This week’s FreightWaves Provide Chain Pricing Energy Index: 40 (Shippers)
Final week’s FreightWaves Provide Chain Pricing Energy Index: 35 (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 knowledge in FreightWavesSONAR to investigate the market and estimate the negotiating energy for charges between shippers and carriers.
This week’s Pricing Energy Index is predicated on the next indicators:
The truckload market is experiencing the seasonal drop in volumes. Each Christmas and New Yr’s fall on Wednesdays this 12 months, creating the sooner slowdown in volumes. The drop in volumes is predicted and there might be a rebound after the primary of the 12 months. The questions that stay are, how important is the restoration firstly of the 12 months, and the way substantial are the seasonal pressures that influence volumes through the first quarter?
SONAR: Outbound Tender Quantity Index — Seasonality View: 2024 (white) and 2023 (pink) To study extra about SONAR, click here.
The Outbound Tender Quantity Index (OTVI), a measure of nationwide freight demand that tracks shippers’ requests for trucking capability, has dropped considerably over the previous week, falling by 5.4% week over week. In comparison with this time final 12 months, tender volumes are down 2.43%. Till the vacations clear, the amount image might be murky, however primarily based on present ranges, it seems that barring a big climate occasion, volumes will seemingly be softer in January.
Volumes throughout the all ranges of the mileage band are down over the previous week, however long-haul volumes had the least important decline. Lengthy-haul volumes, or hundreds shifting greater than 800 miles, fell by 2.1% week over week, whereas the shortest size over haul, native, or hundreds shifting lower than 100 miles, fell by 11.1%. Even with the drop, native volumes are up 5.4% y/y whereas lengthy haul volumes are down 7.1%.
SONAR: Contract Load Accepted Quantity – Seasonality View: 2024 (white) and 2023 (pink) To study extra about SONAR, click here.
Contract Load Accepted Quantity (CLAV) is an index that measures accepted load volumes shifting underneath contracted agreements. Briefly, it’s just like OTVI however with out the rejected tenders. accepted tender volumes, the restoration is much much less pronounced, rising 6.9% over the previous week, pushed by an upward motion in tender rejection charges. In comparison with this time final 12 months, CLAV is down 6%.
November’s retail gross sales knowledge is ready to be launched later this week, however early reads on spending in November had been sturdy. Financial institution of America’s card spending report confirmed that spending was up 0.6% 12 months over 12 months in November. Even with the late Thanksgiving vacation that pushed Cyber Monday into December, expectations are for gross sales to develop by 0.5% m/m.
SONAR: Outbound Tender Quantity Index – Weekly Change To study extra about SONAR, click here.
With the numerous slowdown in volumes on the nationwide degree, the overwhelming majority of markets have skilled decrease volumes over the previous week. Of the 135 freight markets tracked inside SONAR, 47 have seen tender volumes enhance over the previous week, down from 108 in final week’s report.
The biggest markets within the nation have seen volumes enhance over the previous week, together with the main Southern California markets. In Ontario, California, tender volumes elevated by 4.17% over the previous week. Farther east in Dallas, tender volumes elevated by 3.56%.
It wasn’t all optimistic for the most important markets within the nation. The Atlanta market noticed volumes fall 2.34% over the previous week, and in Chicago volumes had been 6.3% decrease 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 here.
By mode: The dry van market was main the best way decrease over the previous week. The Van Outbound Tender Quantity Index fell by 5.8% through the previous week to the bottom degree of the 12 months excluding holidays, although a vacation is impacting this week’s decline. In comparison with this time final 12 months, dry van volumes are down 5.5%.
The reefer market’s decline in quantity is much much less extreme than that of the dry van market, a minimum of this week. The Reefer Outbound Tender Quantity Index declined by simply 0.7% over the previous week. Reefer tender volumes stay nicely above the place they had been this time final 12 months, at the moment up 13%.
The capability facet of the market is seeing the primary important response to holidays in additional than two years as tender rejection charges have been hovering over the previous week. The optimistic signal for the market is that the rise in rejection charges is widespread, not remoted.
SONAR: Outbound Tender Reject Index – Seasonality View: 2024 (white), 2023 (pink) and 2019 (orange) To study extra about SONAR, click here.
Over the previous week, the Outbound Tender Reject Index (OTRI), a measure of relative capability, rose by 286 foundation factors to 9.34%. The OTRI is 449 foundation factors larger than it was this time final 12 months, an indication that the market is tighter now than it was then. The rise over the previous week is just like what occurred in 2019, displaying indicators that 2025 might be a tighter atmosphere, particularly after the start of the primary couple of months, when seasonal weak spot will seemingly seem.
