Chart of the Week: Outbound Tender Rejection Index – Van, Reefer, Flatbed SONAR: VOTRI.USA, ROTRI.USA, FOTRI.USA
Tender rejection rates for the three essential trailer types all spiked as they seasonally do around Christmas. The combination read is that the market stays oversupplied with capability, but that statement doesn’t apply evenly.
Let’s take a take a look at the less-served equipment varieties of flatbed and refrigerated (reefer) and skim the info to see what 2024 may hold for every.
Flatbed flattening
The flatbed space has been less stable than its dry van and refrigerated counterparts because the freight market collapsed in March 2022. Flatbed is more closely tied to manufacturing, energy and construction. Each of those sectors was handicapped through the pandemic thanks largely to produce chain issues and quarantining. In consequence, less attention was given to the space and due to this fact less capability was added.
That is evidenced by a mean tender rejection rate above 10% in 2023 in comparison with about 6% for reefer and about 3.3% for van. Among the elevation is on account of a much lower volume of representation contained in the tender data, but flatbed rejection rates averaged lower than the opposite two trailer types in 2020-H1 of 2021 — a highly unusual development.
The overall direction for national flatbed rejection rates was lower in 2023, averaging 9% within the second half of the yr versus 13% in the primary six months.
Flatbed activity tends to slow within the winter months on account of the character of the freight and weather conditions, but that shouldn’t be an absolute and it doesn’t mean the space loosens necessarily as capability naturally declines for this reason expectation.
Flatbed rejection rates topped out slightly below 20% this yr — its third-highest holiday value of the past five years, but below 2022. The read is that the flatbed market is stabilizing but still exposed to wild swings and nowhere nearly as stable as its closed-deck siblings.
Reefer madness
The refrigerated/reefer sector was the most well liked trailer type in 2020-21 but became as easy to achieve because the more common dry van counterpart in 2022 and thru the primary half of 2023.
Since May, nevertheless, the reefer space has began to perk up a bit, with rejection rates pulling off their floor values and sustaining at a level above van. After hitting a floor value of two.7% and falling into perfect alignment with the Van Outbound Tender Reject Index (VOTRI) in May, the Reefer Outbound Tender Reject Index (ROTRI) topped 10% 3 times within the back half of the yr.
Each of those peaks occurred across the three essential holidays of the second half, however the essential takeaway is that they were all higher than their 2022 values around the identical time.
Taking a look at the ROTRI broken down by region, the essential drivers of the increasing rejection rates occurred within the North and Midwestern regions. The Pacific Northwest has two major seasonal periods driven by harvests and Christmas trees.
Normally this area of the country is amazingly well supplied, with carriers avoiding an excessive amount of inbound freight as they’ve extreme challenges getting back out of the realm. The terrain can be treacherous and weather is usually a large disruption.
Erratic demand has at all times been a challenge, however the indisputable fact that it seems more of an element tells us that the market has had a more impactful reduction in capability this yr than the van side. The late-year rejection rate trend, which could also be more exacerbated by region, is for tightening to proceed with the ground within the rearview.
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