Flat volumes and bleak first-quarter guidance from carriers

The Outbound Tender Volume Index (OTVI.USA) has stayed relatively horizontal below its March 2018 starting point of 10,000 since it recovered from its New Year’s trough.

The index currently sits at 9,606.97, which is above its yearly comparable by less than 1%. At this point in the year, it is important to dissect our Outbound Tender Volume Index into its two largest components: van and reefer volumes.

Van volumes in 2020 are tracking very close to 2019 at this point (up 1.2%), and they have pulled back slightly over the past three weeks. A different story is visible when analyzing reefer volumes. Outbound reefer volumes are still up nearly 11% year-over-year due in part to particularly cold weather in the Midwest. It may seem counterintuitive for reefer volumes to soar in cold weather, but reefer trailers are used to keep freight from freezing in the winter.

A host of poor fourth-quarter earnings reports from carriers (and brokers), paired with weak first-quarter 2020 guidance have thrown cold water on the notion of an imminent recovery from a weak 2019.

However, fourteen of the 15 markets FreightWaves tracks were positive on a week-over-week basis. Markets with the largest gains in OTVI.USA were Miami (21.01%), Seattle (17.73%) and Los Angeles (7.76%). The only market to decline was Savannah, Georgia (-0.91%).

Capacity continues to loosen

After peaking at 14.25% on Christmas Day, the Outbound Tender Reject Index (OTRI) has slipped to 5.78%. This is four straight weeks of declining tender rejections off the peak. The index has now given back most of the peak season bump and has fallen further into negative territory compared to this time last year. It remains to be seen whether the lows of 3.75% from August 2019 are in play. Lastly, overall outbound tender rejections are being boosted by continued stubbornly high reefer rejections, which currently sit at 13.16%.

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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