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 knowledge in FreightWavesSONAR to research 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 modifications in course round holidays is a problem and this 12 months isn’t any totally different. Actually, it might be tougher to determine this 12 months in contrast with any latest 12 months 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 here.
The Outbound Tender Quantity Index (OTVI), a measure of nationwide freight demand that tracks shippers’ requests for trucking capability, is down over 31% prior to now week, however the index is a seven-day shifting common and holidays successfully create zero days within the shifting common. The decline this 12 months was extra important than it has been lately, however that’s probably extra a results of timing of the vacations than a elementary shift in volumes.
After the primary week of January, the course through which volumes are headed will probably be clearer. The problem for the market is that the primary two months of the 12 months are historically the softest durations for freight, and there’s nothing to recommend that there will probably be stronger volumes throughout this time.
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 below contracted agreements. Briefly, it’s just like OTVI however with out the rejected tenders. accepted tender volumes, the decline is just like OTVI, falling by over 31% prior to now week.
SONAR: Outbound Tender Quantity Index – Weekly Change To study extra about SONAR, click here.
As anticipated when there’s a important decline in tender volumes on the nationwide degree, practically 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 have been: Grand Junction, Colorado; Fargo, North Dakota; Fast Metropolis, South Dakota; and Bristol, New Hampshire. The will increase different from 1% increased to 330% increased 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 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 12 months.
The reefer market stays the outperformer between the 2 tools sorts. The Reefer Outbound Tender Quantity Index fell by 21.2% over the previous week. In comparison with this time final 12 months, 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 increased than they have 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 are going to 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 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 increased than it was this time final 12 months, an indication that the market is tighter now than it was then. The spike, whereas not as excessive as 2019, does symbolize a extra responsive market than the earlier two vacation seasons.
SONAR: Outbound Tender Reject Index – Weekly change To study extra about SONAR, click here.
The map above exhibits 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 purple have seen rejection charges decline. The bolder the colour, the extra important the change.
Of the 135 markets, 67 reported increased 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 rising on the nationwide degree over the previous week, the cut up between the variety of markets that skilled increased rejection charges and the quantity that had decrease rejection charges was useless 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%, practically thrice increased than it was this time final 12 months. 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 have 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 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 increased than they have been this time final 12 months.
The reefer market stays the tightest tools 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 have been this time final 12 months, up 950 bps.
Flatbed tender rejection charges skilled the most important enhance of the tools sorts over the previous week. The Flatbed Outbound Tender Reject Index rose 360 foundation factors to 17.36%. In comparison with this time final 12 months, 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 exhibits that carriers have been capable of seize some pricing energy again. The posh for carriers is that if spot charges proceed to rise into 2025, it creates the next flooring for charges heading into the brand new 12 months.
SONAR: SONAR Nationwide Truckload Index – Linehaul Solely (white, proper axis) and Initially Reported Van Contract Price (inexperienced, left axis) To study extra about SONAR, click here.
The Nationwide Truckload Index – which incorporates gasoline surcharge and numerous accessorials – rebounded, rising by 3 cents per mile to $2.46. The NTI is 10 cents per mile increased than it was this time final 12 months, however given the transfer rejection charges remodeled the previous week, it’s probably the hole will widen throughout 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 increased 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, was unchanged over the previous week at $2.34. Contract charges are 5 cents per mile increased than they have been this time final 12 months. With the responsiveness in rejection charges and spot charges, contract charges will probably enhance in 2025.
SONAR: RATES.USA To study extra about SONAR, click here.
The chart above exhibits the unfold between the NTIL and dry van contract charges is trending again to pre-pandemic ranges. The unfold stays huge, 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 12 months, the unfold between spot and contract charges is 26 cents narrower.
SONAR: SONAR TRAC fee from Los Angeles to Dallas. To study extra about SONAR, click here.
The SONAR Trusted Price Evaluation Consortium spot fee from Los Angeles to Dallas continued its enhance this week. The TRAC fee 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 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 because the starting of November. The TRAC fee for this lane elevated over the previous week by 10 cents per mile to $2.77. Spot charges are 6 cents per mile under the contract fee, however that unfold is at a degree at which spot charges supply optionality for carriers and may 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.
