Tender volumes fall back this week

(Chart: Bank of America)

The most recent stimulus round is providing a massive boost to consumers, who by and large are still stuck at home. Working from home has been a major success for millions of Americans, and people keep spending on at-home upgrades like furniture and online electronics. 

Service-based spending categories like airlines, lodging and restaurants all were positively impacted by the stimulus, but the top 5 biggest growth segments came in goods. With the roaring consumer economy, blossoming industrial recovery, white-hot housing market and historically depleted inventories, there’s very little outside of severe inflation that could derail this trucking market. 

On a negative note, only four of the 15 major freight markets that we monitor as a broad, representative benchmark were positive on a week-over-week basis. This ratio decelerated meaningfully compared back to the stronger levels it has become accustomed to in recent months as the freight market rallies. The markets with the largest gains this week in OTVI.USA were Indianapolis (6.46%), Seattle (3.04%) and Houston (0.98%). The markets with the largest declines this week in OTVI.USA were Dallas (-10.40%), Cleveland (-8.99%) and Chicago (-8.96%). 

SONAR: OTVI.USA

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Tender rejections hover near peak

In the last week of Q1, the Outbound Tender Reject Index (OTRI) jumped back toward its familiar natural ceiling of 30% as shippers rushed to get freight out the doors. After topping out at 28.3% on March 28, the U.S. aggregate OTRI has declined to 26.4% currently. This is an extremely high level by any measure; carriers are still rejecting more than 1-in-4 electronic tenders at contract rates. 

It seems that the surge in tender rejections was mostly volume-driven as shippers sought out last-minute shipments. The retreat this week is unsurprising, but what happens over the next few weeks will be telling for the summer season. Produce season is just beginning, and reefer capacity has rarely been tighter. The Reefer Outbound Tender Reject Index is at a staggering 45%, just down from the all-time high in the weeks after the winter storms. 

SONAR: ROTRI.USA (Blue): OTRI.USA (Green)

Higher freight demand is likely in the coming months, and there are no immediate signs of capacity relief visible. The port congestion has prompted retailers to seek alternative routes, which will benefit East Coast ports, but with carriers optimized for LA/Long Beach, it may create lasting volatility. 

SONAR: OTRI.USA

For more information on Passport Research, please contact sholm@www.freightwaves.com.

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