Analyzing the Truckload Market: Rising Rejection Rates and Capacity Concerns
The Current Landscape: Understanding Key Metrics
In the world of freight transport, a critical indicator of market health is the Contract Load Accepted Volume index (CLAV)—a detailed measure of accepted load tenders from shippers to carriers. This metric provides insights into the overall demand for trucking capacity, notably contrasting with the Outbound Tender Volume Index (OTVI), which encompasses both accepted and rejected load tenders. This distinction is vital for understanding how much cargo is successfully contracted versus how much is left on the table.
Recent data highlights a concerning trend: carriers are now accepting load volumes akin to those seen in April 2023, which suggests an ongoing recessionary phase in the freight market. What’s more alarming is that rejection rates—the percentage at which carriers decline load requests—have more than doubled since then. This significant shift indicates that a considerable amount of supply is exiting the domestic truckload market, making it increasingly challenging for shippers to secure reliable trucking capacity.
Deep Dive: Current Measurements and Trends
As of May 2023, the CLAV stood at 13,951 loads, with a rejection rate (OTRI) of just 2.92%. At that time, carriers were accepting loads with minimal resistance. Fast forward to last week, and the CLAV had decreased slightly to 13,910, while the OTRI climbed to 6.48%. The average lengths of haul remained similar; however, the increased rejection rate suggests a deeper imbalance in supply and demand.
Accepted volumes showed a downward trajectory from early September through November, only to stabilize later. Remarkably, rejection rates have been climbing steadily since early October, increasing from around 4.5% on September 29 to an alarming 6.5% by December 12. Unlike the typical seasonal spikes driven by holiday demand fluctuations, the present scenario bears resemblance only to the unusual trends noted during 2019, a year characterized by similar rejection patterns.
Historical Context: Long-term Trends
An analysis of the Outbound Tender Reject Index over the past seven years reveals a pervasive downward trend in rejection rates; however, this year diverges from the norm. Notably, the anticipated surge in rejections experienced during Thanksgiving week has been conspicuously muted over the last three years. Current data suggests that the rise in rejection rates is not merely a reaction to seasonal demand but a signal of a deeper market anomaly.
This growing gap between the OTVI (total tenders) and the CLAV (accepted tenders) underscores the tightening availability of trucking capacity. As both indices trend downward, it’s critical to note that the widening gap is indicative of a market increasingly challenged by capacity constraints.
Carrier Dynamics and Forecasting Future Trends
A comprehensive look into the operational data sourced from the Federal Motor Carrier Safety Administration (FMCSA) reveals promising, albeit cautious indicators. While there’s a reported slowing in the erosion of active operating authorities, this dataset does not fully encapsulate the complexities of fleet sizes or the removal of trucks from active service. Despite some semblance of stabilization in carrier exits, the past two years have seen unprecedented weekly averages of over 350 net carrier exits—an indication that challenges loom large in maintaining capacity across the board.
With the onset of seasonal pressures previously absent in May 2023, we must tread carefully in interpreting potential post-holiday fluctuations in rejection and spot rates. The expectation of an immediate rebound may not materialize, as the landscape continues to shift.
Conclusion: Real-Time Data Insights for Informed Decisions
At Extreme Investor Network, we prioritize offering you unique insights into the intricacies of the trucking and freight markets. Our partnership with SONAR equips our readers with real-time data analytics, empowering participants to navigate a rapidly changing logistics environment more effectively.
By regularly monitoring emerging trends and key data points—including the FreightWaves Chart of the Week—our analysis aims to keep you ahead of the curve. As we proceed through the evolving landscape of freight, continuous adaptation and informed decision-making will become increasingly essential to thriving in this complex arena.
Stay tuned as we continue to provide cutting-edge insights and actionable intelligence. For personalized data exploration tailored to your needs, don’t hesitate to request a SONAR demo today. Together, we can forge ahead in this challenging but exciting market landscape.