Outbound tender volumes ease off peak season highs but are still up nicely

The Outbound Tender Reject Index has slipped sequentially from its Christmas Day high of 14.25% to 10.05%. This total is still substantially higher than the 2019 average of 6.13%, but is likely to go lower as drivers get back on the road after the holidays. This last week was the first negative week-over-week change in rejections since early November. 

From Christmas 2018 to the first week of February 2019, the OTRI halved to less than 7%. It is likely the same happens this year, but possibly to a lesser degree. It is also possible that OTRI exhibits positive year-over-year growth for the first time in more than a year within the next few weeks. 

Despite the slip from the Christmas high, OTRI still remains above its 60-day moving average. We expect capacity to loosen up over the coming weeks and into the early summer. By Q3, we believe there are a few factors that may tighten capacity and put upward pressure on rates: first, the FMCSA Drug Clearinghouse will likely gut the industry of drivers; second, used truck prices have fallen through the floor – indiciating drivers may be looking for work elsewhere; and third, the new Class 8 truck orders were well below the replacement rate for all of 2019. 

For more information on the FreightWaves Freight Intel Group, please contact Kevin Hill at khill@www.freightwaves.com, Seth Holm at sholm@www.freightwaves.com or Andrew Cox at acox@www.freightwaves.com.

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