will doubtless enhance in 2025.
The chart above reveals the unfold between the NTIL and dry van contract charges is trending again to pre-pandemic ranges. The unfold stays extensive, however with the latest pullback by spot charges of the highs and contract charges remaining pretty secure, the unfold narrowed by 14 cents over the previous week to 37 cents, the narrowest it has been in a number of years. In comparison with this time final yr, the unfold between spot and contract charges is 26 cents narrower.
SONAR: SONAR TRAC price from Los Angeles to Dallas. To study extra about SONAR, click on right here.
The SONAR Trusted Fee Evaluation Consortium spot price from Los Angeles to Dallas continued its enhance this week. The TRAC price from Los Angeles to Dallas decreased by 2 cents per mile to $2.75. Spot charges alongside this lane are 25 cents per mile above the contract at current, which is why rejection charges out of Los Angeles are on the rise, now above 9%.
SONAR: SONAR TRAC price from Atlanta to Chicago. To study extra about SONAR, click on right here.
From Chicago to Atlanta, spot charges have been unstable, however they actually haven’t moved considerably for the reason that starting of November. The TRAC price for this lane elevated over the previous week by 10 cents per mile to $2.77. Spot charges are 6 cents per mile beneath the contract price, however that unfold is at a degree at which spot charges provide optionality for carriers and might make the market really feel tighter for shippers than it was just some months in the past when the unfold was within the 40-cent vary.