Rising rejection rates amid demand drop reveal truckload capacity exodus

Table of the week. Contract Load Accepted Volume Index, Outbound Tender Volume Index – US SONAR:CLAV.USA, OTRI.USA

Carriers are accepting the same cargo volumes as they were in April 2023, the theoretical level of the last freight market downturn. Rejection rates (the rate at which carriers reject cargo coverage requests from contract shippers) are more than double what they were then further evidence that a significant amount of supply has left and continues to leave the domestic truck market.

Accepted contract load volume index (CLAV) It varies from carrier to carrier of SONAR Outbound tender volume index (OTVI) because it does not count applications that have been rejected by carriers. More rejections mean that it is more difficult to obtain truck capacity. When comparing the outbound tender rejection index (OTHERS) CLAV, we can approximate how balanced the supply and demand curve is in the truck market by looking at periods of similar accepted volumes and comparing rejection rates over those times.

In May 2023, CLAV had a value of 13.951 while OTRI was 2.92%; mostly carriers were accepting loads indiscriminately.CLAV was at 13,910 last Thursday while OTRI was up 6.48%.Although not all loads are created equal, average load lengths were also similar Seasonality is a factor, but the key is trends.

Accepted volumes fell from early September to November before leveling off.The rejection rate increased from around 4.5% on September 29th to 6.5% on December 12th.

This increase is more than your typical seasonal increase due to reduced holiday throughput. The only year where the rejection rate increased steadily during this period was 2019. The rejection rate is either flat or declining in the current year to Thanksgiving.

Looking at the historical OTRI numbers over the past seven years, there is a downward trend for the most part.This coincides with a slight drop in demand due to the Labor Day weekend.

This year’s OTRI still lacks the Thanksgiving week spike that has been off for the past three years, but the upward trend in denials is a new development, especially given that it’s not driven by demand.

Comparing OTVI (Total Tenders) and CLAV (Applications Accepted), the gap has been steadily increasing. This is a result of less availability of freight. The gap is represented by OTRI , and OTVI fall. Most people familiar with the transportation markets believe that the transition market will have a slowly growing CLAV and growing OTVI, which is what happened in 2020, as seen below.

The story continues

It’s a very telling detail that power decays incredibly fast, which is hard to measure with traditional numbers.

Carrier Details puts an additional layer of refinement on the Federal Motor Vehicle Safety Administration’s data to arrive at its net changes (cancellations and additions) in active operating bodies reported weekly fleet size or decommissioning of tractors. It is still a good measure of market conditions and health. Whenever it is negative, conditions are extremely difficult for carriers in the state for a long time because it is biased towards growth.Two years of more than 350 net carrier exits per week is historic and never seen before.

The bottom line is that the capacity drain is finally showing up in the form of consistently higher rejection rates. There is certainly a level of seasonal pressure in the market right now that wasn’t there in May 2023, but the difference is not just seasonality decreased, but this should not be seen as a setback.

The FreightWaves chart of the week is a selection of charts SONAR: which provides an interesting data point to describe the state of freight markets.The chart is selected from thousands of potential charts SONAR: to help participants visualize the freight market in real time. Each week a market expert will post a chart live on the front page. After that, the weekly chart will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry in real time.

The FreightWaves data science and product teams release new data sets every week and enhance the customer experience.

Click to request a demo of SONAR here.

The post Rising rejection rates amid falling demand indicate a drain on truck capacity appeared first FreightWaves:.