SONAR: Outbound Tender Reject Index – Weekly change To study extra about SONAR, click 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, 121 reported larger rejection charges over the previous week, up from the 88 that noticed tender rejection charges rise in final week’s report.
All the largest markets within the nation have skilled will increase over the previous week, with the Chicago market experiencing the most important enhance of the week. Rejection charges within the Chicago market elevated by 367 bps over the previous week, eclipsing 10%.
Throughout the nation, tender rejection charges in Los Angeles elevated by 256 bps, in Dallas they had been up 252 bps, in Atlanta they elevated by 340 bps and in Harrisburg, Pennsylvania, they rose 216 bps. This week marks the primary time in a number of years when all the most important markets within the nation moved considerably larger on the similar time.
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 here.
By mode: The dry van market had lagged behind the reefer market by way of tender rejection charges rising, however the previous week has been a optimistic signal for the dry van market. The Van Outbound Tender Reject Index elevated by 243 foundation factors over the previous week to eight.3%. Dry van rejection charges are 362 bps larger than they had been this time final 12 months.
The reefer market has continued to tighten as reefer rejection charges have now eclipsed 20%. The Reefer Outbound Tender Reject Index elevated by 704 bps over the previous week to 21.24%. Reefer rejection charges are greater than double what they had been this time final 12 months, up 1,153 bps.
Flatbed tender rejection charges present perception into the market that’s extra project-based, and the Federal Open Market Committee’s launch of future projections advised fewer cuts to the federal funds fee in 2025 than beforehand anticipated. That might create a possible problem for future flatbed tasks in 2025 and past, however flatbed rejection charges confirmed some indicators of life this week. The Flatbed Outbound Tender Reject Index elevated by 80 bps over the previous week to 13.76%. In comparison with this time final 12 months, flatbed tender rejection charges are up 132 bps.
Spot charges retreated from the height skilled final week, however the latest upward development set the baseline larger for the following two weeks. Spot charges will seemingly transfer considerably larger over the following two weeks and assist set the stage for what’s to come back in 2025.
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 here.
The Nationwide Truckload Index – which incorporates gasoline surcharge and numerous accessorials – falling by 9 cents per mile to $2.43. The NTI is eighteen cents per mile larger than it was this time final 12 months, however given the transfer rejection charges remodeled the previous week, it’s seemingly the hole will widen through the subsequent week. The linehaul variant of the NTI (NTIL) – which excludes gasoline surcharges and different accessorials – skilled a barely smaller decline than the general NTI, falling 8 cents per mile to $1.89. The NTIL is 27 cents per mile larger than it was this time final 12 months, displaying how the underlying fee has moved over the previous 12 months.
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 12 months. The initially reported dry van contract fee, excluding gasoline, fell by 2 cents per mile over the previous week to $2.34. Contract charges are 2 cents per mile larger than they had been this time final 12 months. With the responsiveness in rejection charges and spot charges, contract charges will seemingly enhance in 2025.
SONAR: RATES.USA To study extra about SONAR, click here.
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 widened over the previous week to 51 cents. With that stated, the unfold is 12 cents narrower than it was this time final 12 months. Because the unfold continues to slender, the market will really feel considerably tighter, particularly in lanes the place the unfold between contract and spot charges is considerably narrower than the nationwide common.
SONAR: SONAR TRAC fee from Los Angeles to Dallas. To study extra about SONAR, click here.
The SONAR Trusted Fee Evaluation Consortium spot fee from Los Angeles to Dallas continued its enhance this week. The TRAC fee from Los Angeles to Dallas elevated by 2 cents per mile to $2.77. Spot charges alongside this lane are 28 cents per mile above the contract at current, which is why rejection charges out of Los Angeles are on the rise, now above 7.5%.
SONAR: SONAR TRAC fee from Atlanta to Chicago. To study extra about SONAR, click here.
From Chicago to Atlanta, spot charges have been risky, however they actually haven’t moved considerably for the reason that starting of November. The TRAC fee for this lane decreased over the previous week by 2 cents per mile to $2.67. Spot charges are 14 cents per mile beneath the contract fee, however that unfold is at a degree at which spot charges supply optionality for carriers and might make the market really feel tighter for shippers than it was only a few months in the past when the unfold was within the 40-cent vary.
