Chart of the Week: Outbound Tender Volume Index – Ontario, Dallas SONAR: OTVI.ONT, OTVI.DAL
Outbound tender volumes spiked out of two of the nation’s largest origins last week after a comparatively subdued October. This unseasonal spike in demand could also be an indication of things to return this holiday season after a yr of shippers having a comparatively easy time getting transportation capability.
The Ontario, California, market is home to one in all the U.S.’ largest warehousing districts generally known as the Inland Empire. Several Fortune 500 retailers have a presence here as a consequence of the proximity to the ports of Los Angeles and Long Beach. Demand spiked 26% to kick off November out of this market.
The Dallas market has grown in prominence over the past few years, becoming a top 5 market when it comes to overall share of freight demand origination, and is in a state that has develop into a point of interest of growth as supply chains diversify. Outbound tender volumes jumped 12% last week.
Each of those markets originate a considerable amount of freight that moves multiple days’ journey to the ultimate destination — well upstream of the patron.
While it will not be terribly unusual to get demand spikes leading as much as the vacations, they normally don’t occur at this scale.
Taking a look at this historical national Outbound Tender Volume Index (OTVI), there are instances of demand growth initially of November in three of the past five years. This jump in demand is mostly 2-4%. The recent increase from a national perspective was 6.4%.
Traditionally, this level of increase would have led to a deterioration in capability, but nearly all of those loads were accepted by carriers. And potentially more impressively, lead times between tender and requested pickup were reduced to close annual lows for each markets. Shorter lead times give carriers less time to position their trucks and are generally tougher to cover.
Import booking volumes (IOTI), though subdued in comparison with the pandemic period, were unexpectedly strong within the third quarter, leading many to imagine we were experiencing an early maritime peak season — generally occurring in August. While this may occasionally have been true, demand remained strong leading into early October, especially for the Port of Long Beach.
In the course of the pandemic years, imports immediately were transferred to the rails or trucks and made their journey toward the consumers with downstream inventory levels consistently low. Now that inventories are mostly rightsized, shippers seem like holding goods in upstream warehouses until signs of demand spark shipping activity as an alternative of just moving it straight away.
Principally, shippers are keeping inventory on a more just-in-time basis versus just-in-case with goods and transportation more consistently available.
As we approach the vacation season, this practice will get costlier as capability is less available and the sense of urgency for a lot of retailers increases. While it could not mean a historic rise of rates or anything sustainable, it’ll result in increasing instances of demand spikes and expedited or guaranteed service shipments.
Shippers are probably prepared to pay in these instances because the increases are nominal in comparison with the 2020-21 years. There still could also be some instances of sticker shock after an especially easy yr for sourcing capability.
All of this hinges on consumer resilience, but they’ve given no signs of slowing to this point.
Concerning the Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that gives an interesting data point to explain the state of the freight markets. A chart is chosen from hundreds of potential charts on SONAR to assist participants visualize the freight market in real time. Each week a Market Expert will post a chart, together with commentary, continue to exist the front page. After that, the Chart of the Week might be archived on FreightWaves.com for future reference.
SONAR aggregates data from lots of of sources, presenting the information in charts and maps and providing commentary on what freight market experts need to know concerning the industry in real time.
The FreightWaves data science and product teams are releasing latest datasets each week and enhancing the client experience.
To request a SONAR demo, click here.
The post Diminished inventories may boost holiday expediting appeared first on FreightWaves.